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Home Buyer and House Plan Terms and Definitions – Part III

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Copyrighted ImageConvertibility – 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 owner?s 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  ]

Home Buyer and House Plan Terms and Definitions – Part III
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