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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. FIXTURE An article which was once personal property but has been so affixed to the real estate that it has become real property (e.g. stoves, bookcases, plumbing, etc.). If determined to be a fixture, then the article passes with the property even though it is not mentioned in the deed. LAND DESCRIPTION A description of a particular piece of real property. 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 the interest rate you get. However, the more points you pay, the more cash you need up front since points are paid in cash at closing. RESIDUAL PROCESS An appraisal process used in the income approach to estimate the value of the land and/or the building, as indicated by the capitalization of the residual net income attributable to it. ANNUAL PERCENTAGE RATE The relationship of the total Finance Charge to the total amount to be finance as required under the Federal Truth-in-Lending Law. WAREHOUSING A term used in financing to describe the process which loan correspondents employ, assembling into one package a number of mortgage loans which the correspondent has originated and selling them in the secondary mortgage market. |
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