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The Jamaica Real Estate Guide presents Common Jamaica Real Estate Mortgage terms defined Amortization: Method of repayment in which the amount you borrow is paid for over a period of time through monthly payments of principal and interest. During the first few years of the loan most of the amount paid is applied towards the interest. In the last few years of the loan, most of the amount paid is applied towards the principal. Appraisal Fee: A fee charged by an appraiser whose business is to render an opinion on the value of a specific property. This is usually required by most lenders in order for the buyer to obtain a loan. Appreciation: The increase in property value or worth caused by changes in the real estate market, inflation or other factors; the opposite of depreciation.

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Closing Costs: Fees or costs paid in addition to the down payment on closing day of the mortgage loan. This can include attorney fees, loan origination fees, appraisal fees, escrow fees, title insurance, taxes and other items which must be prepaid. Collateral: In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust. Contingency/conditions: A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. Contract of Sale: The agreement between the buyer and seller on purchase price, terms and conditions to be met to convey the title to the buyer. Counter-offer: An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter-offer with a slightly higher sale price. Down payment: The difference between the purchase price and that portion of the purchase price for which a mortgage is being obtained. The down payment can be paid from the buyers own funds or from gifts from relatives. Minimum down payment required is usually in the region of 20% of the purchase price however some lenders have special plans that requires no money down or 5% down. Equity : The difference between a home’s fair market value (appraised value) and the outstanding mortgage balance. Foreclosure: A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage. Gift Letter: A letter that a family member writes verifying that s/he has given you a certain amount of money as a gift and that you don’t have to repay it. You can use this money towards a portion of your down payment with some mortgages. Gross Income: The income of the borrower before taxes and other statutory payments are deducted for qualifying purposes. Home Equity Loan: A fixed or adjustable rate loan secured by the equity in the home. This type of loan can be obtained for a variety of purposes including home improvement, other real estate or investment, car loan, education loan, credit or medical debt or emergency. Mortgage loan: A loan which utilizes real estate as security or collateral to provide for repayment should the buyer default on the terms of the loan. Prepayment Penalties: Fees charged by the lender to a borrower who pays off his loan balance before it is due. 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. 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.

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Purchase and Sale Agreement: A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: 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. Qualifying ratios: Comparisons of the borrower’s gross Monthly income vs. debts and expenses. Usually the Monthly payment cannot be more than a specified amount by the lender, of the borrower’s gross Monthly income. Also all the borrower’s Monthly debt usually cannot be more than a specified amount by the lender, of his Monthly income. Some leniency may be applied based upon down payment, credit history, etc. Valuation report: Estimate of the value of the property. This can be done using 3 methods or approaches which vary by institution primarily. Market Comparison approach: using sales figures for similar property in the area; Income approach – by analyzing rental or lease income possibility in the area; Cost Approach – The cost approach should be broken into two components Land and Building less depreciation. The valuation of the land should include the comparable market for similar sites (not used for condominium units)

Source: JaRealEstateGuide.com

Jamaica Real Estate Guide

www.JaRealEstateGuide.com

Common Jamaica Real Estate Mortgage terms defined  

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