A convertible adjustable rate mortgage (ARM) allows buyers to take advantage of low interest rates by receiving a loan at a “teaser” loan interest rate. Their monthly mortgage payment stays the same, but interest rates fluctuate, usually every six months.
A cost of funds index is an average of the regional interest expenses acquired by financial institutions. It’s used to calculate variable rate loans.
Covenants, conditions, and restrictions, or CC&Rs, are simply rules and property limitations of a planned community neighborhood.
Days on market is a measurement of the time that a particular listing has been on the market, defined as the total number of days the listing is on the active market before either an offer is accepted or the agreement between real estate broker and seller ends.
The debt-to-income ratio, or DTI ratio, is the percentage of the borrower’s gross monthly income allocated to monthly debt payments. Is used by lenders to determine borrowing risk.
A deed, or property deed, is a legal document that transfers property ownership from the seller to the buyer. A deed contains a description of the property and property lines. Both parties must sign the document to make it official.
A deed-in-lieu of foreclosure is a document transferring the title of a property from a homeowner to the bank that holds the mortgage. A homeowner might submit a deed-in-lieu of foreclosure if the bank has denied them a loan modification or short sale.
If a homeowner defaults on their loan, it means they have not paid the sum they agreed to. Typically, a mortgage default means the homeowner hasn’t made a home loan payment in 90 days or more.
A mortgage is considered delinquent when a scheduled payment is not made. If a payment is more than 30 days late, a lender might begin collection or foreclosure proceedings.
Discount points are also known as mortgage points. They’re fees homebuyers pay directly to the lender at the time of closing in exchange for reduced interest rates which can lower monthly mortgage payments. Discount points lower your interest rate in exchange for paying an upfront fee at closing.