According to NAR Vacation Home Buyer Statistics, many of you wonderful Disney area real estate investors are from the UK. Because Real Estate in Orlando in very different than in the UK I’ve decided to post this UK to US Real Estate glossary for all of you out there reading from afar. I hope this helps with your Disney area real estate purchase!
Agreement in Principal (known in the United States as Appraisal)
An assessment made by British Mortgages Abroad of an applicant’s ability to pay for a home and confirmation of the amount the applicant may borrow.
All Inclusive coverage (known in the United States as Homeowner’s Insurance)
Insurance coverage protects your property and any structure attached to it, like the garage or screened porch. Any materials on your property that are being used to extend or repair the fabric of the building, such as timber or bricks being used for an improvement, would also be covered.
A form commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.
Application Fee (known in the United States as Origination Fee)
A fee charged by the lender to cover the administrative costs of setting up a mortgage. This will include the preparation of documents and certain processing expenses in connection with completing a mortgage account.
Building Insurance (known in the United States as Hazard Insurance)
Insurance protecting against loss to property caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.
Completion (known in the United States as Closing)
In property transactions, the delivery of a deed, the payment of the purchase price, the signing of notes, and the paying of closing costs, which completes the transaction.
Completion Date (known in the United States as Origination Date)
The date on which the loan is funded.
Counterpart Contracts (known in the United States as Agreement of Sale)
A written document in which a purchaser agrees to buy properties, which the vendor agrees to sell, under certain agreed conditions. Also known as a “Sales Contract”.
Credit Report (same)
A report on an individuals historic willingness and capacity to make payments in accordance with their loan agreements in the past. This report is provided to British Mortgages Abroad by an outside credit-referencing agency.
Decision in Principal (known in the United States as Pre-Approval)
A process in which British Mortgages Abroad will offer a decision in principal. This opinion is based entirely on the credit search history available to British Mortgages Abroad. The pre-approval is not binding and not necessarily accurate because British Mortgages Abroad will not have yet verified the application details.
Deposit (known in the United States as Down Payment)
The agreed percentage of the purchase price the buyer pays, in cash, at the time the property transaction closes (“completes”).
Direct Debit (same)
A method to set up a regular payment to be automatically paid from a bank account.
Disbursements (known in the United States as Closing Costs)
The various expenses involved in closing a property transaction that are in addition to the purchase price. Closing costs will include title insurance fees and other relevant charges such as a Credit Report fee.
Equity Release (known in the United States as Cash-Out Refinance)
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs and the amount required to redeem other mortgages against the property. In short, a refinance transaction in which the borrower receives additional cash that can be used for any acceptable purpose.
Estate Agent/Property Developer (known in the United States as Realtor)
A real estate broker or an associate holding active membership in a real estate board affiliated with the National Association of Realtors. Unlike estate agents Realtors in the United States must be licensed by the state in which they are selling property and must follow up with continuing education every 2-4 years.
Flat (known in the United States as Condominium)
A structure of two or more housing units. Only interior area of a particular unit is individually owned. All the owners of the individual units jointly own the remainder of the property (land, building and other amenities).
Flood Insurance (same)
A form of insurance designed to protect property owners from loss due to the defined peril of flood. It is required for properties located in federally designated flood areas.
Insurance Schedule (known in the United States as Homeowner’s Insurance Declaration/Insurance Schedule)
A document accompanying a homeowner’s insurance policy whose purpose is to verify that the property quoted in insured.
Money paid to the lender for the use of borrowed funds, usually expressed as an annual percentage.
Loan Term (known in the United States as Maturity)
The term of the loan, or the number of years for which the loan funds are advanced.
Loan To Value (LTV)
The percentage size of the loan in relation to the value of the property.
Mortgage Conditions (known in the United States as Loan Terms)
Necessary conditions of a loan which specify the amount borrowed, interest rate, maturity, method of repayment, etc.
Mortgage Payment (same)
The regular monthly payment that a borrower agrees to British Mortgages Abroad.
Offer of Advance (known in the United States as Commitment Letter)
A formal offer by the lender which states the terms under which it has been agreed to lend money. Also known as a “loan commitment.” This letter will indicate the conditions that must be satisfied before release of funds.
Open Market Value (known in the United States as Fair Market Value/Market Value)
A figure that is the highest amount a purchaser would agree to pay for a property and the lowest amount the vendor would be prepared to sell at.
