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Glossary

Agreement in Principle

This is when your application for your mortgage has been approved by your lender, subject to further checks. These are likely to be checks on your income and the value of the property.

Amenity

A feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, greenery, water) or man-made (like a swimming pool or garden).

Amortised loan

A loan for which the principal and the interest are payable in monthly or other periodic installments over the term of the loan.

Amortization

Repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years).

Annual Percentage Rate (APR)

Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application

The first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

Appraisal

A document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser

A qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

ARM

Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly-payment amount, however, is usually subject to a Cap.

Arrangement Fee

A fee your lender will charge you for arranging your mortgage. It can be paid on completion or included in your mortgage loan.

Assessment

Tax charge or levy against real estate according to established rates.

Assumable Mortgage

A mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage.

Balloon Mortgage Payment

A large payment of a mortgage loan, larger than the regular required payment, often at the end of the loan term.

Base/Bank Rate

A Mortgage rates are determined by this. It is the interest rate at which the Bank of Ghana will lend money to other banks.

Borrower

A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Budget

A detailed record of all income earned and spent during a specific period of time.

Building Code

Based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Cancellation Clause

Proviso in contract or lease that confers the right to terminate obligations upon occurrence of the condition or contingency set forth in clause.

Cap

A limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Capital Gain

Tax term involved with selling or exchanging a capital asset.

Capital Gain

Tax term involved with selling or exchanging a capital asset.

Capital Improvement

Any major structural improvement to real estate, which normally extends the life and value of the property.

Capital Loss

Amount by which the proceeds from the sale of a capital asset are less than the cost of acquiring it.

Cash Reserves

A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Caveat Emptor

Latin phrase for Let the buyer beware.

Certificate of Title

A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Closing

Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing Costs

Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Closing Date

Date on which the buyer takes ownership of the property.

Closing Statement

A detailed accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.

Cloud on the Title

Outstanding claim or encumbrance which, if valid, affects or impairs owner's title.

Commission

Payment to broker/intermediary/middleman for services rendered; usually a percentage of the selling price.

An amount, usually a percentage of the property sales price that is collected by a real estate professional as a fee for negotiating the transaction.

Comparables

Properties listed in an appraisal report that are similar to the subject property.

Completion

The final stage of the sale. At this time all the monies are passed over and the buyer has legal right to the property.

Conditional Sales Contract

Contract for sale of property which states that the contract can be cancelled unless conditions of the contract have been fulfilled. A contract is usually condition for only a defined period of time.

Condominium

An apartment or other unit, held in fee ownership, in which owners pay common charges for the maintenance of common areas.

Condominium

A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Contract

A legal agreement between two parties that has two parts. You, the buyer sign one part and we, the seller sign the other.

Conventional Loan

A private sector loan, one that is not guaranteed or insured by the Ghana government.

Conveyancing

The legal transfer of a property from one owner to another via your legal representative/solicitor.

Covenant

Usually in your deeds, this is a legal restriction or condition affecting the property, which you must comply with. For example, pledging to maintain a wall.

Credit Bureau Score

A number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Credit History

History of an individual’s debt payment; lenders use this information to gauge a potential borrower’s ability to repay a loan.

Debt Service

Annual monthly amount to be paid by debtor to repay borrowed money.

Debt-to-Income Ratio

A comparison of gross income to housing and non-housing expenses; With our in-house lender the monthly mortgage payment may be no more than 60% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 70% of income

Deeds

The legal documents relating to the property - The document that transfers ownership of a property. They are usually held on your behalf by your mortgage provider.

Default

The inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.

Delinquency

Failure of a borrower to make timely mortgage payments under a loan agreement.

Deposit

Paid by the buyer on exchange of contracts and usually a percentage payment of the agreed purchase price.

Developer

One who improves land with buildings, usually on a large scale, and sells to homeowners and/or investors.

Discount Points

An added loan fee charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest loans.

Down Payment

The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.

Duplex

A duplex house is a dwelling having apartments with separate entrances for two households. This includes two-story houses having a complete apartment on each floor and also side-by-side apartments on a single lot that share a common wall.

