An 80-10-10 mortgage is a piggyback mortgage where the first mortgage covers 80% of the home's value, the second mortgage covers 10%, and the remaining 10% is a cash down payment. This structure helps homeowners avoid mortgage insurance.
A Bridal Registry Mortgage is a unique financial tool, sponsored by the Federal Housing Administration (FHA), enabling soon-to-be-married couples to establish a registry where friends and family can contribute funds. These contributions can be used toward the down payment for an FHA-insured mortgage.
A down payment is the initial upfront portion of the total amount due on a property purchase. It is typically paid in cash, representing a percentage of the property's value.
Earnest money is a deposit made by a purchaser of real estate to evidence good faith.
FICO scores measure borrower credit risk and are commonly used by mortgage underwriters when originating loans on owner-occupied homes. The score is based on the applicant’s credit history and credit usage patterns, expressed as a number between 300 and 850. This score determines loan approval and terms offered.
In an installment sale, the Gross Profit Ratio represents the relationship between the gross profit (gain) and the contract price. It is used to determine the taxable gain from each periodic receipt from the buyer.
A high-ratio mortgage is a loan that requires a smaller percentage of down payment, typically covering more than 80% of the property's value. Such loans often necessitate mortgage insurance to mitigate risk.
Initial equity refers to the amount of down payment made by a buyer when purchasing a property. Initial equity does not include appreciation, mortgage amortization, or transaction costs.
An installment sale is a sales method in which the seller receives payments over time and reports a portion of the capital gain to tax authorities as payments are received, thus spreading tax liabilities.
A liquid asset is a property that can be converted to cash quickly and with minimal loss of value. Liquid assets provide the ability to raise cash for financial needs such as down payments for real estate.
A second mortgage is a subordinated lien created by a mortgage loan that enhances financing options by reducing the cash down payment requirement during a property purchase or refinancing.
A shared equity mortgage is a home loan where the lender is granted a share of the equity, allowing the lender to participate in the proceeds from the resale of the property. After satisfying the unpaid balance of the loan, the borrower splits the remainder of the proceeds with the lender.
A sinking fund is a reserved account used for saving up for a specific future expense. Over time, through continuous contributions and compound interest, the fund grows to the desired amount.
Acquiring property with an existing mortgage, but the buyer does not become personally liable for the debt. Contrasted with assumption of mortgage.
