Terms to be familiar with when buying a home

Þ   Mortgage: mortgage is a loan secured on a specified property that the borrower is obliged to pay back with a predetermined set of monthly payments.

 

Þ   Title: The right to the ownership and possession of a property that may be legally recognized as belonging to someone.

 

Þ   Down payment:The minimum cash contribution that must be made by a borrower toward the purchase of a home to qualify for a mortgage

 

Þ   Credit Check or Rating: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness

 

Þ   Interest Rate:The amount charged, expressed as a percentage of principal, by a lender to a borrower for a loan facility.

 

Þ   Foreclosure: The legal proceedings initiated by a lender in the case of mortgage default to realize or claim ownership to a collateral or property

 

Þ   Appreciation: the rise or increase in the value of an asset based on a rise in market price over a period.

 

Þ   Depreciation: A decrease in property or an asset's value caused by unfavorable market conditions.

 

Þ   Default: The failure to promptly pay interest or principal when due. This occurs when a debtor is unable to meet the legal obligation of debt repayment.

 

Þ   Deed: A legal document that grants or conveys ownership of property from a grantor (seller) to a grantee (buyer).

 

Þ   Home Equity:the value of ownership built up in a home or property that represents the current market value of the house less any remaining mortgage or liability.

 

Þ   Appraisal: A valuation of property by the estimate of an authorized person.

 

Þ   Amortization:Amortization is the paying off debt with a fixed repayment schedule in regular installments over a period, for example as with a mortgage loan

 

Þ   Disclosure: Disclosure is the act of releasing all relevant information pertaining to a company that may influence an investment decision.

 

Þ   Adjustable Rate Mortgage (ARM):A type of home loan in which the interest rate is not fixed but adjust in line with market rates.

 

Þ   Fixed Rate Mortgage (FRM): A mortgage that has a fixed interest rate for the entire term of the loan.

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