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Lien
A claim against a property in satisfaction of a
debt. It can be voluntary, such as a mortgage, or
involuntary, as for back taxes.
Listing
A property listed for sale. Also, a contract between
a seller and a real estate broker.
Loan-to-Value (LTV) Ratio
The amount of the loan as a percentage of the property's
appraised value. An 80 percent loan, for example,
is determined by subtracting a 20 percent down payment
from the property's appraised value.
Locking In
Mortgage rates can change daily. An advertised rate
may not be the rate you finally get. Borrowers must
ask lenders when a rate is "locked in," or guaranteed
for a specified period of time.
Market Value
The current value of real estate that a buyer is
willing to pay and a seller is willing to accept.
Mortgage
Evidence of security for a loan. It is the document,
signed by the borrower, which gives the lender the
right to the property if the borrower fails to live
up to the loan arrangement.
Mortgage Broker
Individuals or institutions who match those who
need money with interested investors.
Origination Fees
A fee assessed by the lender for processing the
loan. Most lenders' charges are based upon the amount
of the loan, and one point equals 1 percent of the
loan amount. These fees are normally paid by the
borrower at closing. In some cases, however, they
may be paid by the seller or shared by both parties.
Also, the lender may allow the charges to be deducted
from the mortgage amount.
Point
An amount equal to 1 percent of the principal balance
of a mortgage loan. (Two points equal 2 percent
of the balance, etc.)
Prepayment Penalty
A fee charged by some lenders when the loan is repaid
prior to maturity.
Private Mortgage Insurance (PMI)
Mortgage default insurance designed to pay the lender
a portion of the outstanding balance of a loan in
the event that the homeowner defaults. PMI may be
required on certain types of loans. If so, the initial
premium is usually one of the closing costs, while
subsequent premiums are included in the borrower's
monthly payments. Usually applies to loans with
20 percent or less down payment.
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