New Jersey Real Estate from A – Z!

A cap is a hat, right? Not in real estate speak!  Real Estate speak can put anyone in a quandary, but you’ve got no worries when your local marketing specialist is also an interpreter of the language you need to buy or sell your New Jersey home successfully!

Adjustable Rate Mortgage; A loan with an interest rate that changes depending on the financial market rates.  Usually referred to as an ARM

Amortization; The debt reduction schedule where the interest and principle are reduced with each payment made

Annual Percentage Rate; The actual annual cost of money borrowed over the life of a loan.  This will include any service charges, interest rate, points paid, loan fees, personal mortgage insurance payments and any other items being paid as part of the monthly payment

Appraisal; The evaluation done by a licensed professional that designates the current market sale value of a property

Appreciation; The value increase of property over time

Assumption; When the rights and responsibilities of an existing loan on a property is able to be transferred to a new buyer in place of a new loan

Balloon Payment; The final payment due on a loan where the monthly payments over a short period of time (usually 5-15 years) leave a remaining balance due

Buy down; A payment made by a builder that reduces the mortgage obligation of a buyer

Cap; The amount an interest rate or a monthly payment can increase on an adjustable rate loan, usually for the life of the loan or during any monthly payment period

Certificate of Occupancy; The document necessary that shows a property meets local building codes and ordinances to be occupied, most often used in new builds

Closing; The event at which all legal documents are signed that transfer the title of a property from seller to buyer

Closing Costs; The price charged by a Title Company or Real Estate Attorney to close the purchase of real estate which usually includes transferring title and recording the new deed

Conditions, Covenants, and Restrictions;  commonly referred to as C,C & R’s, usually governed by a Homeowners Association which determine use and other standards to be adhered to by all owners within a certain subdivision

Condominium; Single family dwelling sharing common areas with others

Conventional Loan; Any mortgage made by a bank or entity that isn’t insured by a government agency

Convertibility; A loan which can be changed from an adjustable rate to a fixed rate at a later date

Cooperative; Ownership in a multi-unit complex where each owner holds shares of the entire complex of one unit

Credit Score; A number assigned to a borrower based on past credit history

Default; Failure to complete agreed upon terms of a contract or make agreed upon payments of a mortgage

Down payment; The amount of personal funds a buyer is investing in the purchase of a property

Due-on-Sale; A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of a property

Earnest Money; An initial payment that accompanies an offer to purchase, credited toward costs at closing that a buyer makes to show intent to follow through on a purchase

Easement;  A right-of-way granted by a property owner that allows others to access their land without trespass, usually granted to a utility company, sometimes mandatory by law

Equity; The difference between a properties current value and the balance of any mortgage due

Escrow; The account which handles funds such as Earnest Money payments on behalf of buyers and sellers until the closing of a transaction

Federal Housing Administration; commonly known as FHA, this is the federal agency that insures certain mortgages usually requiring less down payment than a conventional mortgage

Fixed Rate Mortgage; A mortgage where the interest rate does not change and is amortized over the life of the loan

Graduated Payment Mortgage; Abbreviated as GPM, this is a fixed-rate, fixed-schedule loan which starts with lower payments that gradually rise and involve negative amortization of the loan

Growing Equity Mortgage; also known as a Rapid Payoff Mortgage, this fixed-rate, fixed-schedule loan starts with one payment which rises annually and that increase reduces the principle balance on a rapid scale.  There is no negative amortization and may enable the borrower to pay off a 30-year loan in much less time, saving interest payments

Hazard Insurance; In addition to Homeowners insurance, this protects against loss due to fire, storms and other common hazards. Many lenders require borrowers to carry it in an amount at least equal to the mortgage

Index; The standard used to determine changes in monthly payments for an adjustable rate loan

Infrastructure; Public facilities and services which support residents of a city that includes roads, bridges, schools, sewer and water systems and utility services

Interest; The price charged by a lender to borrow money

Joint Tenancy; Ownership status in which each person named on a property title owns the property in equal proportion. If one dies, the other would automatically own the entire property in their name alone

Mortgage Broker; A licensed professional who represents many lenders and works with consumers to secure a mortgage for a property purchase

Mortgage Commitment; A formal letter given to a buyer by a lender in which the lender agrees to make a loan on a property under certain conditions and for a specific amount

Mortgage; The lender who makes a mortgage loan

Mortgage Loan; A contract in which the borrower’s property is pledged as collateral with payments amortized monthly over a specific time frame, often including amounts toward property taxes and insurance

Mortgage Origination Fee; Fee charged by the lender to offset costs of document preparation and servicing of a loan. Varies by lender

Negative Amortization; When the balance owed increases over time due to lower monthly payments that do not cover the full interest amount due

Note; What the formal document representing the existence of a debt is called

PITI; Abbreviation refers to the principal, interest, taxes, and insurance included in a loan payment

Point; A charge represented by a certain percentage of the principle loan amount. Points are a one-time charge assessed by the lender that lowers interest rate a certain amount

Prepayment; Payment of all or part of a debt prior to its due date

Principal; The original amount borrowed which does not include interest or other charges

Property Survey; Determines the boundaries of a property based on the legal description

Purchase and Sale Agreement; The written agreement between buyer and seller which details the terms, times, price and all other pertinent information outlining an offer to purchase real estate.  This becomes a legally binding contract when all parties to the sale have signed

Recording Fee; Cost to legally record the transfer of a property

RESPA; Abbreviation for the Real Estate Settlement Procedures Act which is a federal law that requires all mortgage lenders provide borrowers with full disclosure of all known or estimated settlement costs

R-Value; The insulation value of insulation material, higher numbers being higher insulation strength

Settlement; The closing of the real estate transaction

Tax Assessment; The value used to determine the amount of tax to be charged on a property

Tenancy in Common; Ownership type the gives all named parties equal but separate share requiring legal transfer for inheritance purposes (see Joint Tenancy)

Title; Legal deed or certificate of ownership

Transfer Taxes; Taxes levied on sale or transfer of property

TRID; stands for Truth in Lending Integrated Disclosure, governs the regulations of information that must be disclosed to a borrower and the time frame for those disclosures to be made

Veterans Administration (VA); A federal agency insuring mortgage loans for honorably discharged veterans and their surviving spouses

Walk-Through; A final visual inspection just prior to closing or settlement of a sale to verify property is in same or better condition as when the offer to purchase was made

Warranty; A written, verbal or implied promise guaranteeing the workmanship and performance of a product for a specific length of time

Zoning; Legal code determining type of building use or activities allowed within specific geographic areas determined by local government agencies

Please feel free to copy and paste these terms for a handy reference during your next real estate transaction.  For any other questions you may have about real estate, I’m just a click away!