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What is Debt-to-Income Ratio? Debt-to-income ratio (DTI) is the percentage of a consumer’s monthly gross income that goes toward paying debts. DTIs often cover more than just debts; they can include principal, taxes, fees, and insurance premiums as well. Debt-to-Income explained Lenders use the debt-to-income (DTI) ratio to measure your borrowing risk. It is the […]
What is a Deed of Trust? A trust deed, sometimes known as a deed of trust, is a type of real estate contract used in the United States. It’s a legal document that comes into play when one party borrows money from another to buy a house. The trust deed is a contract between a […]
What is Down Payment? A down payment has two purposes: it ensures that the lending institution has enough capital to issue money for a loan in fractional reserve banking systems, and it allows the lender to collect a portion of the loan total if the borrower defaults. The asset is used as collateral to protect […]
What is the Down Payment on a VA Loan? The down payment on a VA Loan is 0%, according to the U.S. Department of Veterans Affairs. VA loans do not require down payments because the government guarantees the loan, meaning the lender can recover between 25% and 50% of the borrowed amount in the event […]
Due-on-sale clause explained A due-on-sale clause is a condition in a mortgage contract that compels the borrower to repay the lender in full upon the sale or transfer of a portion or complete interest in the property that secures the loan. Mortgages with a due-on-sale provision cannot be assumed by the next owner of the […]
What is a Duplex? Two living units are joined to each other in a duplex house plan, either next to each other as townhouses or condominiums, or above each other as apartments. A building with two attached units on two separate properties, on the other hand, is commonly referred to as a duplex in portions […]
What is an Easement? An easement, also known as an easement arrangement, is a real estate term that describes a situation in which one party uses the property of another for a fee in exchange for the right of easement. Public utility corporations frequently purchase easements in order to build telephone poles or run pipes […]
What is the Equal Credit Opportunity Act? The Equal Credit Opportunity Act (ECOA) is a federal civil rights statute that prohibits lenders from discriminating against credit applicants based on factors other than their capacity to repay the loan. ECOA protects consumers from discrimination in lending based on race, colour, religion, national origin, sex, marital status, […]
What is Home Equity? The value of a homeowner’s interest in their home is known as home equity. In other words, it is the current market value of the property (less any liens that are attached to that property). As more mortgage payments are made and market forces effect the property’s current worth, the amount […]
What is an Escape Clause? An Escape clause, also known as an contingency clause, is a contract term that requires a specified event or action to occur before the contract is declared legitimate. The other party is relieved from its duties if the party who is obligated to satisfy the contingency clause is unable to […]
What is Escrow? Escrow is a legal term that refers to a financial instrument in which a third party holds an asset or escrow money on behalf of two other parties who are completing a deal. Escrow accounts may include escrow fees maintained by agents who hold monies or assets until they receive proper instructions […]
What is a Fair Market Value? In its most basic form, fair market value (FMV) refers to the price at which an item would sell on the open market. Fair market value has come to represent the price of an asset under the following common set of circumstances: prospective buyers and sellers are reasonably knowledgeable […]
