Homes For Sale in RI
○ Buyers Representation
○ Short Sales
○ Bank Owned
○ Luxury Homes
○ Relocation Assistance
Rhode Island Homes For Sale!
Search properties in all of RI... whether it's in Providence, Cranston, Johnston, Smithfield, Warwick, or any where else in RI you'll find the MLS Listings here! schedule showings, set alerts to your email or cell phone, and more...

Mortgage Glossary

A B C D E F G H I J L M N P R S T U V W Z


Affordability - This is an estimate as to how much a person can afford in order to purchase a home. Affordability gives the consumer a possible price that they could be approved for and pay for a house, and the mortgage required to pay that amount.

Agency Disclosure - Most states require that an agent discloses which side they are working for in the real estate process. Either a buyers' agent, meaning the agent is working in the interest of the buyer, or the sellers' agent where the agent is solely working in the interest of the seller.

Amortization - The process of repayment of a loan with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time, the loan balance declines by the amount of the scheduled payment, plus the amount of any extra payment. The scheduled payment less the interest equals amortization.

Amount Finance - This figure is used to calculate your APR. It represents your loan amount minus any prepaid finance charges and assumes you will keep the loan to maturity and make only the required monthly payments.

Annual Percentage Rate - There are two interest rates applied to your loan: the Actual Interest Rate and the Annual Percentage Rate. The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the "note rate"), and is the rate used to calculate your monthly payments. The amount of interest you pay, as determined by your Actual Rate, is only one of the costs associated with your loan; there may be others. The Annual Percentage Rate (APR) includes both your interest and any additional costs or prepaid finance charges you might pay such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.

Application Fee - Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges. The fee is usually $0 - $500. and is typically applied towards your closing costs.

Appraisal - An appraisal is a written analysis of the estimated value of your property. A qualified appraiser who has knowledge, experience and insight into the marketplace prepares the document. It demonstrates approximate fair market value based on recent sales in your neighborhood and is required to purchase or refinance your new home or property. An appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraisal Fee - A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific date. This fee is paid to the outside appraisal company to objectively determine the fair market value of your property. This fee varies based on the location and type of your property. Typically $225 - $450

Assignment - The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.

Assignment Recording Fee - In many instances, after closing the lender transfers your loan to a specialized loan "servicer" who handles the collection of your monthly payments. The Assignment Fee covers the cost of recording this transfer at the local recording office.

Assumption - A method of selling real estate where the buyer of the property agrees to become responsible for the repayment of an existing loan on the property.

back to top


Backup offer - An alternate bid or secondary offer for a property that will be accepted if the first fails.

Balloon mortgage - Balloon mortgage loans are short-term fixed-rate loans with fixed monthly payments for a set number of years followed by one large final balloon payment for all of the remainder of the principal. Typically, the balloon payment may be due at the end of five, seven, or ten years. Borrowers with balloon loans may have the right to refinance the loan when the balloon payment is due, but the right to refinance is not guaranteed.

Bankruptcy - A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts. The person's assets are then turned over to a trustee and used to payoff outstanding bills.

Base loan amount - The foundation loan amount upon which loan payments are based. If any other charges accrue, those costs will be added to the base loan amount.

Bi-monthly Mortgage - A mortgage on which the borrower pays half of the monthly payment on the first day of the month and the remaining half on the 15th of that same month.

Bi-weekly Mortgage - A mortgage on which the borrower pays half the monthly payment every two weeks.

Borrower - An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.

Broker - A person who is licensed to handle property transactions and acts as a go-between for buyers and sellers. Brokers also assist on negotiating contracts.

Broker Processing Fee - The fee charged to you to have your file packaged and handed over to a selected lender. Typically is about $575 - $1000

Buydown Mortgage - A mortgage loan with a below-market rate for a period of time, usually one to three years. A borrower may want this option because they expect their earnings to go up but want a lower payment right now.

Buyer's Marketer - Market conditions that favor buyers. With more sellers than buyers in the market, sellers may be forced to make substantial price concessions.

back to top


Call Option - A provision of a note that allows the lender to require repayment of the loan in full before the end of the loan term. The option may be exercised due to breach of the terms of the loan or at the discretion of the lender.

