The ratio, expressed as a percentage, which results from dividing a borrower's monthly payment obligation on long-term debts by the borrower's gross monthly income. Prepaid interest assessed at closing by the lender. A point is equal to 1 percent of the loan amount. Down Payment Cash paid by the buyer at closing that makes up the difference between purchase price and the mortgage amount. Earnest Money Money given by a buyer to a seller as a deposit to commit the buyer to the future transaction.
Earnest money is subtracted from closing costs.
The value an owner has in real estate over and above the obligation against the property. Equity is fair market value minus the current indebtedness. Escrow Funds given to a third party which will be held to cover payments such as tax or insurance payments and earnest money deposits. Fixed Rate Mortgage A mortgage in which the interest rate remains constant throughout the life of the loan. The ratio between the amount of the mortgage loan and the appraised value of the property.