Thinking about selling your fire-damaged house? Here are a variety of terms that you need to be familiar with to best proceed through the selling process.
Knowing these terms will help you “walk the walk” and “talk the talk” whether you are selling your fire-damaged house yourself or through a real estate agent.
Terms to Know When Selling a Fire-Damaged House:
Abstract of Title:
Recorded documents for a piece of land that lists its history, including ownership and mortgage transfers. In some states, also referred to as a preliminary title report.
A condition in a contract that requires the borrower to pay back the entire balance of a loan immediately, if the contract is broken.
Adjustable-Rate Mortgage (ARM):
A type of mortgage loan with an interest rate that can go up or down based on market conditions. ARM loans may be capped to limit how much the interest rate can change.
Payments on a mortgage loan that are calculated so that the debt is paid off at the end of a fixed period and for which the payments of both principal and interest are equal.
Annual Percentage Rate (APR):
The cost of a mortgage that is expressed as an annual rate and that includes interest, points, and other finances charges.
A decrease or increase in the selling price of a property to account for a feature that the property has or does not have in another comparable property.
A report provided by a licensed expert that includes an overview of the property’s history and amenities to determine the property value.
The value associated with a property, based on facts about the location, improvements, and other factors regarding the property and its surroundings.
Assignment of Contract:
A binding agreement that is used to sell, transfer, and/or assign rights under a contract.
A mortgage where the buyer makes monthly payments for a length of time and later pays the balance (the balloon payment) at the end of the loan term.
Breach of Contract:
A contract violation that occurs if an individual breaks an agreement after signing a contract with a seller, a buyer, a real estate agent, or someone else in this business.
Local or state government rules that specify minimum building and construction standards that are used to protect public safety and health.
Certificate of Occupancy:
A document issued to the property owner or an entity by a local government body indicating that a building is safe and can be occupied.
Fees that either the buyer or the seller are responsible for paying at the closing. Fees may include mortgage broker, agent, or appraisal fees; prepaid insurance; and taxes.
Properties that are used as comparisons for a particular property, which help determine the value of the subject property.
A stated event that must occur before a contract is considered binding. Term applies to both a loan and a contract of sale.
Contract of Sale:
A two-way agreement between a buyer and a seller in which the seller agrees to sell and the buyer agrees to buy a property under specific terms and conditions. Also used in reference to a land contract.
A mortgage loan offered by an approved lender in which the borrower’s ability to repay the loan is not insured by a government agency.
A document, such as a deed, mortgage, or lease that transfers a property title from one party to another.
Deed of Trust:
Used in some states in place of a mortgage to show that the title is transferred to a trustee instead of a borrower.
A legal, written document that is used to transfer a real estate title from one person to another.
The failure to perform a duty or meet an obligation that was identified in a contract.
The decrease in value applied to real property improvements caused by the economy, deterioration, or outdated features.
A real estate property that is boarded up, vacant, or inhabited but in need of repair.
Due Diligence Period:
The time between the day your offer on a property is accepted and the day you actually purchase the property.
The down payment made by a buyer that is used to demonstrate good faith in the completion of the sale.
The act of closing a transaction through a disinterested third person (an escrow agent) who hold funds and/or documents for delivery on the performance of certain conditions.
Fannie Mae (FNMA):
he Federal National Mortgage Association; a government-chartered private company that buys numerous mortgage loans from lending institutions and sells securities in the open market to investors.
Federal Housing Administration (FHA):
A federal agency that insures first mortgages and allows lenders to loan money at a very high percentage of the property’s sale price.
Final Value Estimate:
The appraiser’s estimate of a property’s defined value, which is figured by reconciling the estimates of value based on the sales comparison, cost, and income approaches.
Fixed Interest Rate:
A rate that fixes the principal and interest payment so that payment is the same throughout the duration of the mortgage loan term.
A person or business entity that is usually licensed and bonded by a state regulatory agency to complete renovation work on properties or buildings.
Good Faith Estimate:
A lender’s estimation of the amount of money the buyer will be required to pay at the closing (closing costs), as well as the buyer’s monthly mortgage payment. By law, lenders are required to provide the good faith estimate within three days of the initial loan application.
Financial institutions, such as banks, savings and loans, insurance companies, credit unions, and commercial loan agencies, whose loans are regulated by law.
An agreement that allows the seller to retain his or her loan on a property and the buyer to make monthly payments to the seller.
Coverage that protects a property owner against claims of personal injury, negligence, etc.
A legal claim against a property that holds it as collateral for money owed to another person. A lien may be ordered voluntarily (e.g., a mortgage), involuntarily (e.g., a judgment), or by law (e.g., a property tax lien).
Loan Origination Fee:
A fee, usually stated as a percentage of the loan amount, that the lender may charge the borrower to create the mortgage loan.
A calculation of a property’s loan amount divided by the property’s value. For example, a property may be valued at $100,000 but the lender may loan the buyer $90,000 which is 90% of the LTV of the home (or 90% LTV).
1. A legal document that pledges a property as security for repayment of the loan. The document is recorded in county land records, creating a lien (encumbrance) on the property. This is also known as a deed of trust in some states. 2. A loan in which small payments are made for a certain period of time until a buyer’s debt on a property is paid.
This insurance is required on loans for which the borrower is financing more than 80 percent of the loan amount of the property. This insurance protects the lender in the event that the borrower does not pay on the loan. Also called PMI or MIP.
A financial institution, such as a bank, credit union, or life insurance company, that lends money to a borrower for purchasing a property.
Multiple Listing Service (MLS):
A computerized database compiled and used by real estate agents and brokers to obtain information about properties that are for sale or have sold.
A type of mortgage where the lender is a private individual rather than a lending institution.
A written, unsecured note that indicates a borrower’s promise to pay a specified amount of money on demand; it is often transferable to a third party.
Quick Claim Deed:
A deed that indicates the grantor is giving up any claim he or she has in a property.
The process of restoring a property to satisfactory condition while preserving the features that are related to the property’s form, style, or architecture.
A statement prepared by a closing agent, such as a title or escrow company, that breaks down all costs and charges associated with a real estate transaction. Required by RESPA on a form HUD-1.
A formal document that shows evidence of property ownership.
An insurance policy that protects against loss arising from issues with a title. A policy protecting the lender is called a loan policy, whereas a policy protecting the purchaser is called an owner’s policy. Virtually all transactions involving a loan require title insurance.
A review of the public records related to a property, which discloses facts concerning ownership of the property.
A type of deed where the seller makes a guarantee to holding the title for a property and having the right to sell it to a buyer.
Regulation that defines the way property is used in specific areas; enforceable by police power.
Avoid a Long Selling Process
You can avoid a long, drawn-out, stress-filled selling process. You can do this by selling your fire-damaged house directly to We Buy Fire Damaged Houses.
We pay a great price and in all cash. This allows you to get your money fast and move on with your life. Fill out the form below to learn more and to see if your home qualifies for a free quote.