TERMS TO KNOW

Appreciation

An increase in the value of a Property (the opposite is depreciation). Property can appreciate due to a number of reasons including changes in economic conditions.

Mortgage

A Contract in which a lender loans funds and receives secured Interest in Property until the funds are repaid.

Equity

The difference between the fair market value of the Property and the amount of Debt outstanding against it.

Foreclosure

The legal process by which a borrower is deprived of their Interest in the Mortgaged Property. This usually is the last action taken by a lender to collect from a borrower in default. Foreclosure involves a forced sale of the Property at public auction with the proceeds of the sale being applied against the Mortgage Debt.

Homeowner's insurance

An insurance policy that protects a dwelling and its contents from personal liability and damage. Sufficient coverage is required by lenders.

PMI

Private Mortgage Insurance, which protects the lender in case of default by the borrower. PMI is often used when buyers obtain financing with less than a 20% Down payment.

Point

A charge by the lender representing 1 percent of the amount of the Mortgage.

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