Staten Island Property Real Estate Terms

Debt Ratios
The comparison of a buyer’s housing cost to his or her gross or net effective income, and the comparison of a buyer’s long-term debt to his or her gross or net effective income. The first ratio is housing ratio; the second ratio is total debt ratio.

Due-On-Sale Clause
A clause that requires a full payment of a mortgage or deed of trust when the secured property changes ownership.
Earnest Money
The portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.

Escrow
A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties’ instructions and assuming responsibility for handling all of the paperwork and distribution funds.

Equity
The difference between what is owed and what the property could be sold for.

FHA Loan
A loan insured by the Federal Housing Administration (of the Department of Housing and Urban Development).

Federal Home Loan Mortgage Corporation (FHLMC)
Called “Freddie Mac”; a part of the secondary market, particularly used to purchase loans from savings and loan lenders within the Federal Home Loan Bank Board.

Federal National Mortgage Association (FNMA)
Popularly known as “Fannie Mae”; a privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by the FHA or guaranteed by the VA, as well as conventional home mortgages.

Fee Simple
An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate.

Finance Charge
The total cost a borrower must pay, directly or indirectly, to obtain credit according to Regulation Z.

Fixed Rate Mortgage
A conventional loan with a single interest rate for the life of the loan.

Fully Indexed Rate
The maximum interest rate on an ARM that can be reached at the first adjustment.

Gift Letter
A letter from a relative stating that an amount will be gifted to the buyer, and that said amount is not to be repaid.

Government National Mortgage Association (GNMA)
Called “Ginnie Mae”; a government part of the secondary market that deals primarily in recycling VA and FHA mortgages, particularly those that are highly leveraged.

Graduated Payment Mortgage
A residential mortgage with monthly payments that start at a low level and increase at a predetermined rate.

Home Inspection Report
A qualified inspector’s report on a property’s overall condition. The report usually includes an evaluation of both the structure and mechanical systems.

Home Warranty Plan
Protection against failure of mechanical systems within the property. Usually includes plumbing, electrical, heating systems and installed appliances.

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