Mortgage Terminology: R-Z for New Home Buyers
July 3, 2014
Over the last few weeks we've been reviewing mortgage terminology to assist in the understanding of a home purchase. For some people the most daunting task in purchasing a new home can be understanding the language used in the whole mortgage process. We've tried to put together all the building blocks that go into the loan application and lending process to make it easier when you purchase real estate. Whether here in Oklahoma city, or any other market, the mortgage terminology is the same. RESPA - Real Estate Settlement Procedures Act. This is a law that governs acceptable practices and fees in real estate transactions. Recording fee - When a home is purchased a fee is paid to an agent for entering the property sale into public records. Sale agreement - The contract signed by both parties of the sale stating the terms and conditions under which a property will be sold. Seller's market - Often the terms buyers and sellers markets are used to explain when market conditions favor one or the other party in a sale. When there are more buyers than sellers in the market, sellers have the negotiating power as demand exceeds supply. Settlement (or Closing) - When all conditions are met and the purchase is ready to take place the buyer, seller and lender (or their agents) meet to exchange property and funds to complete the sale. Settlement sheet (HUD-1) - This is the breakdown of costs payable at closing that determines the seller's net proceeds and the buyer's net payment. Survey - A measurement of land, prepared by a licensed surveyor, showing a property's boundaries, elevations, improvements and relationship to surrounding tracts. Title - Documentation showing ownership, rights and possession of a given property. Title insurance - Insurance that protects the lender (lender's policy) or buyer (owner's policy) against loss due to disputes over property ownership. Title search - This is an examination of municipal records to ensure that the seller is the legal owner of a property and that there are no liens other claims against the property. Truth-in-Lending Act - A federal law requiring written disclosure of the terms of a mortgage (including APR and other charges) by a lender to a borrower after application. Underwriting - The process of verifying data and evaluating a loan application. The underwriter gives the final loan approval. VA Loan - A home loan available to veterans with little or no down payment and guaranteed by the U.S. Veterans' Administration. Walk-through - A final inspection of a home. Often new homebuilders have a final walk-through to check for problems that may need to be corrected before closing. In order to review other terms please check out part 1, part 2, and part 3 of this list to help you fully understand many of the terms you'll come across when applying for home loans and working with a lender to purchase your new home.