Navigating the world of homeownership and home equity sharing can involve unfamiliar terms and concepts. This glossary provides definitions of key terms related to Steadworth's Home Wealth Share program to help you better understand the program and make informed decisions.
A
Appraisal: A professional evaluation of a property's market value conducted by a licensed appraiser.
Appreciation: The increase in the value of a property over time.
C
Closing Costs: Expenses associated with finalizing a real estate transaction, such as title insurance, attorney fees, and recording fees.
Contract Term: The duration of the Home Wealth Share Agreement, typically 5 or 10 years.
D
Debt-to-Income Ratio (DTI): A financial metric that compares your total monthly debt payments to your gross monthly income.
Down Payment: The upfront payment made by a homebuyer towards the purchase of a property.
Down Payment Split: The percentage of the down payment contributed by the homebuyer and Steadworth, respectively.
E
Effective Date: The date on which the Home Wealth Share Agreement becomes legally binding.
Equity: The portion of a property that the homeowner owns outright, calculated by subtracting the outstanding mortgage balance from the market value.
Escrow: A neutral third party that holds funds and documents during a real estate transaction until all conditions are met.
H
Home Equity Sharing: A financial arrangement where a homeowner shares a portion of their home's future appreciation with an investor in exchange for an upfront investment.
Home Wealth Share Agreement: The legally binding contract between the homeowner and Steadworth that outlines the terms and conditions of the Home Wealth Share program.
Homeowner's Insurance: Insurance that protects your home and belongings from damage or loss due to covered events.
L
Loan-to-Value Ratio (LTV): The ratio of the mortgage loan amount to the appraised value of the property.
M
Memorandum of Home Wealth Share Agreement: A document recorded in public records that provides notice of Steadworth's co-investment interest in the property.
Mortgage: A loan used to finance the purchase of a property, typically secured by the property itself.
Mortgage Insurance (PMI): Insurance that protects the lender in case the borrower defaults on a mortgage with a down payment of less than 20%.
Multiplier: A predetermined number used to calculate Steadworth's share of the appreciation in the home's value.
O
Original Home Value: The value of the property at the time of purchase or the Effective Date of the agreement.
Owner Repurchase: The option for the homeowner to buy out Steadworth's investment and Wealth Share at any time.
P
Principal: The amount of money borrowed in a loan, excluding interest.
Property Taxes: Taxes levied by local governments on real estate property.
R
Refinance: The process of replacing an existing mortgage with a new one, often with different terms or a lower interest rate.
Remodel Value: The value added to a property due to renovations or improvements, as determined by an appraisal.
S
Steadworth Homeowner Mortgage: A document that creates a security interest in the property for Steadworth's investment.
Steadworth Proceeds: The portion of the home's appreciation that Steadworth receives upon sale or refinance.
T
Title: A legal document that establishes ownership of a property.
Triggering Event: An event that triggers the termination of the Home Wealth Share Agreement and the calculation of Wealth Share Proceeds, such as the sale or refinance of the property.
W
Wealth Share: The percentage of the home's appreciation that is shared between the homeowner and Steadworth.
Wealth Share Proceeds: The portion of the home's appreciation that is distributed to the homeowner and Steadworth upon sale or refinance.