Home Inspection A professional evaluation of the structure and major systems home during the purchase contract inspection contingency period. If the buyer is not satisfied with the result of the inspection, (s)he can exit the contract with no penalty, as long as they do so before the inspection contingency expires. An inspection will usually entail a visual inspection of the roof, foundation, electrical system, plumbing, interior, exterior, and other major systems. Homeowners Insurance Insurance against loss or damage to the structure and contents of a home due to hazards, fire, smoke, theft, or vandalism. It usually does not cover flood or earthquake damage. Real estate purchased for the purpose of investment (rental, fix-and-flip, etc.), not for the purpose of occupancy by the owner. Investment Property Jumbo A loan with a balance too large to conform with Fannie Mae or Freddie Mac insurance requirements. Usually used to buy high-end, expensive homes. Usually requires strict underwriting and large down payments. A legal encumbrance on the title of a property, usually recorded on paper and filed with the applicable government entity, like the County Clerk. The owner of a lien on the property is entitled to seize the property through judicial foreclosure if the property owner defaults on certain obligations. A mortgage creates a lien, which the lender can use to foreclose the property if the borrower defaults on the loan. Other entities that can place liens on property include Homeowners’ Associations, contractors, and property tax assessors. Lien
Forbearance An agreement with the lender for the borrower to temporarily stop making payments and defer those payments to the end of the loan term. Foreclosure The judicial process whereby a lender seizes the title to the real estate asset as collateral for a mortgage loan that a borrower has defaulted on. If borrowers are still in the property when the foreclosure is executed, they and their possessions may be forcibly removed from the premises by law enforcement.
Government-Sponsored Enterprises (GSEs)
A quasi-governmental organization established to enhance the flow of credit (like mortgage loans) to specific economic sectors.
Hazard Insurance Insurance against damage to the structure of the home from natural hazards. It usually doesn’t cover floods or earthquakes, and it doesn’t cover personal property contained within the home.
Home Equity Line of Credit (HELOC)
A type of home loan where the lender extends a revolving line of credit, like a credit card, secured by the owner’s equity in the home. The homeowner can borrow against the line of credit, up to the credit limit, at will. The borrower doesn’t have to carry a balance on the HELOC, but will owe interest according to the APR of the loan if they do carry a balance. Contrast this with a mortgage loan, which begins as a lump-sum loan and gets repaid in regular installments.
RITA REALTOR | BROKERAGE 904-555-5555 | Rita@realtor.com | www.Authorify.com
LARRY LOAN OFFICER | OFFICE 904-555-1010 | Larry@loans.com | www.Authorify.com
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