What Do These Property-Purchasing Terms Mean? Match the terms relating to the basic terminology and concepts associated with making housing decisions with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer wer Description A. Loan-to-value ratio This term is often used by lenders as an alternative of charging interest on their loans. Mortgage points D B. This refers to an apartment in a building or a residential complex that is individually owned. Closing costs C. This is the maximum percentage of the value of a property that a lender is willing to loan. Foreclosure Short sale N E. Condominium N F. Also referred to as PMI, this insurance policy protects the mortgage lender from a default by its mortgage borrower. This refers to the process through which lender takes possession of the property as a result of the owner's failure to make his or her mortgage payments. This term describes the process through which an asset, not owned by the seller, is sold at a price lower than debt balance owed on the property. This term is used to describe the situation in which the market value of a parcel of real estate is lower than the amount owed on the loan to purchase the parcel. G . Private mortgage insurance H. Earnest money deposit This is the general name given to the expenses that a borrower pays when his or her mortgage loan is closed, the funds are paid to the seller, and the buyer receives title to the purchased property. Negative equity This refers to the conditions attached to an offer to purchase property that is included in the contract which states that the buyer can back out if the certain reasonable conditions are not fulfilled, for example the lack of financing. This is a deposit made to the seller to express the intent of purchase so that the offer is considered seriously. Contingency clause J