Introductory Investors

Denver Real Estate Glosssary

Words and phrases you need to know      

Adjustable Rate Mortgage (ARM): Mortgage loans in which the interest rate and monthly payments may be adjusted periodically to correspond with change in the cost of funds.

Amortization: Payment of debt in regular, periodic installments of principal and interest, as opposed to interest only payments.

Amortization Schedule: A schedule showing each payment of a loan to be amortized and breaking down the payment into the amount applied to principal and the amount applied to interest.

Annual Percentage Rate (APR): This is the cost of your credit expressed in terms of an annual rate.  Since you may be paying “points” and other closing costs, the APR disclosed is often higher than the interest rate on your loan.  The APR can be compared to the APR for other loans for which you may have applied to give you a fair method of comparison.

Assumption Fee: Lender’s charge for paperwork involved in processing records for a new buyer assuming an existing loan.

Balloon Payment: When the final installment payment on a note is greater than the preceding installment payment and the note is paid in full.

Cap: (1) Change Cap – an interest rate cap which limits the increase on the interest rate form one adjustment period to the next. (2) Life Cap – an interest rate cap which limits the increase rate of the life of the loan.

Certificate of Reasonable Value (CRV): The Federal Veterans Administration appraisal commitment of property value.

Closing Statement: The statement which lists the financial settlement between buyer and seller and the costs each must pay.

Condominium: A system of individual ownership of units combined with joint ownership of common areas of structure and the land.

Contingency: The dependence upon a stated event which must occur before a contract is binding.  For example: the sale of a house is contingent upon the buyer obtaining financing.

Conventional Loan: A mortgage or deed not obtained under government insured program (such as FHA or VA).

Deed of Trust: An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor) in favor of the lender (beneficiary), and re-conveyed upon payment in full.

Earnest Money: Down payment made by a purchaser of real estate as evidence of good faith.

Escrow: Delivery of a deed by a grantor to a third party for delivery to the grantee.

Federal Housing Administration (FHA): An agency of the federal government that insures mortgage loans.

Home Warranty Insurance: Private insurance insuring a buyer against defects (usually in plumbing, heating, and electrical) in the home purchased.  The period of insurance varies and both new and used homes may be insured.

Loan Origination Fee: A one time setup financial settlement between buyer and seller and the fee charged by the lender.

Mortgage Insurance Premium (MIP): Insurance on a government-funded loan to ensure against foreclosure.
 
Private Mortgage Insurance (PMI): Insurance on a conventional loan that is required with an LTV of 81% or higher to ensure against foreclosure.
 
Point: One percent of the loan amount.
 
REO (Real Estate Owned): Properties that have already gone through the full foreclosure process and are now held in the bank’s portfolio.

Title Insurance: Insurance against loss resulting from defects of title to a specific described parcel of real property.  Defects may run to the chain of title or to encumbrances.

Variable Interest Rates: An interest rate which fluctuates as the prevailing rate moves up or down.  In mortgages there are usually maximums as to the frequency and amount of fluctuation.  This may also be called flexible interest rate.

Veterans Administration Loans (VA): Housing loans to veterans by banks, savings and loans, or other lenders which are insured by the Veterans Administration, enabling veterans to buy a residence with little or no money down.



Now that you have some real estate knowledge under your belt check out our Intermediate Investor Resources which has all your foreclsoure information or start searching for homes.  Of course, the best place to start is in our own “Home Search” function, where you can query our database of quality homes to get a short list of Denver properties that meet all of your expectations.

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