Last month, we began our series on some common real estate terminology I hope you find helpful to know, either as a buyer or a seller. This month we continue our series and kick it off with the letter “I” …
Insurance, specifically homeowners. This is an insurance you have to have in place before the date of your closing. If you are getting a mortgage, the lender requires you have it, so they can do the adjustments for the escrow. This insurance protects your home from things like property damage (fire, wind); theft; etc. Typically, homeowners insurance is included as part of your mortgage payment.
Joint Tenancy. This is a type of ownership in a property where two people own it and if one person dies, the other owns the property 100%. There are other options such as tenants in common, where if the owner dies, an heir would inherit the property and also joint tenants by the entirety for married couples, which gives the surviving partner on death, an undivided one-half interest in the real property by operation of law. Let’s talk about how you want to hold title.
(K). This is an abbreviation used for contract. It’s the shorthand version that lawyers use. The contract of sale is the formal agreement between the purchaser and the seller and outlines the terms of the sale. Another abbreviation commonly used is FEK for Fully Executed Contract, and yes, there can also be a PEK for Partially Executed Contract.
Liens. These can be anything that the title search shows that affects ownership, for instance a judgment, a tax lien, a red light camera ticket (Suffolk County specific), unpaid water charges, prior mortgages, unsatisfied mortgages, UCC1 financing statement, etc. Any liens need to be removed before closing so the title is clear.
Mortgage. This is a formal document recorded with the County Clerk as evidence of the loan you are borrowing from a lender. In NY state, there is mortgage tax, approximately ¾ of 1% of the mortgage amount, which is paid to the title company at closing (NYC and some other Cities also charge a mortgage tax so beware.) There are various types of mortgage options including a fixed-rate or adjustable-rate mortgage, FHA or conventional. Determine which option works best with your finances.
Notice of Sale. This is when a property is potentially going to be sold in a foreclosure action. This must be done at least 4 weeks in advance. Please note that even if a notice of sale has been issued, there still may be time to save your house or at least gain you extra time to find a place to live. Every mortgage is different; every situation is different. We cannot guarantee results.
Off-market listing. This is a private sale between two individuals, without a real estate agent involved. The property is not listed on the MLS (Multiple Listing Services.)
Private Mortgage Insurance (PMI). This is typically used when you have a conventional loan and you put down less than 20% on contract. PMI is an additional monthly fee you pay until your equity comes to at least 20%. It protects the lender if you fall behind in payments.
Join us next month for the last section of our Real Estate ABCs series!