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Frequent Asked Questions:

What is a foreclosure ?
It is a legal procedure where the property is sold to satisfy the debt in the even of default of payment. The buyer of a foreclosure sale may obtain the property free of all encubrances affecting the property.

What is a short sale ?
It is a sale where the bank allows you sell your property for less than what you owe to the bank. In other words, the homeower sells the property for less than the outstanding balance of the loan. This type of sale have to be approved by the bank, because the bank will lose money in the transaction.
A shortsale is executed to prevent a foreclosure.Usually the bank allows a short sale if they believe that it will result in a smaller financial loss than foreclosing.

What is a friendly foreclosure?

It is technically called, deed in lieu of foreclosure.
It is carried out by mutual agreement between the borower and the bank,so no court involve.
The borower gives the property to the bank, the bank takes the property subject to junior liens to sell it. The bank keeps any equity there may be in the property.

What is a Mortgage?
A mortgage is a voluntary lien on real estate. The person who borrows money to buy a property voluntarily gives the lender the right to take the property if borrower fails to repay the loan.

What is Interest ?
It is a charge for using somebody else money

What is a Loan Origination fee ?
It is a fee that the bank charges to cover the expenses involve in generating the loan.

What are Discount Points ?
Discount points are pre-paying interest at the time of the closing. To reduce interest rate, the bank might offer you to buy discount points. One point is 1% of the loan amount Ex: If the loan is $100,000 and you buy 3 points so you must pay 3% ($3000) at closing to reduce your interest rate.

What is a Balloon Mortgage ?
It is a fixed rate loan for a specific period of time, with the balance due at the end of the time.

What is a Fixed Rate Mortgage (Conventional)?
Regarless of fluctution in the market, your principal and interest remain the same for the duration of the loan. This is the traditional choice of home buyers who plant to stay in their home for many years.

what is an Interest Only Mortgage ?
Your mortgage payments covers interest only with no principal reduction for a designated period of time. When the interest only period ends, your payment is adjusted to include principal and interest in the amount that will fully amortize your loan over the remaining years of the loan. Your monthly payments are lower during the interest only period and increased once that period is over.

What is an Adjustable Rate Mortgage ?
It offers an initail term with a lower interest rate and lower payment than conventional fix rate maortgage. After the initial term, the interest rate is reset periodically to keep in line with current market interest rate. If interest rate goes up your monthly payment will also goes up. If interest rate goes down, your monthly payment will go down. Most ARMs have their interest rate adjusted at specific intervals of time depending on the mortgage terms.

What is Anual Cap ?
It is the limit on how high the the interest rate of an ARM mortgage can rise during a single year.

What is Annual Percentage Rate (APR) ?
It is the true cost of a loan, expressed as an interest rate including finance charges and fees.The APR is the best way to compare loan programs from various lenders.

What is Appraised Value or Market Value ?
It is an estimate of what the property is worth in the market. It is based on recent sales of comparable properties nearby. Lenders use appraisals to verify a home's value before making a loan, to justify their investment.

What is Assesed value ?
It is the value of a property for tax purposes. It is usually less than market value

FHA/VA Loan Programs
The Federal Housing Administration (FHA) and the Department of Veterant's Affairs offer loan programs that enable qualified buyers to move into a home with little or no downpayment.
FHA and VA allow downpayment of less than 3% and also 100% financing. There is no minimum credit score and fewer employment requirement.

What is a 100% Financing Mortgage ?
Available to qualified buyers with an excellent credit history. No downpayment is required. Usually this type of buyer qualify for 80% conventional loan 20% home equity loan or line of credit. It is usually done when you must close on your new home before selling your current home.

What is a Stated Income Mortgage ?
It is based on your income. If you have verifiable assets,confirmed employment and aceptable credit score you migth qualify.
Interest rate are generally higher than a fully documented loan because the lender is assuming more risk. This type of loan requires less documentation than a traditional home loan.

What is a Downpayment ?
It is money that you give in advance that reduce your loan balance, the biggest your downpayment the less money you owe to the lender.

What is the meaning of Closing costs ?
Closing cost are fees involve with the home sale such as lender processing fees, title company fees for handleing all paperwork, local goverment recording fees, and some other fees incurred in the transaction.

What is the Earnest Money?
Money deposited by the buyer when making an offer to purchase real estate. This deposit is evidence of the buyer's intention to carry out the terms of the contract in good faith. This money is forfited if the buyer default, but applied to the purchase price if the sale is closed.

Marlen Hernandez
Phone: 786-752-1814
Florida Real Estate Licensed

Florida Realty of Miami | (305) 598-5488 | 9415 Sunset Dr. Suite 236 Miami, FL 33173

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