A semi-detached house is not a 'duplex'.

Earnest Money

Money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Egress

A way out.

Equity

Interest or value that an owner has in his or her property over and above any mortgage debts.

An owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loan(s) from the fair market value of the property.

Escrow

Written agreement between two or more parties providing that property be placed with a third party to be delivered to a designated person upon fulfillment or performance of some act or condition.

Escrow Account

A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance,etc.

Exchanging

This is where you, the buyer and us, the seller exchange contracts. After the exchange, the sale is legally binding.

Exclusive Agency Listing

Listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission.

Exclusive Right to Sell

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner or another broker.

Executor

Person or corporate entity designated in a will to carry out its provisions.

Fair Market Value

The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fiduciary

Person who acts on behalf of another and transacts business or handles money regarding property not the persons own. The relationship is characterized by trust and confidence.

Fixed-Rate Mortgage (FRM)

A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Fixtures

Personal property attached to the land or improvements that become part of the real property.

Foreclosure

A procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payment or terms.

Freehold/Leasehold

If your home is freehold, then the parcel of land on which your house sits is yours. If it is leasehold, then your ‘ownership’ of the land is set for a period of time, usually 99 years. After this time the land returns to the freeholder.

Grace Period

Additional time allowed to perform an act or make a payment before a default occurs.

Ground Lease

A lease of land only, on which the tenant usually owns a building or constructs a building as specified in the lease.

Guarantor

A person who guarantees that a loan will be paid, even if the buyer defaults on the repayments.

Holdover Tenant

A tenant who remains in possession of the leased property after the expiration of the lease term, and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy.

Home Inspection

An examination of the structure and mechanical systems to determine a home’s safety; makes the potential home buyer aware of any repairs that may be needed.

Homeowner’s Insurance

An insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence, inappropriate action that result in someone’s injury, or property damage.

Independent Financial Advisors (IFAs)

Known as IFAs, these professionals offer independent financial advice on all financial matters. They have knowledge of the whole market and can recommend the most suitable financial products, such as mortgages.

Index

A measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Insurance

Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

Interest

The percentage of a sum of money charged for its use.

Interest Rate

The amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Involuntary Lien

A lien imposed against property without the consent of the owner, such as taxes and special assessments.

Land Commission and Fees

The Land Commission is the government body that records who owns land and property in Ghana. You pay them a fee, through your solicitor, to register your ownership of your new property.

Lessee

Tenant

Lessor

Landlord

Lien

Right given by law to certain creditors to have their debt paid out of the property of a defaulting debtor.

Listing

A contract between principal and agent, authorizing the agent to perform services for the principal within a given time, for which the principal agrees to pay a commission.

Litigation

The act of carrying on a lawsuit.

Loan

Money borrowed that is usually repaid with interest.

Loan Fraud

Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

loan-to-value (LTV)

The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and non-bank lenders to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property.

 

 

The LTV ratio is calculated as the amount of the mortgage lien divided by the appraised value of the property, expressed as a percentage. For example, a borrower taking on a $90,000 mortgage to purchase a home appraised at $100,000 would have an LTV ratio of 90% (90,000/100,000).

 

Local Searches

These are carried out by your solicitor and reveal any changes that may effect your new home or the surrounding area, including any planning decisions and applications.

Lock-in

Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss Mitigation

A process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.

Management Company

A company who is appointed to take responsibility for the maintenance and management of all communal areas and shared services, like roads, streetlights, open spaces.

Margin

An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Market Value

The probable price a ready, willing, able, and informed buyer would pay and a ready, willing, able, and informed seller would accept, neither being under any pressure to act.

Marketable Title

A title which a court of equity considers to be so free from defect that it will enforce its acceptance by a purchaser.

Meeting of the Minds

Whenever all parties to a contract agree to the exact terms thereof.

Mortgage

A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Most people take out a mortgage to buy a house. An Independent Mortgage Adviser can explain all the types of mortgages available to you. When you take out a mortgage your property is used as security.

Mortgage Banker

A company that originates loans and resells them to secondary mortgage lenders.

Mortgage Broker

A firm that originates and processes loans for a number of lenders.