Cash Out - Any cash received when you get a new loan that is larger than the remaining balance of your current mortgage, based upon the equity you have already built up in the house. The cash out amount is calculated by subtracting the sum of the old loan and fees from the new mortgage loan. For example, if your existing loan is $100,000, you might refinance it with a loan of $120,000. After you pay off your current loan ($100,000) and any loan-origination costs for the new loan (for example $2,000 in points), you would be left with $18,000 cash out. Cash-out loans may not be available for all types of property.

Ceiling - The maximum allowable interest rate of an adjustable rate mortgage.

Certificate of Title - This document shows that the property in question belongs to the current owner. It should be provided by a qualified source such as a title company. The certificate of title however does not offer the protection given by title insurance.

Cosing (or Settlement) - The settlement or closing is the conclusion of your real estate transaction. It includes the delivery of your security instrument, signing of your legal documents and the disbursement of the funds necessary to the sale of your home or loan transaction (refinance). A closing statement is issued which is a document that is used in a real estate transaction to outline the fees, insurance, commissions, and other costs that are associated with a transfer of ownership to occur. This is sometimes referred as "settlement statement" and is commonly prepared by the closing agent.

Closing Costs - Also known as settlement costs, these costs are for services that must be performed to process and close your loan application. Examples include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, taxes, and surveying fees. Closing cost vary by geographic location.

Collateral - Assets (such as your home) pledged as security for a debt, however the borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust

Commission Fee - Money paid to a real estate agent or broker for negotiating a real estate or loan transaction. Salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more.

Commitment - A promise to lend and a statement by the lender of the terms and conditions under which a loan is made.

Comparables - An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Comparative Market Analysis - An informal estimate of market value that a real estate agent or broker calculates based on sales of comparable properties. An appraisal or a comparative market analysis are the most accurate ways to determine what your home is worth.

Condominium - A real estate project in which each unit owner holds title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas. The condominium may be attached or detached. The homeowners association dues are included in the total monthly mortgage payment for qualifying purposes. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

Confirming Loan - A mortgage loan that meets all requirements to be eligible for purchase by federal agencies such as Fannie Mae and Freddie Mac. The maximum conforming loan amount is $300,700 for a one-unit property ($451,050 in Alaska, Hawaii and the Virgin Islands).

Contingency - A condition that must be satisfied before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Conventional Loan - Loans that are not made under any government housing program; they are not subject to the restrictions of government housing programs, such as loan size limits.

Conversation Clause - A provision in some ARMs that allows you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate will be set at current rates, and there may be a charge for the conversion feature.

Convertible ARM - A type of ARM loan with the option to convert to a fixed-rate loan during a given time period.

Cooperative (or Co-Op) - A multi-unit housing complex that allows multiple owners that allows shares in the cooperative corporation that owns the property, each resident in the co-op has the right to occupy a specific unit or apartment.

Cost of Funds Index (or COFI) - An index of the weighted-average interest rate paid by savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank District. COFI is one of the indexes that are used to determine interest rate changes for certain adjustable rate mortgages.

Credit Bureau - A credit bureau is a clearinghouse for credit history information. Credit grantors provide the bureau with factual information on how their credit customers pay their bills. The bureau regularly assembles this information, along with public record information obtained from courthouses around the country, into a "file" on each consumer. Equifax, Experian, and Trans Union are three largest credit bureaus in the United States.

Credit Report - This is a report that states your credit scores based on the results of the three major national credit Bureaus (Equifax, Experian, and TransUnion.) An average of the three is used to determine the score. It helps determine whether a client is eligible for a mortgage as well as the interest rate. The higher the score, the easier it is for that person to obtain a loan. Usually about $15 - $30

Credit Scores - A statistical method of assessing your creditworthiness. Your credit card history; amount of outstanding debt; the type of credit you use; negative information such as bankruptcies or late payments; collection accounts and judgments; too little credit history and too many credit lines with the maximum amount borrowed are all included in credit-scoring models to determine your credit score.

back to top


Debt to Income Ratio - The comparison of your gross income to housing as compared to your non-housing expenses. The FHA usually requires monthly mortgage payment to be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed - Legal document with which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.

