Real Estate Agent A real estate professional who acts as broker in a real estate transaction, acting as an intermediary between the buyer and the seller. An agent is usually hired by and loyal to one party in the transaction, and both the buyer and the seller may be represented by a real estate agent. Recast/Re-Amortize A mortgage recast happens if the borrower makes a large lump-sum payment of principal. The lender will then re-amortize the mortgage — recalculate the new minimum payment, based on the new reduced balance, to bring the balance to $0 by the end of the loan. The lender may then reset the minimum mortgage payment to the lower number that will fully amortize the loan after the recast. Refinance Taking out a mortgage or HELOC on a property that the borrower already owns, rather than taking out a loan for the purchase of a new home. This may be a second mortgage, it may repay and replace the first mortgage, or it may be taken if the borrower has no mortgage at all and owns the property free-and-clear. Repayment Plan The contractual plan for the borrower to repay the loan. If the loan is fully amortized, the repayment plan will bring the loan balance to $0 at maturity. In a balloon loan, the repayment plan may leave a balance due at maturity, requiring a balloon payment at that time. Second Mortgage A borrower may take more than one mortgage out on a property. In a second mortgage, the lien is considered to be junior to the first mortgage — meaning the first lender has the right to foreclose in the event of default before the second lender. This makes second mortgages much more risky for the lender. As such, second mortgages usually carry higher interest rates and require strict screening of the borrower.
Prequalification An informal estimation of how much a borrower is eligible to borrow. Little documentation or verification is required for a lender to issue a prequalification, so it is not binding and carries little weight. Principal The balance still due on the loan. In a fixed-rate loan, each mortgage payment includes some paydown of principal. If the loan is fully amortized, the principal is paid down to $0 by the end of the loan term. If a principal balance is left due at the end of the loan term, a “balloon payment” of the remaining principal may be required at that time. Private-Label Mortgages A private-label mortgage is a mortgage that is not insured by one of the common government mortgage guarantors, like Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), US Department of Veterans Affairs (VA), US Department of Agriculture (USDA), or a GSE. This makes the loans more risky for the lender.
Private Mortgage Insurance (PMI)
Private Mortgage Insurance. Since the Great Recession of 2008, borrowers who put less than 20% down are required to buy private mortgage insurance (PMI) at their expense. Property Taxes Taxes assessed by the county for the privilege of owning property, due every year. Property taxes are usually assessed as a percentage of the value of the property, based on an appraisal by a country appraiser. If an owner does not pay his property taxes, the county can put a lien on the property and eventually foreclose the property. This lien is “senior” to any mortgage, meaning the county has the right to foreclose first and leave the lender with no collateral. This is why many lenders require the borrower to pay funds into an escrow account to cover property taxes.
RITA REALTOR | BROKERAGE 904-555-5555 | Rita@realtor.com | www.Authorify.com
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