In working with buyers and sellers in the Kansas City market I find that there are a few things that people don't find as common terms in the real estate world that are just not common in other arenas. I therefore have given you a brief A to Z on items that will be useful for you in selling or buying your next home! Some of these are very basic and mean the same thing in or outside of real estate; a quick read to help everyone.
- A - ARM (Adjustable Rate Mortgage) - A mortgage loan in which the interest rate may be adjusted periodically, following the rise or fall of interest rates as measured by a published index. Most ARMs specify the frequency of rate adjustment (the "adjustment period"), and "caps" -- limits to the amount of rate change in any single adjustment, and to the maximum interest rate allowed during the life of the loan.
- B - Basis Point - One 100th of 1%.
- C - Chattel - Personal property
- D - Down Payment - The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
- E - Escrow Amount - An account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses.
- F - Fannie Mae (FNMA) - A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. If you have a foreclosure property from Fannie Mae it would be listed on http://www.homepath.com and The Bubb Cribb Team is a licensed / registered Fannie Mae partner / buyers agent.
- F - Freddie Mac (FHLMC) - Federal Home Mortgage Corporation. A US agency which purchases first mortgages on residences. 2nd largest purchaser of mortgages. If you have a foreclosure property from Freddie Mac it would be listed on http://homesteps.com and The Bubb Cribb Team is a licensed / registered Freddie Mac partner / buyers agent.
- G - Grace Period - A period of time after the regular due date of a loan payment during which a late payment penalty is not charged.
- H - HUD (HUD - 1 Settlement Statement) - A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."
- I - Interim Financing - A loan, including a construction loan, used when the property owner is unable or unwilling to arrange permanent financing. Generally arranged for less than 3 years, used to gain time for financial or market conditions to improve.
- J - Jumbo Loan - A loan for greater than Fannie Mae’s and Freddie Mac’s loan limits. Also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans. The non-conforming loan limit for a standard conventional loan is $417,000 - all loans above this rate are considered "Jumbo Loans".
- K - Kansas City - The best place to live, buy & sell real estate in the United States (shameless plug)... really is a great town - if you want to learn more about #KC go to http://visitkc.com and be sure to check out the Summer Bucket List for fun ideas to do!
- L - Loan To Value (LTV) - The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.
- M - Mortgage Insurance - A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan; also called private mortgage insurance (PMI).
- N - Novation - The acceptance of a new contract in substitution for the old contract, with the intent that the new contract will extinguish the original contract. Sometimes encountered in transfers of deeds of trust, where the new owner assumes the debt and the lender, through novation, releases the former owner from any liability under the original promissory note and deed of trust.
- O - Origination Fee - A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount.
- Q - Quitclaim Deed - A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made. Many times in divorce or separation of couples with joint ownership of a property a quitclaim deed is used to transfer property from one party to the other.
- R - Right of First Refusal - A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
- S - Settlement Statement - See HUD - 1 Statement - Literally the same thing.
- S - Setback - The minimum distance a house or building must be from the lot line. (S was short so we went ahead and did two). :)
- T - Tax Lien - Two words you do not want to hear in real estate... A claim against real estate for the amount of the unpaid taxes. In most instances these will be uncovered by Title Companies researching the sale; we are lucky to be working with two great companies, Premier Title Solutions, and Kansas City Title - An affiliated company to Reece & Nichols.
- U - Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself. Lending companies may have underwriting happen within their organization or go outside their organization if they will be selling the loan to another company.
- V - VA Mortgate - A mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage. Veteran / VA mortgages can be enacted with ZERO money down as a down payment (thank you Veteran's) but they are restricted by some additional fees to ensure loans are paid back.
- W - Wraparound Loan - A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.
- X - X (As A Signature) - The signature of someone incapable of writing - this has mostly been replaced with digital signatures, but if used does require a witness.
- Y - Yield - The effective return on an investment, as paid in dividends or interest, used to find out the outcome of an investment in commercial or residential property upon a sale or appraisal for sale.
- Z - Zero Lot Line - A zoning regulation which allows certain properties to have buildings placed up to the line dividing separate properties.
If you are looking to sell and list your home or to put an offer in on a new home, now is the time and the Bubb Cribb Team would love to help you!
The Bubb Cribb Team at Reece & Nichols would love to be your neighborhood experts in buying or selling your home in any part of Kansas City. We have great area specialists in Union Hill, Hyde Park, Brookside, Sunset Hills, Waldo, Mission Hills, Prairie Village, Overland Park, Fairway, Leawood, Kansas City North, Lees' Summit and more; please contact Christopher Cribb, Megan Bubb Cribb or Eric Bubb for assistance!
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