Discount Points (or Points) - Points are an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower your interest rate. However, the more points you pay, the more cash you need up front since points are paid in cash at closing. Generally 0 - 2% of loan

Document Preparation Fee - Occasionally companies charge this to prepare the loan closing documents. This fee covers the cost of this service.

Down Payment - The amount of your home's purchase price you need to supply up front in cash to get your loan. For conventional loans, you should strive for a down payment that's at least 20% of your home's value, since lenders generally do not require private mortgage insurance with a down payment of at least 20% of your home's purchase price. (Note, however, that FHA and VA loans have different policies regarding insurance.)

Due On Sale Clause - Provision in a mortgage or deed of trust allowing the lender to demand immediate payment of the loan balance upon sale of the property.

Duplex - Owner occupied property for more than one family.

back to top


Earnest Money - Deposit made by a buyer towards the down payment in evidence of good faith when the purchase agreement is signed. The deposit becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Escrow - A transaction in which a third party acts as the agent for seller and buyer, or for borrower and lender, in handling legal documents and disbursement of funds. Also refers to a special account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insurance. The lender disburses escrow account funds on behalf of the borrower when they become due. Also known as Impound Account.

Estimated Closing Fee - An estimate of the fees that must be paid on or before the closing date by the buyer and/or seller for services, taxes and items necessary to obtain mortgage. These fees will average between 2% and 5% of the loan amount and vary by lender, property location, and type of mortgage. Some fees are one-time expenses and some are recurring.

Equity - The difference between the current market value of a property and the total debt obligations against the property. On a new mortgage loan, the down payment represents the equity in the property.

Express Courier Fee - This fee covers the cost of an overnight courier to expedite the payoff of the existing loan. About $30.

back to top


Fannie Mae - The official name of the Federal National Mortgage Association, this agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

Federal Housing Association - A federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans. The FHA sets standards for construction and underwriting, however it does not lend money or plan or construct housing.

Federal Housing Association (or FHA) Mortgage - A low down payment loan that is insured against loss by the Federal Housing Administration. The borrower pays an insurance premium and the loan amount is usually limited.

Federal Reserve Board - The 7-member Board of Governors that oversees Federal Reserve Banks, establishes monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms. also called the Fed.

Finance Charge - Your finance charge is the total of all the interest you would pay over the entire life of the loan, assuming you kept the loan to maturity, as well as all prepaid finance charges. Loan charges include origination fees, discount points, mortgage insurance, and other applicable charges. If the seller pays any of these charges, they cannot be included in the finance charge. If you pre-pay any principal during your loan, your monthly payments remain the same, but your total finance charge will be reduced.

Financial Statement - The financial summary of a person's or a company's financial situation. The statement includes a person's assets and liabilities for a given date and a company's Profit and Loss Statement for a given date.

FICO (or Fair Isaac & Co) - The most common credit-scoring model used by lenders, it is also known as a Fair, Isaac score. Your FICO can range from 200 to 900. According to this model, the higher your score, the less likely you are to default on your loan.

First Mortgage - A mortgage that is in first lien position, taking priority over all other liens. In the case of a foreclosure, the first mortgage will be repaid before any other mortgages.

Fixed Rate Mortgage - An interest rate that is fixed for the term of the loan, 15 year and 30 year loans are the most common types. Also called a traditional loan.

Flood Certification Fee - Federal law requires that you obtain flood hazard insurance if your property lies in a flood zone. A flood determination company is used to identify if your house is located in a flood zone. The flood certification fee covers the cost. If your house is located in a flood zone, you will be required to purchase Flood Insurance.

Flood Insurance - Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance.

Foreclosure (or Repossession) - Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default.

Freddie Mac - This agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

back to top


Good Faith Estimate - Written estimate of the settlement costs the borrower will likely have to pay at closing. Under the Real Estate Settlement Procedures Act (RESPA), the lender is required to provide this disclosure to the borrower within three days of receiving a loan application.

