Real Estate Terms
Simple Real Estate Definitions : Escrow Account
October 20, 2009 by MikeRosen · Leave a Comment
An escrow account is a designated savings account into which funds get deposited for a specific purpose.
With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.
Escrow accounts are managed and disbursed by lenders.
When a homeowner “escrows” his mortgage, along with his scheduled monthly [...]
What Are Discount Points?
June 1, 2009 by MikeRosen · Leave a Comment
Most often referred to as just-plain “points”, discount points are an up-front fee charged by a mortgage lender in exchange for a lower mortgage rate.
The dollar value of one point is one percent on the loan size. Discount points appear on Good Faith Estimates and HUD-1 Settlement Statements on Line 802.
Historically, each 1 point paid [...]
Simple Real Estate Definitions : Amortization
October 22, 2008 by MikeRosen · Leave a Comment
In the widest definition possible, amortization (pronounced: am-ohr-tih-ZAY-shun) is the scheduled process by which a loan’s principal balance pays down to $0.
The opposite of an amortizing loan is an interest only loan for which there is no scheduled principal repayment schedule.
With respect to mortgages, amortization is what determines how much of a monthly payment goes [...]
Simple Real Estate Definitions : Home Inspection
September 4, 2008 by MikeRosen · 2 Comments
A home inspection is a complete, top-to-bottom, visual check-up of the structure and systems of a house.
It is meant to be an objective determination of a home’s condition.
A home inspection usually takes 3-6 hours to complete, depending on the size of the home.
During the inspection process, the inspector will examine all of the following [...]
Simple Real Estate Definitions : PITI
June 24, 2008 by MikeRosen · Leave a Comment
Most homeowners make four housing-related payments each month:
Principal on a mortgage
Interest on a mortgage
Taxes on the real estate owned
Insurance for the real estate owned
Collectively, these payments are known by the acronym PITI but don’t let it fool you — a homeowner’s monthly expenses are still called PITI even if one or more of the elements [...]
Simple Real Estate Definitions : Loan-to-Value
May 21, 2008 by MikeRosen · Leave a Comment
Loan-to-value is a math formula that represents the relationship between how much a home is “worth” and how much money is borrowed against it.
Loan-to-value is often abbreviated as “LTV” and is one of the many factors that lenders consider when underwriting a mortgage application.
The math formula is straightforward:
In the LTV equation, Loan Size is [...]
Simple Real Estate Definitions: Average Days On Market
April 18, 2008 by MikeRosen · Leave a Comment
In the world of real estate, Days On Market is the number of days between when a home lists for sale and when it goes under contract.
It is often abbreviated as DOM.
Average Days on Market is a similar statistic but instead of applying to one home in particular, it applies to all homes in a [...]
Simple Real Estate Definitions: Discount Points
April 2, 2008 by MikeRosen · Leave a Comment
More commonly called “points”, discount points are up-front fees charged by mortgage lenders in exchange for lower mortgage rates.
The cost of one point is one percent on the loan size and discount points appear on Line 802 of the HUD-1 Settlement Statement.
As a general guideline, each point paid lowers a mortgage lender’s offered interest rate [...]
Why “Median Sales Price” Reports Aren’t Helpful For Housing Markets
March 27, 2008 by MikeRosen · Leave a Comment
Each month, the Commerce Department and the National Association of REALTORS release national housing data.
The former’s release is called the New Residential Sales report and the latter’s is called the Existing Home Sales report.
Both reports highlight the “median sales price”, the point at which half of the homes in the U.S. sold for more, and [...]
Real Estate Term: Earnest Money
February 26, 2008 by MikeRosen · Leave a Comment
When a buyer and seller reach agreement on a home sale, the buyer typically puts a small amount of money into a trust account.
This up-front deposit is more commonly known as “earnest money”.
A sales contract’s earnest money requirement will vary from contract to contract. It can be as high as 10 percent of the purchase [...]
