- Introduction
- Acknowledgements
- 1: Getting Ready
- 2: The Costs of Space
- 3: Understanding Credit
- 4: Professional Services
- 5: Finding Space
- 6: Residential Leases
- 7: Commercial and Industrial Leases
- 8: Buying Real Estate
- 9: Types of Mortgages
- 10: The Mortgage Application
- 11: Ownership Models
- 12: Purchasing Alternatives
- 13: Chicago Zoning Ordinance
- 14: Chicago Building Code
- 15: Chicago's Neighborhoods
- 16: Property Taxes
- 17: When You Find a Property
- 18: Inspections
- 19: After Moving In
- 20: Insurance
- 21: Utilities
- 22: Rehabbing Your Space
- 23: Safe and Healthy Spaces
- 24: Green Practice
- 25: When Disputes Arise
- 26: Space Emergencies
- 27: Facility Development Planning
- Bibliography
Banking Terms
Some key words you will need to know for this chapter include:
- Amortization: The elimination of mortgage debt through regular payments over a specific length of time. Payments must be large enough to cover both principal and interest.
- Debt Ratio: A comparison between your total assets (gross income, money in the bank, equity in property, etc.) and total debts (credit cards, student loans, car loans, etc.).
- Deed: The legal document that transfers title of the property to the buyer.
- Earnest Money: The funds you (the buyer) deposit with the seller to indicate serious interest in purchasing the space.
- Escrow: An account set up for you by the lender that holds funds for your insurance and property taxes until payment is required. The lender typically makes the payments for these expenses from this account.
- Equity: This represents the difference between what you owe on the property (the mortgage) and what the property is actually worth. For example, five years after you purchase a home for $115,000, the property's value increases to $125,000, but you still owe $75,000 on your mortgage. The difference between the value of the property and the mortgage amount you owe is $50,000 ($125,000 - $75,000). So, you have $50,000 in equity in the property.
- Interest Rate: The amount of money you are charged for using the lender's money to purchase the property. Based on the risk of the loan and prevailing market rates.
- Lien: A legal claim against the property. Liens are used to secure loans, and must be paid first if the building is sold. Other types of liens that may be put on your property include property taxes, from the Internal Revenue Service, court-ordered, etc.
- Mortgage: A type of loan specifically used to finance the purchase of real estate. Several types are available.
- Mortgagee: The bank, credit union or other financial institution that loans you money to purchase real estate property.
- Mortgagor: The borrower who accepts the loan from the lender (i.e., you).
- Principal: The original amount of money you borrow for the mortgage. Does not include your interest rate.
- Term: The length of time the borrower has to pay back the principal with interest. Depending on type of loan, the longest mortgage term for residential properties is typically 30 years.
- Title: The legal document that denotes ownership of real estate.
Other terms and their definitions will also appear in the text and will be defined as we go along.
More investment and financing market terms are accessible at Dictionary.com, Investor Words, Global Investor Glossary, MortgageLoan's Financial Glossory or ADVFN Financial Glossary.
For real estate terminology view the House and Home glossary or the Real Estate Agent.com glossary.