Government Recording Fee - This is a fee paid to your local county recording office for recording your mortgage lien, and in the event of a purchase transaction, the deed that transfers title. Fees for recording vary by county and are set by state and local governments.

Grace Period - Period of time during which a loan payment may be made after its due date without incurring a late penalty. The grace period is specified as part of the terms of the loan in the Note. Grace periods apply only to mortgages on which interest is calculated monthly. Simple interest mortgages do not have a grace period because interest accrues daily.

Graduate Mortgage Payment - A mortgage that requires borrowers make larger payments to the loan for specified periods. The GPM starts off low for the first few months, but gradually rises for the next few months but then it remains constant at the fully amortized level.

Gross Income - Total income before taxes or expenses are deducted.

Guideline Ratio - There are two guideline ratios used to qualify you for a mortgage. The first is called the front-end ratio, or top ratio, and is calculated by dividing your new total monthly mortgage payment by your gross monthly income. Typically, this ratio should not exceed 28%. The second is called the back-end, or bottom ratio, and is equal to your new total monthly mortgage payment plus your total monthly debt divided by your gross monthly income. Typically, this ratio should not exceed 36%.

back to top


Home Equity Line of Credit - A home equity line of credit is a credit line that is kept open and restored as you pay off what is owed. An equity line of credit also has a high credit limit similar to a credit card that you are allowed to draw upon as needed.

Homeowners Insurance - Just as you insure your automobile to protect against theft and damage, you insure your home. Homeowners insurance is required by all lenders to protect their investment, and must be obtained before closing. In most cases, coverage must be equal to the loan balance, or the value of the home. Varies - $350 and up, a standard policy insures the home and the homeowners possessions.

Housing Expense Ratio - The percentage of gross monthly income devoted to housing costs. This is a method used in qualifying borrowers.

Housing and Urban (or HUD) - Housing and Urban Development, the U.S. government agency established to implement federal housing and community development programs; oversees the Federal Housing Administration.

back to top


Inspection Fee - A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. This makes the potential buyer aware of any potential hazards or home repairs that may be needed. A typical inspection costs around $225 - $450.

Interest - The fee a lender charges for permitting the borrower to use their money for a specific length of time.

Interest Adjustment - The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage. Let's say that the closing date on your new house is August 10th - but your mortgage payments are on the 15th of each month (so your first payment is calculated from August 15th and paid on September 15th). That leaves four days (August 10th to 14th) that aren't accounted for in your first mortgage payment. You have to make an extra payment to make up for these four days; the payment is generally due on your closing date. You can avoid all this by arranging to make your first mortgage payment exactly one payment period (e.g., one month) after your closing date.

Interest Only Mortgage - An interest only mortgage is one that gives you the option of paying just the interest or the interest and as much principal as you want in any given month during an initial period of time. Interest only loans can be 30-year fixed-rate mortgages or adjustable rate mortgages.

Interest Rate - The rate of interest a lender receives for permitting the borrower to use money for a specific length of time. The rate is calculated by dividing the total amount of interest charged by the loan amount.

Interest Rate Cap - Consumer safeguards that limit the amount the interest rate on an ARM loan can change in an adjustment interval and/or over the life of the loan. For example, if your per-period cap is 1% and your current rate is 7%, then your newly adjusted rate must fall between 6% and 8% regardless of actual changes in the index. The interest rate ceiling is the highest interest rate that you can receive under an Adjustable Rate Mortgage. The interest rate floor is the lowest interest rate that you can receive under the ARM. Floors are less likely than ceilings.

back to top


Joint Liability - Liability shared among two or more people, each of whom is liable for the full debt.

Joint Tendency - A form of ownership of property giving each person equal interest in the property, including rights of survivorship.

Jumbo Mortgage - A mortgage larger than the limits set by Fannie Mae and Freddie Mac outlined as follows: Lower 48 States: 1 unit (i.e. a single family home): $333,700; 2 unit (i.e. a duplex) : $427,150; 3 unit: $516,300; 4 unit: $641,650; For Alaska and Hawaii: 1 unit (i.e. a single family home): $500,550; 2 unit (i.e. a duplex): $640,725; 3 unit: $774,450; 4 unit: $962,475 .

back to top


Legal Fees and Disbursement - Some of the legal costs associated with the sale or purchase of a property. It's in your best interest to engage the services of a real estate lawyer.

