Sunny Brook Estates

1031 Exchange	This refers to a portion of the IRS code also known as a Like Kind Exchange or Starker Exchange. This specifies that if a property is sold and the proceeds of the sale are investin in an asset of like kind, then no gain or loss is recognized. This is a very effective way to defer taxes that would otherwise be due on the sale of a property.
401(k)/403(b)	An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirement or emergency purposes. 401(k) plans are provided by employers that are private corporations. 403(b) plans are provided by employers that are not for profit organizations.
401(k)/403(b) loan	Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Loans against 401K plans are an acceptable source of down payment for most types of loans.
adjustable-rate mortgage (ARM)	A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
amortization	The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.
amortization schedule	A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
annual percentage rate (APR)	This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual not rate on your loan.
appraised value	An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.
assessed value	The valuation placed on property by a public tax assessor for purposes of taxation.
assessment	The placing of a value on property for the purpose of taxation.
assessor	A public official who establishes the value of a property for taxation purposes.
asset	Items of value owned by an individual. Assets that can be quickly converted into cash are considered liquid assets. These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.
assignment	When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.
assumable mortgage	A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must qualify in order to assume the loan.
assumption	The term applied when a buyer assumes the seller's mortgage.
balloon mortgage	A mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth year the entire remaining balance must be paid.
Basis Point	A basis point is one one-hundredth of one percentage point. For example, the difference between a home loan at 4.25 percent and one at 4.38 percent is 13 basis points.
broker	Broker has several meanings in different situations. Most Realtors are agents who work under a broker. Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.
Cap Rate	See Capitalization Rate
Capitalization Rate	The assumed rate of return on an investment in real estate. The capitalization rate is commonly used in the valuation of commercial and investment property because it directly links the value to the income produced by the property.
Cash Flow	The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income.
Cash Home Buyer	An individual or company who purchases houses quickly for cash (typically at a discount from the retail value).
Cash Out Refinance	The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan.
Certificate of Eligibility	A document issued by the Veterans Administration that certifies a veteran's eligibility for a VA loan.
Certificate of Occupancy (CO)	A document stating that a home or other building has met all building codes and is suitable for habitation.
clear title	A title that is free of liens or legal questions as to ownership of the property.
closing	This has different meanings in different states. In some states a real estate transaction is not consider closed until the documents record at the local recorders office. In others, the closing is a meeting where all of the documents are signed and money changes hands.
closing costs	Closing costs are separated into what are called non-recurring closing costs and pre-paid items. Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. Pre-paids are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.
closing statement	See Settlement Statement.
cloud on title	Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.
co-borrower	An additional individual who is both obligated on the loan and is on title to the property.
collateral	In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.
comparable sales	Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as comps.
contingency	A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
contract	An oral or written agreement to do or not to do a certain thing.
conventional mortgage	Refers to home loans other than government loans (VA and FHA).
convertible ARM	An adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
cooperative (co-op)	A type of multiple ownership in which the residents of a multi unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
cost of funds index (COFI)	One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings, and advances of the financial institutions such as banks and savings & loans, in the 11th District of the Federal Home Loan Bank.
Counteroffer	An offer made in return by one who rejects an unsatisfactory offer.
Creative Financing	Financing property or anything outside of a standard loan.
default	Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.
delinquency	Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a late fee for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days late, most lenders report the late payment to one or more credit bureaus.
deposit	A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an earnest money deposit.
down payment	The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Due-on-Sale Clause	A clause in many mortgages that allows the lender to call the loan due immediately if the property is sold. In general lenders are not very aggressive in enforcing this clause as long as they continue to be paid their monthly payment.
Due-on-Sale Provision	A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
earnest money deposit	A deposit made by the potential home buyer to show that he or she is serious about buying the house.
equity	A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
escrow	An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.
et uxor	A latin term meaning "And Wife". Commonly used in real estate deeds. Also etux, et ux.
eviction	The lawful expulsion of an occupant from real property.
examination of title	The report on the title of a property from the public records or an abstract of the title.
exclusive listing	A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
fair market value	The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae (FNMA)	The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds. For a discussion of the roles of Fannie Mae, Freddie Mac (FHLMC), and Ginnie Mae (GNMA), see the Library.
Federal Housing Administration (FHA)	An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.
FHA mortgage	A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
firm commitment	A lender's agreement to make a loan to a specific borrower on a specific property.
first mortgage	The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.
fixed-rate mortgage	A mortgage in which the interest rate does not change during the entire term of the loan.
foreclosure	The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
grantee	The person to whom an interest in real property is conveyed.
grantor	The person conveying an interest in real property.
Hard Money Loan	Hard money loans are loans in which real estate serves as the collateral asset. It is most commonly used as a type of bridge loan for temporary financing. As with other collateralized loans, the size, rate, and length of a hard money loan is determined by the borrower’s equity in the asset, the volatility of the asset and marketplace, and the financial standing of the borrower. Hard money loans are funded for business and personal use. The real estate asset may be business or personal property, and the proceeds of hard money loans are not restricted to business use.
home equity line of credit	A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.
home inspection	A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
homeowners' association	A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
homeowner's insurance	An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
HUD-1 settlement statement	A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the closing statement or settlement sheet.
