Craig McKenzie
Windermere Real Estate/ Whidbey Island
Craig McKenzie | Direct: 360-929-1712 | Toll Free: 1-877-944-3239 | Email: cmckenzie@windermere.com
Real Estate Language Part 3
Posted on February 22, 2008
Hello Again -
Well, its turning into a pretty busy year here for the Craig McKenzie Team. Although the year started off a bit slow, we seem to have created some strong, forward momentum, and are really seeing some positive changes in this market.
Our last two blog entries focused on the definitions of some more common real estate terms. There's one final installment, and then we'll wrap up this series. As always, if you have any questions about these definitions, don't hesitate to let us know.
Note rate: The interest rate stated in the legal document (note) used as evidence of the borrower's debt to the lender. The document also describes how the loan will be repaid.
Origination fee: Fee charged by the lender to process a loan application and underwrite the loan. It is usually 1 to 3 percent of the loan amount.
Points: The amount equal to 1 percent of the principal amount of the loan. For example, if the loan is $50,000, a point would be $500. Points are charged by the lender to increase the yield on a loan to make it comparable with other types of investments.
Rate lock-in: A guarantee that the interest rate will remain the same for a specified period of time. Whether the loan's interest rate index rises or falls during that period, the borrower pays the rate which was current at the time of the lock-in agreement.
Replacement cost: The cost of replacing property without deduction for depreciation.
Second mortgage: A mortgage placed on a property which has a second claim (or secondary rights of foreclosure) to a first mortgage on the property.
Secondary market: Investors who purchase loans from lending institutions, providing those institutions a secondary source of funds other than deposits from which the institutions can offer more loans.
Title insurance: A policy which insures current ownership of the property regardless of previous claims against the property and insures the lender's claims on the property resulting from the loan.
Underwriting: A series of criteria used by the lender to determine whether a loan application should be approved or denied.
Wraparound mortgage: Seller keeps original mortgage. Buyer makes payments to seller, who forwards a portion to the lender holding the original mortgage.
Well, these are the last of the definitions, unless there are terms not listed here that you would like us to define. If so, just send your request to us @ mckenzie@whidbey.net. We'll respond to you as quickly as possible, and then add that to your list of definitions for future installments.
We hope that so far this year is proving to be successful for you, both personally and financially. Please check back again soon for more additions to The Craig McKenzie Team Blog.
Thanks!
Craig, Dawn & Tammi-