Lender - The bank, mortgage company, or mortgage broker offering the loan.

Lender Processing Fee - The lender processing fee covers the cost of analyzing your loan application and compiling and packaging the necessary supporting documentation to close your loan.

Lien - A legal claim by one person on the property of another for security for payment of a debt.

Loan Fraud - Loan Fraud occurs when trying to qualify for a better loan by giving false information.

Loan Origination Fee - Fee charged by a lender to cover administrative costs of processing a loan. This usually includes the evaluation, preparation, and submittal of the loan.

Loan-To-Value Ratio (or LTV) - The percentage of the loan amount to the appraised value (or the sales price, whichever is less) of the property. The Loan-to-Value Ratio and down payment are different ways of expressing the same set of facts. This is calculated by taking the amount to be borrowed divided by the value of the home. For example, Jane wants to buy her first house which costs $100,000. She has a down payment of $15,000 and needs to borrow the remaining $85,000. The loan-to-value is 85% ($85,000 divided by $100,000).

Lock or Lock-In - A lender's guarantee of an interest rate for a set period of time-usually between loan application approval and loan closing. The lock-in protects you against rate increases during that time.

London Interbank Offered Rate (or LIBOR) - The interest rate charged among banks in the foreign market for short-term loans to one another-a common index for ARM loans.

back to top


Manufactured Home - A factory assembled home built in units or sections that are transported to a permanent site and erected on a foundation. Manufactured Homes can range from small trailers to a large residence, manufactured homes are usually built without knowing where they will be sited, and are subject to a Federal building code administered by HUD.

Market Value - A factory assembled home built in units or sections that are transported to a permanent site and erected on a foundation. Manufactured Homes can range from small trailers to a large residence, manufactured homes are usually built without knowing where they will be sited, and are subject to a Federal building code administered by HUD.

Maturity - The date when the principal loan balance is due.

Maximum Cash Out - The maximum amount of money you are allowed to get back from your mortgage transaction based on the loan information provided and the amount of equity you have in your home.

Maximum Monthly Payment - As part of your Mortgage 1stuml; approval, you are given a maximum monthly payment for which you qualify based on the information you provided. This maximum payment is inclusive of the four major components of a typical mortgage payment: taxes, insurance, loan principal and interest.

Monthly Mortgage Payment - A monthly mortgage payment typically contains four parts called the PITI (principal, interest, taxes, and insurance). If you pay your taxes and insurance on your own, you pay only principal and interest to your lender.

Monthly Principle and Interest (or P&I) Payment - Principal and interest is the dollar portion to repay the loan. All interest that occurs is calculated on the current balance owing. The principal reduces the remaining balance of a mortgage.

Mortgage - A legal document by which real property is pledged as security for the repayment of a loan. Not to be confused with a mortgage loan.

Mortgage Broker - An individual or company that arranges financing for borrowers. The mortgage broker matches lenders with borrowers who meet the lenders criteria. The mortgage broker does not fund the loan but they do receive a payment from the lender for their services.

Mortgage Insurance - Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's appraised value. (Note, however, that FHA and VA loans have different insurance guidelines.)

Mortgage Note - Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage or deed of trust or other security instrument.

Mortgagor - (see borrower).

back to top


Negative Amortization - A loan payment schedule in which the outstanding principal balance of a loan goes up rather than down because the payments do not cover the full amount of interest due. The monthly shortfall in payment is added to the unpaid principal balance of the loan.

Non-Assumption Clause - A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.

Notice of Default - Written notice to a borrower that a default has occurred and that legal action may be taken.

back to top


Payment Cap - Consumer safeguards that limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, they may cause negative amortization.

Payment Schedule - The method for disclosing your payment schedule varies by loan type. For fixed-rate loans, the payment schedule indicates what your required monthly payment will be throughout the life of your loan. The payment schedule for VA, FHA, one-time MIP and uninsured conventional loans should also indicate a fixed monthly payment. The payment schedule for fixed-rate insured loans may gradually decrease over time due to a declining insurance premium. For adjustable rate loans, the payment schedules will vary by loan type and are based on conservative assumptions of future interest rates.

