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Hazard Insurance
Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.

Home Equity Line of Credit
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.

Home Inspection
A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.

The home inspection reviews the structural and mechanical condition of the property. This is not an evaluation of the market value of the home or a determination of whether the home complies with applicable building and safety codes. The inspection does not include a recommendation on whether you should or should not buy the house.

The inspector bases the findings on observable structural elements of the home. Potential home buyers are urged to be present during the inspection -- this will allow you to ask questions and be in a better position to learn more about any problems that arise.

You should expect to see an evaluation of:

-- roof and siding,
-- windows and doors,
-- foundation,
-- insulation,
-- ventilation,
-- heating and cooling systems,
-- plumbing and electrical systems,
-- walls, floors, and ceilings,
-- and any common areas if you are purchasing a condominium or cooperative.

You should view the home inspection report as a way to identify problems before you buy the home, to help negotiate adjustments in the purchase price if problems exist, and to help get the buyer to make any needed improvements before you buy the home.

Lastly -- and for some buyers most importantly -- the home inspection report is a way to make you feel confident that the home you are buying includes systems that are in good working condition.

Homeowner's Insurance
Homeowner's insurance -- also called "hazard insurance" -- should be equal to at least the replacement cost of the property you want to purchase. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss.

Most home buyers purchase a homeowner's insurance policy that includes personal liability insurance in case someone is injured on their property; personal property coverage for loss and damage to personal property due to theft or other events; and dwelling coverage to protect the house against fire, theft, weather damage, and other hazards.

If the home you want to buy is located near water, you may be able to get flood insurance as part of your homeowner's protection. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.

Seek out and compare rates from several insurance companies before making your final decision.

Lenders often want the first year's premium to be paid at or before closing. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in an escrow account. The lender then pays your insurance bill out of escrow when it receives premium notices from your insurance company.

Homeowners' Association
A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

Homeowner's Warranty (HOW)
A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale.

HomeStyle Construction-to-Permanent Mortgage
This mortgage gives you the financial power to build your own home -- you can borrow money to build a home from the ground up or to finish building a home that's currently under construction. This loan provides financing from the construction through the purchase phases of your new home.

Advantages:

-- You enjoy peace of mind by locking in fixed interest rates on both the construction and permanent mortgage financing phases of your home purchase in one convenient loan.
-- You can borrow a minimum of 95 percent of the construction cost or the as-completed value of the property (which means your down payment can be as low as 5 percent).
-- You can use this mortgage to purchase land upon which you build your home.
-- You save money because there is one set of closing costs, compared to those associated with separate loans for construction and occupancy.
-- You pay interest only on the funds disbursed during construction.
-- This mortgage can be used for construction that's already under way.

Details:

-- A minimum down payment of 5 percent for a one-unit home and 10 percent for two-unit homes.
-- Construction phases of six, nine, or 12 months, with extensions available up to six months, are allowed.
-- This loan is available for one- and two-unit owner-occupied homes, one-unit second homes, and one-unit investor homes.
-- You can choose a 15- or 30-year fixed-rate mortgage. You can also include the construction phase in these terms, or not, depending on your preference.
-- You can also finance with fixed-period ARMs.

Housing Expense Ratio
The percentage of gross monthly income that goes toward paying housing expenses.

HUD-1 Statement
A document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The (blank) form is published by the U.S. Department of Housing and Urban Development (HUD).

Items on the statement include:

-- real estate commissions,
-- loan fees,
-- points, and
-- escrow amounts.

The form is filled out by your closing agent and must be signed by the buyer and the seller. The buyer should be allowed to review the HUD-1 Settlement Statement on the business day before the closing meeting to know the closing costs in advance.

The HUD-1 Settlement Statement is also known as the "closing statement" or "settlement sheet."

 

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