Home Buyer and House Plan Terms and Definitions - Part III
Convertibility - The ability to change a loan from an adjustable rate schedule to a fixed rate schedule.
Cooperative - A form of ownership in a multi-unit complex; the purchasers own shares of the entire complex rather than owning individual units.
Credit Rating - A report ordered by a lender from a credit bureau to determine if the borrower is a good credit risk.
Default - A breach of a mortgage contract (such as not making monthly payments).
Density - The number of homes built on a particular acre of land. Allowable densities are usually determined by local jurisdictions.
Downpayment - The difference between the sales price and the mortgage amount on a home. The downpayment is usually paid at closing.
Due-on-Sale - A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property. A mortgage with a due-on-sale clause is not assumable.
Earnest Money - A sum paid to the seller to show that a potential purchaser is serious about buying.
Easement - Right-of-way granted to a person or company authorizing access to the ownerís land; for example, a utility company may be grated an easement to install pipes or wires. An owner may voluntarily grant an easement, or in some cases, be compelled to grant one by a local jurisdiction.
Equity - The difference between the value of a home and what is owed on it.
Escrow - The handling of funds or documents by a third party on behalf of the buyer and/or seller.
Federal Housing Administration (FHA) - A federal agency which insures mortgages that have lower downpayment requirements than conventional loans.
[ PART IV - Home Buyer and House Plan Terms and Definitions ]
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