Periodic Cap - Consumer safeguard that limits the amount the interest rate on an adjustable rate mortgage (ARM) can change in an adjustment interval. This is a limit on the amount that payments can increase or decrease during any one adjustment period.

Principal, Interest, Taxes and Insurance (or PITI) - Abbreviation for Principal, Interest, Taxes and Insurance, the components of a monthly mortgage payment. Payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

Planned Unit Development - A planned unit development (PUD) is a project or subdivision that consists of common property and improvements that are owned and maintained by an owner's association for the benefit and use of the individual units within the project. For a project to qualify as a PUD, the owners' association must require automatic, non-severable membership for each individual unit owner, and provide for mandatory assessments. Contrast with condominium, where an individual actually owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development or association.

Points - See discount points

Power of Attorney - A legal document that authorizes one person to act on behalf of another. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time. In real estate this happens when a buyer or a seller is at another location but would like their friend or family member sign documents on their behalf.

Pre-Approval - The process of determining how much money a prospective homebuyer or refinancer will be eligible to borrow prior to application for a loan. A pre-approval includes a preliminary screening of a borrower's credit history. Information submitted during pre-approval is subject to verification at application.

Prepaid Expenses - Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

Prepaid Interest - Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

Prepaid Property Tax and Utility Adjustment - The amount you will owe if the person selling you the home has prepaid any property taxes or utility bills. The amount to reimburse them will be calculated based on the closing date.

Prepayment - Full or partial repayment of the principal before the contractual due date.

Prepayment Penalty - A prepayment penalty is a fee that is charged if the loan is paid off earlier than the specified term of the loan. Depending on your loan program and applicable state law, you may or may not incur a prepayment penalty. Contact your loan officer for specific information.

Prequalification - The process of finding out how much money you can afford to borrow based on how much you earn in income and how much in liquid assets and liabilities you have. This step is taken before actually applying for a loan.

Principal - The loans balance still owed to the lender or the loan amount borrowed from the lender, excluding interest.

Private Mortgage Insurance - Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's purchase price. (Note, however, that FHA and VA loans have different insurance guidelines.)

Property Survey - A legal description of your property and its location and dimensions. An up-to-date survey is usually required by your mortgage lender. If not available from the vendor, your lawyer can obtain the property survey for a fee.

Property Taxes - The taxes assessed on the property by the local government (e.g. city, county, village or township) for the various services provided to the property owner. Such services may include police and fire department services, garbage pick up and snow removal.

Purchase Agreement - Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

back to top


Rate Protection - Protection of the borrowers rate just in case rates rise during the time a borrower applies for the loan and the time the loan closes.

The Real Estate Settlement Procedures Act ( or RESPA) -RESPA is a federal law that gives consumers the right to review information about loan settlement costs after you apply for a loan and again at loan settlement. The law obliges lenders to provide these settlement costs only after application.

Real Financing Cost - The real financing cost is a consumer-oriented rate that takes into account specific costs, fees, potential rate changes and the projected amount of time you will have the loan. The fees and costs are distributed over the time you plan to be in the house, allowing you to do an apples-to-apples comparison of a variety of loan types. The real financing cost is not the APR. The APR assumes that you keep your loan for the entire term (e.g. 30 years for a 30-year fixed loan) and includes only some of your loan fees. The total financing cost takes into account all of your closing costs associated with your loan and also how long you plan to be in your house.

Real Property - Land and any improvements permanently affixed to it, such as buildings.

Refinance - The process of paying off one loan with the proceeds from a new loan secured by the same property. Refinancing is usually done to secure better loan terms like a lower interest rate than your current loan or a lower monthly payment. Refinancing can also be used as an alternative to a home equity loan to access cash.

Right to Recession - Under the provisions of the Truth-in-Lending Act, the borrower's right, on certain kinds of loans, to cancel the loan within three days of signing a mortgage.

back to top


Security - This refers to the address of the property being pledged as security for your loan.

