Glossary of Real Estate Terms M thru P
Manufactured Housing – Homes that are built entirely in a factory in accordance with a federal building code administered by the U.S. Department of Housing and Urban Development (HUD). Manufactured homes may be single or multi-section and are transported from the factory to a site and installed. Homes that are permanently affixed to a foundation often may be classified as real property under applicable state law, and may be financed with a mortgage. Homes that are not permanently affixed to a foundation generally are classified as personal property, and are financed with a retail installment sales agreement.
Margin – A percentage added to the index for an adjustable rate mortgage (ARM) to establish the interest rate on each adjustment date.
Market Value – The current value of your home based on what a purchaser would pay. An appraisal is sometimes used to determine market value.
Marketable Title – A title that is called a Marketable Title is one that corresponds to a particular piece of property that shows a chain of ownership that is clear and free from “clouds” or defects. Since a search of its history shows nothing likely to pop up (such as a undiscovered existing mortgage or unpaid tax bill) that may cause the new buyer of the property trouble in the future, a Marketable Title means it can be marketed for sale with no additional effort by either the seller or potential buyer. If a defect (or defects) are found in the title search, a title can become Insurable as opposed to Marketable. That means that rather than fixing the defect (which could be an expensive and time-consuming process), a title company may agree to insure against any problems that the discovered defect may cause in the future. Some defects never become a problem (or threaten either the ownership or value of the property) so the title company (in the business of risk management) would rather defer that risk than correct it.
Maturity Date – The date on which a mortgage loan is scheduled to be paid in full, as stated in the note.
Merged Credit Report – A credit report issued by a credit reporting company that combines information from two or three major credit bureaus.
Modification – Any change to the terms of a mortgage loan, including changes to the interest rate, loan balance, or loan term.
Money Market Account – A type of investment in which funds are invested in short term securities.
Mortgage – A loan using your home as collateral. In some states the term mortgage is also used to describe the document you sign (to grant the lender a lien on your home). It also may be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage often is the purchase price of the home minus your down payment.
Mortgage Broker – An individual or firm that brings borrowers and lenders together for the purpose of loan origination. A mortgage broker typically takes loan applications and may process loans. A mortgage broker also may close the loan.
Mortgage Insurance (MI)- Insurance that protects lenders against losses caused by a borrower’s default on a mortgage loan. MI typically is required if the borrower’s down payment is less than 20 percent of the purchase price. See also “Private Mortgage Insurance”
Mortgage Insurance Premium (MIP)- The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (PMI) company.
Mortgage Lender – The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.
Mortgage Life Insurance – A type of insurance that will pay off a mortgage if the borrower dies while the loan is outstanding; a form of credit life insurance.
Mortgage Rate – The interest rate you pay to borrow the money to buy your house.
Mortgagee – The institution or individual to whom a mortgage is given.
Mortgagor – The owner of real estate who pledges property as security for the repayment of a debt; the borrower.
Multifamily Mortgage – A mortgage loan on a building with five or more dwelling units.
Multifamily Properties – Typically, buildings with five or more dwelling units.
Multiple Listing Service (MLS)- A clearinghouse through which member real estate brokerage firms regularly and systematically exchange information on listings of real estate properties and share commissions with members who locate purchasers. The MLS for an area is usually operated by the local, private real estate association as a joint venture among its members designed to foster real estate brokerage services.
Municipal Lien Search – A report that shows open and expired building permits that have not been closed, outstanding property taxes, municipal lien/assessments that have been imposed, utility department balances, code enforcement violations and liens that have been imposed.
Mutual Funds – A fund that pools the money of its investors to buy a variety of securities.
N
Negative Amortization – </ An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due. span>
Net Monthly Income – Your take home pay after taxes. It is the amount of money that you actually receive in your paycheck.
Net Worth – The value of a company or individual’s assets, including cash, less total liabilities.
Non Liquid Asset – An asset that cannot easily be converted into cash.
Note – A written promise to pay a specified amount under the agreed upon conditions.
Note Rate – The interest rate stated on a mortgage note, or other loan agreement.
O
Offer – A formal bid from the home buyer to the home seller to purchase a home.
Open House – When the seller’s real estate agent opens the seller’s house to the public.
Original Principal Balance – The total amount of principal owed on a mortgage before any payments are made.
Origination Fee – A fee paid to a lender or broker to cover the administrative costs of processing a loan application. The origination fee typically is stated in the form of points. One point is one percent of the mortgage amount.
Owner Financing – A transaction in which the property seller provides all or part of the financing for the buyer’s purchase of the property.
Owner Occupied Property – A property that serves as the borrower’s primary residence.
Owner’s Title Insurance Policy – Covers the buyer both legally and financially and insures you will not be liable for any title flaw that arose from the property’s history before you purchased it. The Owner’s Title Insurance Policy will stay in effect as long as you or your heirs own the property. FTIC will be there to pay valid claims and cover the costs of defending any attack on your title, now or in the future.
P
Paid Outside of Closing (POC)- Paid outside of closing. Sometimes the lender requests this money before settlement.
Partial Payment – A payment that is less than the scheduled monthly payment on a mortgage loan.
Payment Cap – For an adjustable rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.
Payment Change Date – The date on which a new monthly payment amount takes effect, for example, on an adjustable rate mortgage (ARM) loan.
Personal property – Owned items which are not permanently affixed to the land. Any property that is not real property.
PITI – Principle, interest, taxes, and insurance (PITI).
PITI Reserves – A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.
Planned Unit Development (PUD)- A real estate project in which individuals hold title to a residential lot and home while the common facilities are owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.
Point – One percent of the amount of the mortgage loan. For example, if a loan is made for $50,000, one point equals $500.
Polybutylene (PB)- Plastic piping manufactured between 1978 and mid-1995, installed in up to 10 million homes in the Unites States during that period. Production ceased in mid-1996 after polybutylene pipes were discovered to have ruptured causing property damage.
Power of Attorney – A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Pre-approval – The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers.
Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.
Predatory Lending – Abusive lending practices that include making mortgage loans to people who do not have the income to repay them or repeatedly refinancing loans, charging high points and fees each time and “packing” credit insurance onto a loan.
Prepayment – Any amount paid to reduce the principal balance of a loan before the scheduled due date.
Prepayment Penalty – A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principle balance.
Pre-Qualification – A preliminary assessment by a lender of the amount it will lend to a potential home buyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.
Pre-Qualification Letter – A letter from a mortgage lender that states that you’re prequalified to buy a home, but does not commit the lender to a particular mortgage amount.
Principal – The amount of money borrowed or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.
Principal, interest, taxes, and insurance (piti)- The most common constituents of a monthly mortgage payment.
Private Mortgage Insurance (PMI)- Insurance for conventional mortgage loans that protects the lender from loss in the event of default by the borrower. See, “Mortgage Insurance”
Promissory Note – A written promise to repay a specified amount over a specified period of time.
Purchase agreement – A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Purchase and Sale Agreement – Information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.
Purchase Money Mortgage – A mortgage loan that enables a borrower to acquire a property.