A contract signed by buyer and seller stating the terms and conditions under which a property will be sold.
The payment of a debt that satisfies an obligation.
Secondary mortgage market
The market into which primary mortgage lenders sell the mortgages they make to obtain funds to originate more new loans. This includes investors such as Fannie Mae and Freddie Mac.
A subordinate mortgage made in addition to a first mortgage.
An agent hired by a seller to represent him/her in negotiations to sell property.
Market conditions that favor sellers. With more buyers than sellers in the market, sellers have the negotiating power as demand exceeds supply.
Servicing (or Loan administration)
The collection of mortgage payments from borrowers and related responsibilities (such as handling escrows for property tax and insurance, foreclosing on defaulted loans and remitting payments to investors).
Settlement (or Closing)
A meeting between the buyer, seller and lender (or their agents) where property and funds legally change hands.
Settlement cost (HUD guide)
A booklet given to consumers after applying for a loan that provides an overview of the lending process.
See Closing costs.
Settlement sheet (HUD-1)
The computation of costs payable at closing that determines the seller’s net proceeds and the buyer’s net payment.
Interest that is computed only on the principal balance.
A pre-determined rate of interest that will be applied to the loan until the date of the first interest rate change.
Subsidized second mortgage
Alternative financing option for low- and moderate-income households that also includes a down payment and a first mortgage, with funds for the second mortgage provided by city, county or state housing agencies, foundations or nonprofit corporations. Payment on the second mortgage is often deferred and carries low interest rates (if any). Part of the debt may be forgiven for each year the family remains in the home.
A measurement of land, prepared by a licensed surveyor, showing a property’s boundaries, elevations, improvements and relationship to surrounding tracts.
Value added to a property by improvements made by the owner.