Self Employed Borrower - The self employed borrower causes a more difficult mortgage process. This kind of borrower documents their income in alternative ways rather using information form an employer.

Settlement - (see closing)

Simple Interest - The interest calculated on a principal sum, not compounded on earned interest.

Single Family - A single-family home is a residence that houses one family.

Site Condominium - A detached single-family dwelling characterized as a site condominium by the way it is platted by the builder, however it is still considered a condominium.

Structural Improvements - A "Structural Improvement" is any permanent improvement made to your property that is not strictly for decorating purposes. Examples include: additions, new flooring, kitchen or bathroom upgrades, new windows and central air. Swimming pools are considered structural improvements only if they are in ground and your property is in a year round warm weather climate.

Survey - A mortgage survey is a bird's eye sketch of your property that shows the boundary lines of your lot, and details any encroachments between you and your neighbors.

Sweat Equity - Value added to a property in the form of labor or services by the owner rather than by cash.

back to top


Tax Lien - Claim against a property for unpaid taxes.

Term - The period of time which covers the life of the loan. For example, a 30 year fixed loan has a term of 30 years.

Title - Document that gives evidence of ownership of a property. Also indicates the rights of ownership and possession of the property. Individuals who will have legal ownership in the property are considered "on title" and will sign the mortgage and other documentation. A title may be obtained through a purchase, personal inheritance, or through the foreclosure of a mortgage.

Title Company - A company that insures title to property.

Title Company Closing Fee - This fee is paid to the title insurance company that conducts your closing and handles the transfer of funds among the parties.

Title Insurance - Title insurance protects a lender against any title dispute that may arise over a particular property. It is required to close on your home. You may also purchase owner's title insurance which protects you as the homeowners. Varies - generally between $175 - $875

Title Search - Examination of local real estate records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property

Total Payment - This is the total amount you will have paid over the life of the loan for principal, interest and prepaid finance charges, assuming you keep the loan to maturity and made only the required monthly payments.

Transfer Tax - Tax paid when title passes from one owner to another.

Truth-In-Lending Act - Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by a lender to a borrower after application. Also requires the right of rescission period.

back to top


Underwriting Fee - Underwriting is the process of determining the risks involved in a particular loan and establishing suitable terms and conditions for the loan. It includes a review of the potential borrower's credit history and a judgment of the quality of the property. The person who does this is called an underwriter. The underwriting fee covers the cost of evaluating your entire loan package, including your credit report and appraisal, to determine whether the lender can approve your loan request. Typically $195 - $795.

back to top


Variable Rate - Interest rate that changes periodically in relation to an index.

Variable Rate Mortgage - Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as, (but not always,) Treasury bill rates. If interest rates rise, your monthly payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an ARM loan. The initial rate is the rate charged during the first interval of this loan.

Veterans Affairs (or VA) Loans - Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are designed to make housing affordable for eligible U.S. veterans. VA loans are available to veterans, reservists, active-duty personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to purchase a home with no down payment, no cash reserve, no application fee, and lower closing costs than other financing options. The maximum VA loan amount is currently $203,000.

back to top


Walk Through - A final inspection of a home to check for problems that may need to be corrected before closing.

Wire Transfer Fee - On occasion, funds are transferred via the inter-bank wire transfer system to the client, your prior lender, and/or the title insurance company conducting your closing. This fee covers the cost of such transfer.

back to top


Zoning Ordinances (or Zoning Regulations) - Local law establishing building codes and usage regulations for properties in a specified area.

back to top

Copyright © 2006
Quicken Loans
America's Home Loan Experts ®

Contact Information
The RealPro Group
Connect Realty
1011 Smith Street
Providence, RI 02908
Tel: 401-709-4626
Fax:401-709-4627

Quick Links
homes for sale ri real estate agents in providence ri homes for sale on MLS listings in ri 1st time home buyers providence ri homes Buyers
relocate to ri homes for sale in Cranston RI properties for sale foreclosures in ri bank owned properties in ri real estate agents in providence ri move to rhode island Relocation
For sale by owner in ri homes for sale in Cranston RI real Estate agent in providence ri mls listings in warwick ri sell my house mls list my home on the market my homes sales fast

Opportunity Knocks