Pre-Contractual Stipulation (known in the United States as Contingency)
A clause or condition within a contract stating what the buyer or seller must satisfy before the purchase can be completed.
Prepayments (known in the United States as Prepaids)
Those expenses of property which are paid in advance of their due date and will usually be pro-rated upon sale, such as taxes, insurance, rent, etc.
Procuration Fee (known in the United States as Commission)
An agent’s fee for negotiating a real estate or loan transaction, often expressed as a percentage of the purchase price or the loan amount.
Promissory Note (same)
Your loan agreement with the lender detailing all the rights, obligations and conditions of the loan.
Purchase Contract (known in the United States as Sales Contract)
A written agreement between the vendor and purchaser stating the conditions that need satisfying for the sale to complete. Also known as an “Agreement of Sale.”
Redemption (known in the United States as Payoff)
Complete repayment/settlement of the principal balance along with interest and any other amounts due. The payoff of an account occurs either over the full term of the mortgage, through monthly repayments, or through early redemption.
Redemption Penalty (known in the United States as Prepayment Penalty)
A charge a borrower pays to redeem or part redeem a loan before it is due.
Redemption Penalty Clause (known in the United States as Prepayment Clause)
A clause that confirms the amount of the principal balance of an account the borrower may pay earlier than expected with or without penalty. The terms acceptable to British Mortgages Abroad vary according to the product selected.
Remortgaging (known in the United States as Refinancing)
Taking out a new loan to pay off an existing mortgage. This is usually done to obtain a lower interest rate or to borrow further funds against the equity in a property that may have built up since the original purchase.
Rental Property (known in the United States as Income Property)
Properties owned with intention of producing an income. Also referred to as “non-owner occupied property” or “rental property.”
Repossession (known in the United States as Foreclosure)
Legal Process by which a borrower in default under the terms of a mortgages ceases to have an interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being used to reduce or clear the mortgage debt.
Security (known in the United States as Collateral)
Any property given as security for repayment of a debt.
Self Declaration (known in the United States as Low-Documentation)
Below a stated LTV, British Mortgages Abroad only require the applicant to state the source and the affordability of the mortgage applied for, without providing supported documentation pay slips or trading accounts.
Settlement Statement (known in the United States as Closing Statement)
Can be known as the “HUD-1”. The final statement of costs to be paid to close a loan or to purchase property.
A map executed by a licensed surveyor, which sets down precisely the boundaries of a given property as well as improvements, references to known landmarks, and the property’s principal features.
Title Company (same)
A company that checks the title of the property you want to buy. If they are satisfied with their enquiries they will provide you and the lender with the reassurance of insurance cover to protect your future interests (see below for definition of Title Insurance).
Title Deeds (known in the United States as Certificate of Title)
A written document stating that the title to a piece of property is legally vested in the present owner.
Title Insurance (same)
The insurance that protects British Mortgages Abroad, along with the homeowner, if an owner’s policy is purchased against losses resulting from problems with the title of the property, or unknown liens (charges) or other inconsistencies relating to the title of the property.
Title Search (same)
An examination of public records, laws and court decisions to identify any material facts regarding liens (charges) along with ownership of any given property.
Total Charge for Credit (known in the United States as Finance Charge)
Charges levied by British Mortgages Abroad that include all of the interest due over the life of the loan, in addition to certain other charges related to a loan.
Truth-in-Lending Act (TILA)
A law applicable in the United States requiring disclosure of the credit terms of finance transactions using a recognised format. This is intended to help borrowers compare the lending costs, terms and conditions of different lenders. Also known as “Regulation Z.”
Underwriting (known in the United States as Loan Processing)
Steps taken by British Mortgages Abroad from the time a loan application is approved or declined. This process includes receiving the application, credit searches (investigation) and the overall underwriting assessment of the application.
Unencumbered (same and also known in the United States as Clear Title)
Title not burdened by mortgages, charges (liens) or legal questions.
Valuation (known in the United States as Appraisal)
An estimate of the market value of a piece of real estate made by a competent professional (the appraiser) who knows local property and prices.
Villa Management (known in the United States as Property Management)
We hope to earn the opportunity of helping you achieve your investment property goals this year. To set up a free, no obligation investment property consultation with us please use our scheduling tool or contact us directly at 866-422-6191 and if you have enjoyed this article please consider subscribing to our blog and stay updated on future information.