Buying
a House
Abstract
A document detailing the financial history of the property, including
ownership changes, title changes, mortgages, liens, forfeitures,
etc. Back to alphabetical list
Addendum
A document detailing changes to a contract. Back
to alphabetical list
Adjustable
Rate Mortgage (ARM)
A mortgage with a rate that varies according to an established benchmark,
such as the prime lending rate. Many have a cap and may include
a one-time option to lock the rate at a set amount. Back
to alphabetical list
Annual
Percentage Rate (APR)
The yearly interest cost of a loan. Monthly mortgage payments include
an interest rate equal to 1/12 the APR. Back to
alphabetical list
Cap
In an ARM, the highest the interest rate can rise or the amount
a payment can increase over the life of the loan. Back
to alphabetical list
CC&Rs
Codes, Covenants, and Restrictions are the rules stating your rights
and duties regarding your property when you purchase property that
includes property held in common with other owners in the subdivision
or building. Back to alphabetical list
Closing
The meeting at which the money and property title change hands.
Closing costs include fees for the title search, appraisal, survey,
loan origination, points, deed recording, credit report, notary,
and possible other charges as well. Also called settlement.
Back to alphabetical list
Construction
Loan
A short-term loan to finance the construction of a home. The lender
makes periodic payments directly to the builder as work progresses.
These loans are more expensive than mortgages, and are converted
to mortgages as soon as the building is completed. Back
to alphabetical list
Contingency
A condition(s) that must be met for the contract to be valid. Common
contingencies attached to purchase offers include sale of buyer's
existing home and outcome of a home inspection. Back
to alphabetical list
Contract
for Deed (CD)
An arrangement in which the seller finances all or part of the purchase
price and retains the property deed until the contract is fulfilled.
Back to alphabetical list
Conventional
Mortgage
A loan based on the applicant's credit and collateral (usually the
property being purchased). Not insured through the FHA or VA. Back
to alphabetical list
Covenant
A written restriction on the use of the property. Homeowners' Associations
often enforce covenants governing architecture and maintenance of
houses in a subdivision. Back to alphabetical list
Disclosure
Statement
A document listing known defects, such as water problems, roof damage,
and the like. Required by law in some areas. Back
to alphabetical list
Earnest
Money
A
good faith down payment made when the purchase agreement is signed
by both parties. Back to alphabetical list
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