Philippine Real Estate Glossary
Loss in value due to reduced desirability and usefulness of a structure because its design and construction become obsolete; loss because of becoming old-fashioned and not in keeping with the modern need with consequent loss of income.
This provision is a good way to help ensure that your home will be ready for occupancy after the closing takes place. As part of your formal purchase offer, consider including a provision that holds the seller responsible for paying you rent should they not move out on or prior to the agreed-upon date. This allows you, for example, to use the money you receive to pay your own rent if you are leasing your current residence.
When you make an offer on a house, it means you are making a formal bid to buy a home. You can work with your real estate sales professional to put together a written bid that abides by the laws in your state. Your offer should include such aspects as the address of the home, the sales price, the type of mortgage financing you will use to purchase the home, any personal property that might be included as part of the sale, and a target date for closing and occupancy. An earnest money deposit typically accompanies the offer. Your real estate sales professional can provide guidance on other elements of the offer. Once you have made an offer, the seller has the opportunity to accept, decline, or make a counter-offer. If your offer is accepted, you have a ratified sales contract. This contract is the starting point for working with an approved lender to get the mortgage that's right for you.
A statement by the owner of property or the owner of a lien against property, setting forth the present status of lien against the said property.
Home buyers should not forget that there are on-going costs associated with owning a home. They include, but are not limited to, Monthly mortgage payment, Mortgage insurance, Homeowner's insurance, Property taxes, and Utilities, such as gas, oil, water and electricity. Another cost home buyers should consider is how much it will cost to maintain their home. These costs include everything from cleaning and minor repairs to yard work and painting. Condominium owners and people living in planned unit developments should factor in any homeowners' association fees or similar costs.
A mortgage which can be paid off any time even before its maturity.
Open End Mortgage
A mortgage containing a clause which permits a mortgagor to borrow additional money after the loan was reduced, without re-writing the mortgage.
An authorization given by a property owner to a real estate agent wherein said agent is given the non-exclusive right to secure a purchaser; open listing may be given to any number of agents without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing or secures the acceptance by the seller of a satisfactory offer.
A right given for a consideration to purchase or lease a property upon specified terms within a specified time.
A verbal agreement; one who is not reduced to writing.
Original Principal Balance
The total amount of principal owed on a mortgage before any payments are made.
A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount. The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. For example, a P100,000 mortgage with a loan origination fee of 1 point would mean you pay P1,000.
Other Buyer Costs
There are other costs associated with the closing that are typically paid by the buyer. They often include: Fees paid to the lender: Loan discount points, loan origination fee, credit report fee, appraisal fee, and assumption fee. Advance payments or prepaid fees: Interest, mortgage insurance premium, and hazard insurance premium. Escrow accounts or reserves: State and local law and lenders' policies vary but these reserves may have to be set up if the lender will be paying property taxes, mortgage insurance, and hazard insurance. Title charges: Closing (or settlement) fee, title insurance premium, title search, document preparation fees, and attorney fees. The fees the buyer pays for a real estate attorney are not part of settlement procedures. Recording and transfer fees: States often impose a tax on the transfer of property. The payment of a fee for recording the purchasing documents may be required. Additional charges: Surveyor's fees, termite and other pet infestation inspection fees, and the cost of other inspections required by the lender. Adjustments: Items paid by the seller in advance and items yet to be paid for which the seller is responsible. The most common expense is property taxes, but others may have to be addressed.
A contingency in a contract states that if a certain requirement is not met, the deal can be canceled. Some of the most common contingencies related to home purchases include: Professional home inspection: This states that your sales contract is contingent on a satisfactory report by a professional home inspector. You have the right not to proceed with the purchase of the home, or to re-negotiate the terms of purchase, if any major problems are uncovered. Termite inspection: This states that the property is free of both visible termite infestation and termite damage. Asbestos: You may choose to hire a qualified professional to inspect the home, take samples for asbestos, and offer solutions to correct any problems. Formaldehyde: This colorless, gas chemical was used in foam insulation for homes until the early 1980s and is emitted by some construction materials. It is suspected of causing cancer, and it can also irritate the throat, nose, and eyes. A qualified inspector can let you know if the gas is present in the home you wish to purchase. Radon: Most home buyers require that the house be tested for radon, a naturally occurring, odorless gas that can cause health problems. You can contact your regional health office for more information. Lead-based paint: You should also have the house inspected for lead-based paint, which can lead to very serious health problems. If the house was built before 1950, you can be fairly certain lead-based paint was used. For houses built between 1950 and 1978, there is also a chance lead-based paint was used. Lead disclosure regulations can vary from province to province. Health officials in the province where the home you want to buy is located may be able to provide further guidance.
Other Financial Companies
Other financial companies include credit unions, mortgage brokers, insurance companies, investment bankers, and housing finance agencies. Credit unions are cooperative, not-for-profit institutions organized to promote savings and to provide credit, including mortgage loans, to their members. Credit unions either service the mortgages they originate or sell them to other investors. Mortgage brokers are independent real estate financing professionals who specialize in the origination of residential and/or commercial mortgages. Mortgage brokers originate loans on behalf of other lenders including banks, thrifts and mortgage banking companies, but do not service loans. Insurance companies and investment bankers are large institutional investors in mortgages that do not receive deposits from consumers. They use premiums from their clients' insurance polices and investment packages to fund their mortgage lending activities. Housing finance agencies are typically associated with state or local governments. They are generally geared toward assisting first-time and low- to moderate-income borrowers. They use tax exempt bonds to fund mortgage lending and as a result are often able to provide interest rates that are below current market rates.
An improvement which is not suitable to the site on which it is placed due to excessive size or cost.
A property purchase transaction in which the property seller provides all or part of the financing.