Mortgage Commitment

A formal indication, by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.

Mortgage Insurance

A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 25% of the home’s purchase price.

Mortgage Modification

A loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Mortgage Valuation

When you apply for a mortgage the lender will normally insist on a survey before agreeing on a loan. They will asses the value and condition of the property.

Mortgagee

A lender in a mortgage transaction.

Mortgagor

A borrower who conveys his or her property as security for a loan.

Notice

The period immediately after the building work on your new home has finished in which legal completion must take place. We will let your Lawyers know when notice is served.

Offer and Acceptance

Two essential components of a valid contract; a meeting of the minds when all parties agree to the exact terms.

Offer to Purchase

Indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Open Listing

A listing given to any number of brokers without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer; the sale of the property automatically terminates the listing.

Option

An agreement to keep open for a set period of time an offer to sell or purchase property, usually for consideration.

Origination

The process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Performance Bond

A bond used to guarantee the specific completion of an endeavor in accordance with a contract.

PIT

Principal, Interest, and Taxes – the three elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes goes to the city for payment of property taxes.

Points

Discount charges imposed by lenders to raise the yields on their loans. One point equals one percent of the amount of the loan.

Power of Attorney

A written instrument duly signed and executed by an owner of property, which authorizes an agent to act on behalf of the owner to the extent indicated in the instrument.

Pre-Approved

Lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-Foreclosure Sale

Allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-Qualify

A lender informally determines the maximum amount an individual is eligible to borrow.

Premium

An amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment

Payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty.

Prepayment Clause

A clause in a mortgage which gives a mortgagor the privilege of paying the mortgage indebtedness before it becomes due.

Principal

The employer of an agent or broker; the broker's or agent's client.

Principle

The amount borrowed from a lender; doesn’t include interest or additional fees.

Prospectus

A printed statement disclosing all material aspects of a real estate project.

Purchase Money Mortgage

A note secured by a mortgage given by a buyer, as mortgagor, to a seller, as a mortgagee, as part of the purchase price of the real estate.

Quiet Enjoyment

The right of an owner or a person legally in possession to the permitted use of property without interference of possession.

Ready, Willing and Able Buyer

One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Real Estate Agent

An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Real Property

Land, and generally whatever is erected upon it or affixed thereto.

Recording

The act of recording or entering in a book of public record instruments affecting the title to real property.

Redemption

The right of a mortgagor to redeem the property by paying a debt after the expiration date and before sale at foreclosure: the right of an owner to reclaim the owner's property after the sale for taxes.

Refinancing

Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rent to Own

Assists low- to moderate-income home buyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Semi-detached

A single family dwelling house built as one of a pair that share one common wall. Often, each house's layout is a mirror image of the other.

Often abbreviated to semi or semi-D.

Sold Subject to Contract

When both the seller and the buyer have agreed a sale but the legal paperwork isn’t complete.

Special Assessment

An assessment made against a property to pay for a general improvement by which the assessed property is supposed to be especially benefited.

Special Forbearance

A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Specific Performance

A legal action brought in a court of equity in special cases to compel a defendant to carry out the terms of an agreement or contract.

Sponsor

The developer or owner organizing and offering for sale a condominium development.

Stamp Duty

This is a government tax on the sale of a residential property. You will pay this at completion. The amount varies dependent on the purchase price and increases in bands.

Standard Variable Rate (SVR)

The standard interest rate set by the lender that in most instances tracks the Bank of Ghana base rate or Treasury bill rate.

Subletting

A leasing by a tenant to another for part of the lessee's remaining term.

Surveyors Certificate

A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Time Is of the Essence

A phrase in a contract that requires the performance of a certain act within a stated period of time, terminating irrevocably on a certain date.

Title

Evidence that owner of land is in lawful possession thereof; evidence of ownership.

Title Deeds

The legal documents that set out the rights and liabilities that attach to the property and state who are the legal owners. You sign this and it is then sent to the Lands Commission for registration.

Title Insurance

Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for home buyers.

Title Search

An examination of the public records to determine the ownership and encumbrances affecting real property.

Title Search

A check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Underwriting

The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.

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