What Is P.I.T.I.?
Principal, Interest, Taxes,
Insurance. These are the four
elements that make up the usual
monthly mortgage payment. Principal
refers to the part of the monthly
payment that reduces the remaining
balance of the mortgage. Interest is
the fee charged for borrowing money.
Taxes and insurance refer to the
amounts that are paid into an escrow
account each month for property
taxes and mortgage and hazard
insurance
What is
escrow?
Escrow is a process where a certain
agreement or something of value is
put in the care of a neutral third
party until certain conditions are
fulfilled.
What is a
Point?
Points are the interest on a
mortgage loan that lending
institutions charge as extra
up-front interest. Bad points are
the ones you pay; good points are
those paid by the other party.
Buyers' points are tax-deductible,
but the sellers' are not deductible.
Make sure you get the point facts
before you secure your mortgage.
What is
Earnest Money?
In legal terms, it is the money
pledged to show the ability and
intent to perform a contract. In the
real estate transaction, it
represents the buyer's sincerity and
eagerness to purchase the home. When
the buyer makes a written offer,
generally the seller requires a
monetary deposit. The deposit is
kept in the trust account of the
real estate company that is handling
the listing-it is not turned over to
the seller. It is totally refundable
if the offer is not accepted or if
some of condition of the contract is
not satisfied. If everything
proceeds smoothly, the deposit
applies in full toward the purchase
price at closing. However, problems
do arise when the real estate
transaction fails to close, for
whatever reason.
What is the
difference between list and sales
prices, and how do they relate to
the appraised value?
The list price is the advertised
price-a rough estimate of what the
seller would like to get for the
home. Be aware that sellers can set
the list price higher or lower than
what they are expecting to get, so
compare prices in the area to see
how the particular listing measures
up. The sales price is the actual
price the buyer pays for the home.
And the appraisal value is the
estimated worth of a property
determined by a certified appraiser,
based on criteria such as the
property's condition and comparable
sales
How do I
Overcome Credit Barriers?
Mortgage lenders approve based on
the borrower's income, assets,
liabilities, employment history, and
credit history. It used to be that a
poor credit history or a high
debt-to-income ratio made it almost
impossible to buy a home. The 1996
Home Mortgage Disclosure Act cited
credit history as the number one
reason for denying a mortgage
application. More options are
available today than ever before for
people with less-than-perfect
credit.