Land Trust	A trust created to effectuate a real estate ownership arrangement in which the trustee holds legal and equitable title to the property subject to the provisions of a trust agreement setting out the rights of the beneficiaries whose interests in the trust are declared to be personal property called also Illinois land trust.
late charge	The penalty a borrower must pay when a payment is made a stated number of days. On a first trust deed or mortgage, this is usually fifteen days.
lease	A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time. [Top]
Lease Option	An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.
liability insurance	Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. It is usually part of a homeowner's insurance policy.
lien	A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.
life cap	For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.
line of credit	An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
liquid asset	A cash asset or an asset that is easily converted into cash.
loan	A sum of borrowed money (principal) that is generally repaid with interest.
loan officer	Also referred to by a variety of other terms, such as lender, loan representative, loan rep, account executive, and others. The loan officer serves several functions and has various responsibilities: they solicit loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.
loan-to-value (LTV)	The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
lock-in	An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
lock-in period	The time period during which the lender has guaranteed an interest rate to a borrower.
margin	The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.
maturity	The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
mortgage	A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.
mortgage banker	For a more complete discussion of mortgage banker, see Types of Lenders. A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae. However, firms rather loosely apply this term to themselves, whether they are true mortgage bankers or simply mortgage brokers or correspondents.
mortgage broker	A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.
mortgage insurance (MI)	Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Often mistakenly referred to as PMI, which is actually the name of one of the larger mortgage insurers. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above 80% LTV that call themselves No MI are usually a made at a higher interest rate. Instead of the borrower paying the mortgage insurance premiums directly, they pay a higher interest rate to the lender, which then pays the mortgage insurance themselves. Also, FHA loans and certain first-time home buyer programs require mortgage insurance regardless of the loan-to-value.
mortgagee	The lender in a mortgage agreement.
mortgagor	The borrower in a mortgage agreement.
multi dwelling units	Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
Multiple Listing Service (MLS)	A real estate listing service that combines the listings for all available properties in an area that are listed by real estate agents in one directory. The MLS is typically limited to licensed real estate agents.
negative amortization	Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called deferred interest. The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.
no cash-out refinance	A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a rate and term refinance.
no-cost loan	Many lenders offer loans that you can obtain at no cost. You should inquire whether this means there are no lender costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a no-point loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.
note	A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
note rate	The interest rate stated on a mortgage note.
notice of default	A formal written notice to a borrower that a default has occurred and that legal action may be taken.
Option	A situation in which a buyer puts down money for the right to purchase a piece of real estate within a set time period but does not have an obligation to buy.
origination fee	On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called discount points. One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.
owner financing	A property purchase transaction in which the property seller provides all or part of the financing.
partial payment	A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.
PITI	This stands for principal, interest, taxes and insurance. If you have an impounded loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio.
point	A point is 1 percent of the amount of the mortgage.
power of attorney	A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
pre-approval	A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification
prepayment penalty	A fee that may be charged to a borrower who pays off a loan before it is due.
pre-qualification	This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.
prime rate	The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.
principal	The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
private mortgage insurance (PMI)	Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
promissory note	A written promise to repay a specified amount over a specified period of time.
public auction	A meeting in an announced public location to sell property to repay a mortgage that is in default.
purchase agreement	A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Quit Claim Deed	A quit claim deed is a legal document by which a person releases or "quits" any claim that they may have had to property. Of the different types of deeds, the quit-claim has the least assurance that the person receiving it will actually get any rights. The person who provides a quit-claim deed makes no warranty or representation that they actually own anything. The quit-claim merely provides that whatever they had or may have had, they are conveying it. Other types of deeds are judicial deeds, warranty deeds, and sheriff's deeds.
real estate agent	A person licensed to negotiate and transact the sale of real estate.
Real Estate Investment Trust	A company that purchases and manages real estate or real estate loans, using money invested by its shareholders. (REIT)
Realtor	A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
recorder	The public official who keeps records of transactions that affect real property in the area. Sometimes known as a Registrar of Deeds or County Clerk .
REIT	See Real Estate Investment Trust
remaining balance	The amount of principal that has not yet been repaid.
remaining term	The original amortization term minus the number of payments that have been applied.
rent loss insurance	Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
repayment plan	An arrangement made to repay delinquent installments or advances.
sale-leaseback	A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
second mortgage	A mortgage that has a lien position subordinate to the first mortgage.
secondary market	The buying and selling of existing mortgages, usually as part of a pool of mortgages.
secured loan	A loan that is backed by collateral.
security	The property that will be pledged as collateral for a loan.
seller carry-back	An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.
subdivision	A housing development that is created by dividing a tract of land into individual lots for sale or lease.
subordinate financing	Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
survey	A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
third-party origination	A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.
title	A legal document evidencing a person's right to or ownership of a property.
title company	A company that specializes in examining and insuring titles to real estate.
title insurance	Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
title search	A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
transfer of ownership	Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property subject to the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.
transfer tax	State or local tax payable when title passes from one owner to another.
Treasury index	An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.
trustee	A fiduciary that holds or controls property for the benefit of another.
Truth-in-Lending	A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
two- to four-family property	A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
two-step mortgage	An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.
Underwriting	The act of applying formal guidelines that provides qualitative and quantitative standards for determining whether or not a loan should be approved.
Undivided Interest	An ownership right to use and possession of a property that is shared among co-owners, with no one co-owner having exclusive rights to any portion of the property.
Unencumbered Property	Real estate that is owned free and clear.
Unrecorded Deed	An instrument that transfers title from one party (grantor) to another party (grantee) without providing public notice of the change in ownership.
Veterans Administration (VA)	An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.