Mid Hudson Realty
1035 Main Street
PO Box 435
Fishkill, NY 12524
(845) 897-8600 tel
(845) 897-8668 fax

help@midhudsonrealtyonline.com

www.midhudsonrealtyonline.com

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help@midhudsonrealtyonline.com

help@midhudsonrealtyonline.com

Helpful Information to Assist You
In Buying or Selling a Home



Adjustable Rate Mortgage (ARM)
This type of mortgage features an interest rate which can fluctuate higher or lower at specific intervals and offers lower initial monthly payments than those of a fixed rate mortgage.

Adjustment Period
The amount of time between interest rate changes. You can select an ARM with an adjustment period of as little as six months or as long as ten years.

Annual Percentage Rate (APR)
This is an interest rate that reflects the cost of the mortgage as a yearly rate. This rate is often higher than the specific or advertised rate on the mortgage because it figures in account points and other credit costs. The APR facilitates comparison of different types of mortgages based on the annual costs of each loan.

Assumption of Mortgage
A buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability.

Balloon Payment
A lump sum principal payment due at the end of some mortgages or other long-term loans.

Cap
The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.

Certificate of Occupancy (C of O)
Certificate issued by the municipality’s Building Inspector that declares that the house and any improvements are in compliance with all applicable State, County and Town codes.

Covenants, Conditions and Restrictions: Documents that controls the use, requirements and restrictions of a property.

Closing
Closing occurs when the deed to the home is actually transferred from seller to buyer, or when the final documents are signed on refinancing.

Closing Statement
The financial disclosure statement that accounts for all the funds received and expended at the closing, including deposits for taxes, hazard insurance, and mortgage insurance.

Commitment
A written promise to make a loan for a specified amount on specific terms.

Condominium
A form of real estate ownership where the owner receives title to a particular unit and has a proportional interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceilings) serve as it boundaries.

Contingency
A condition that must be satisfied before a contract is binding. For example, a sales agreement may be contingent upon the buyer obtaining financing.

Conversion Clause
A provision in some ARMs that enables you to change an ARM to a fixed rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. There may be an extra charge for this feature.

Cooperative
A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements.

Due-on-Sale Clause
An acceleration clause that requires full payment of a mortgage or deed of trust when the secured property changes ownership.

Equity
The residential market value of your home once you deduct the mortgage balance. A shorter term allows you to build equity more quickly than a longer term loan.

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

Escrow Account
An account maintained by the lender to pay for the taxes, hazard insurance and other items that become due. A portion of your monthly mortgage payments (which exceed principal and interest payments) is deposited into this account for those purposes.

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.

Fixed Rate Mortgage
With a fixed rate mortgage, the interest and monthly payments stays the same over the life of the loan.

Index
A measure of interest rate changes used to determine changes in an ARM’s interest rate over the term of the loan.

Joint Tenancy
An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedent’s interest in the property.

Lien
A legal hold or claim on property as security for a debt or charge.

Loan to Value Ratio (LTV)
A ratio obtained by dividing the loan amount by the value of the property. Different loan programs have different maximum LTV’s.

Mortgage Life Insurance
A type of term life insurance often bought by mortgagors. The coverage decreases as mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds.

Negative Amortization
This occurs when monthly payments fail to cover the interest cost. The interest that isn’t covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren’t high enough to cover the interest.

Origination Fee
A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan.

Points
An amount equal to one percent of the loan amount. For example, one point on a $100,000 mortgage would cost $1,000.

Prepayment Penalty
A fee charged to a mortgagor who pays a loan before it is due.

Private Mortgage Insurance (PMI)
Insurance written by private company protecting the lender against loss if the borrower defaults on the mortgage.

Rate Lock
This guarantees that the rate in effect when you apply will be the same when you close, if you close within a specific time frame. This time frame can vary depending on the loan you select.

Survey
The process by which a parcel of land is measured and its area ascertained; also, the blueprint showing the measurements, boundaries, and area.

Term
The time it will take to pay your mortgage in full is the term. With a shorter term, you’ll pay less interest over the life of the loan but may pay more each month than with a longer term.

Title Insurance Policy
A policy that protects the purchaser, mortgage or other party against loss. This guarantees that, if for any reason the title should have a defect or prove to be defective, the holder will receive just compensation.

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