GLOSSARY OF TERMS
Common terms that will come up throughout your buying process...
APPRAISAL: An independent expert contracted by your creditor to give an estimate of the value of your home. Do not confuse this with a home inspection.
CONSUMMATION: The final step in property purchase where the title is transferred from the seller to the buyer
CONTINGENCY: A contingency clause gives parties the right to back out of the contract under certain circumstances (i.e. home sale contingency, home inspection, property owners, or condo contingency, etc.
EARNEST MONEY DEPOSIT: Money put down by a potential buyer to show that they are serious about purchasing the home. It can become part of the down payment when the offer is accepted.
FOR SALE BY OWNER (FSBO): Homes which are not listed through the REIN system; usually offered for sale by the owner(s) of the home or foreclosure properties.
LOAN ORIGINATION: A creditor’s fee for the origination and processing of a loan.
MORTGAGE INSURANCE: (MIP, PMI or FUNDING FEE) - Insurance policy required by the creditor to protect the mortgage company in the event of default (non-payment) on the loan.
MORTGAGE COMMITMENT: A document or certificate which indicates you have begun the process of applying for a mortgage and which shows you are able to qualify for a loan in the amount that you are offering for the purchase of a property.
PICRA: Property Inspection Contingency Removal Addendum. This is used to address any non-cosmetic repairs that you would like to ask the seller to complete as a result of your home inspection.
PITI: Principal, interest, taxes and insurance. The components of a monthly mortgage payment.
POINTS: Charges by the creditor to adjust the effective rate of interest on a loan. Each discount point equals one percent of the loan amount.
POSSESSION: Occupancy of a home by the buyer. Possession usually occurs after the closing on the home.
PREPAIDS: Money collected at closing to start the escrow account to pay interest, taxes and insurance.
PRE-QUALIFYING: Pre-qualification for a mortgage is obtained by meeting with a creditor and discussing your financial situation to determine the price range and loan type which will be comfortable for your needs.
RATIFIED: All parties (buyer and seller) have agreed to all terms and have signed the contract. Time frames noted in your contract will begin when ratification occurs.
REAL ESTATE INFORMATION NETWORK (REIN): The local computerized system of all homes listed for sale and/or sold through REALTORS®. In our market, less than 5% of all homes sold are not listed in the REIN system.
TITLE INSURANCE: Insures against possible defects in the title which were undiscovered in a title search.
TOTAL MARKET OVERVIEW: A specialized report which shows market trends based on city, property type and price range.
UNDER CONTRACT/PENDING: Once all contractual contingencies have been removed.
UNDERWRITING: Process of evaluating a loan application to determine the risks involved for the creditor.
VA/FHA/CONVENTIONAL EXHIBIT: A part of the Purchase Agreement which requires that a property appraise at or above the sales price. This offers you, the buyer, protection against paying more for a property than it is worth.
WALK THROUGH INSPECTION: Your final inspection by the buyer completed within a day or two of closing. This inspection allows the buyer to check all appliances, outlets, heating, air conditioning, plumbing, etc. to insure these items are in working order prior to closing on the property.