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| You
will find this Glossary useful in understanding words or terms used in Real
Estate transactions. However, there are some factors that may affect the
following definitions: |
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1.
Terms are defined as commonly understood in the mortgage and real estate
industry. The same terms may have different meanings in other context.
2. The definitions are intentionally short and non-technical. They do
not include all possible meanings that a term may acquire in legal
use.
3. State laws may modify or change the meanings of certain terms defined. |
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Plat
A map or chart of a lot, subdivision or community drawn by a surveyor
showing boundary lines, buildings, improvements on the land, and easements.
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Points
Sometimes called "discount points." A point is one percent of
the amount of the mortgage loan. For example, if a loan is for $25,000,
one point is $250. Points are charged by a lender to raise the yield on
his loan at a time when money is tight, interest rates are high, and there
is a legal limit to the interest rate that can be charged on a mortgage.
Buyers are prohibited from paying points on HUD or Veterans' Administration
guaranteed loans (sellers can pay, however). On a conventional mortgage,
points may be paid by either buyer or seller or split between them.
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Prepayment
Payment of mortgage loan, or part of it, before due date. Mortgage agreements
often restrict the right of prepayment either by limiting the amount that
can be prepaid in any one year or charging a penalty for prepayment. The
Federal Housing Administration does not permit such restrictions in FHA
insured mortgages.
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Principal
The basic element of the loan as distinguished from interest and mortgage
insurance premium. In other words, principal is the amount upon which
interest is paid.
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Purchase
Agreement
See Agreement of sale.
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