Philippine Real Estate Glossary
Fair Market Value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fee Market Value
The price at which a willing seller will sell and willing buyer will buy neither being under abnormal pressure.
The greatest possible interest a person can have in real estate. Fee simple ownership provides the owner with unrestricted powers to dispose of the owned property as the owner sees fit. Of all types of ownership a person can have in real estate, fee simple provides the greatest amount of personal control.
Fee Simple Estate
An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property.
A person in a position of trust and confidence as between a principal and a broker as fiduciary owes a certain loyalty which cannot to breached under rules of agency.
Final Walk-Through Inspection
Your sales contract should include a clause that allows you to examine the property you want to purchase within the 24 hours before closing.This walk-through, during which you will be accompanied by the real estate sales professional, is your chance to ensure that the seller has vacated the house and left behind whatever property was agreed upon.Make sure to check that all lights, appliances, and plumbing fixtures are in working order.You will also want to make sure that all conditions of the sales contract have been met. If they aren't, or you observe major problems, you have the right to delay the closing until the problems are corrected.One other option is to make sure money to correct the problems is placed in an escrow account at closing to cover the cost of repairs.
An index is a number to which the interest rate on an adjustable rate mortgage (ARM) is tied. It is generally a published number expressed as a percentage, such as the average interest rate or yield on U.S. Treasury bills. A margin is added to the index to determine the interest rate that will be charged on ARMs. This interest rate is subject to any caps associated with the mortgage. The interest rate changes on an ARM are tied to some type of financial index. Some of the most common type of indexed ARMs are:-- Treasury-Indexed ARMs-- CD-Indexed ARMs (Certificate of Deposit)-- Cost of Funds-Indexed ARMs (COFI)-- LIBOR-Based ARMsWhen comparing ARMs, look at how the index to which it is tied has performed recently. Your lender can provide information on how to track the index and a history of the index they use.
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
A lender's agreement to make a loan to a specific borrower on a specific property.
First and Second Mortgages
A "first mortgage" is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments.
A mortgage that is the primary lien against a property.A "first mortgage" is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments.
The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.
Fixed-Period Adjustable-Rate Mortgages
This type of adjustable-rate mortgage (ARM) maintains the same initial interest rate for the first three, five, seven, or 10 years of your loan, depending on the term you choose. Your interest rate then adjusts annually, and can move up or down as market conditions change. Be sure to ask your lender about the interest rate caps for both the annual adjustments and for the life of the loan. Advantages: Your initial interest rate will be lower than a fixed-rate mortgage, so you may be able to afford more home. You are protected against interest rate increases for the first three, five, seven, or 10 years of the loan, depending on which type of fixed-period ARM you choose. You may have the option to convert your ARM to a fixed-rate mortgage at the first, second, or third interest rate adjustment dates. You have time to improve your financial position (i.e., salary increases) or accumulate additional assets before the interest rate adjusts at the end of the fixed period. Details: The lifetime interest rate cap for fixed-period ARMs is typically 5 to 6 percentage points above your initial rate. Your annual cap during the adjustable period is typically 1 to 2 percentage points above or below over the current rate. Can be used to buy one to four-family residences including second homes and condos, co-ops and planned unit developments. Manufactured homes are also eligible.
Fixed-Rate Mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan. Fixed-rate mortgages, the most popular type of mortgage, offer the peace of mind that your interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your key concern. If you decide that you like the stable, predictable payments of a fixed-rate loan, you have the option of choosing from a variety of repayment terms: 1, 3, 5,10, 15, 20, and 30 years are the most common. Typically, the longer the term of the mortgage, the more interest you pay over the life of your loan. However, stretching out your repayment term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage. Lenders offer a wide array of fixed-rate mortgages: Balloon Mortgages / Biweekly Mortgages
Personal property that becomes real property when attached in a permanent manner to real estate.
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. If you repeatedly do not make your mortgage payments on time, your lender could sell your home and evict you from it in a legal procedure called foreclosure. A foreclosure on your property can result in the loss of your home and your good credit rating. Foreclosure is most often a last resort effort that lenders will take if you repeatedly don't make your mortgage payments. Before going to foreclosure, lenders will work with you if you are facing financial hardships to come up with repayment plans that will let you get back on track and remain in your home.
The loss of money, property, rights, or privileges due to a breach of legal obligation.
The land between high tide and low tide lines. The owner owns absolutely up to the high tide marks, but is subject to the right of the public to the low tide line.
The intentional and successful employment of any cunning, deception, collusion or artifice used to circumvent, cheat, or deceive another person whereby that person acts upon it to the loss of his property and to his legal injury.
An estate in fee simple; A life estate.
A measurement one foot wide starting on the streetline to a depth of 100 feet.
Fully Amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.