| Abstract |
A summary; an abridgment. Before the use of photostatic
copying public records were kept by abstracts of recorded documents.
|
| Abstract of Title |
A compilation of the recorded documents relating to a
parcel of land, from which an attorney may give an option as to the condition
of title. Still in use in some states, but giving way to the use of title
insurance.
|
| Acre |
A measure, usually of land, equal to 160 sq. rods
(43,560 sq. ft.) in any shape.
|
| Action to
Quiet Title |
A court action to establish ownership to real property.
Although technically not an action to remove a cloud on a title, the two
actions are usually referred to as "Quiet Title" actions.
|
| Adjustable Rate
Mortgage (ARM) |
A mortgage where the interest rate is not fixed, but
changes during the life of the loan in line with movements in an index rate.
You may also see ARM's referred to as AML's or VRM's.
|
| Agency |
An Agency relationship is one in which one person is
empowered to act on behalf of another, subject to the control and consent of
the person being represented.
|
| Agent |
The person who is acting on behalf of the principal or
client.
|
| Agreement
of Sale |
In some states it is synonymous with a purchase
agreement (Purchase Agreement). In other states, it is synonymous with a land
contract (Land Contract).
|
| Alienation Clause |
A clause calling for a debt under a mortgage or deed of
trust to be due in its entirety upon transfer of ownership of the secured
property.
|
| Amortize |
To reduce a debt by regular payments of both principal
and interest, as opposed to interest only payment.
|
| Annual
Percentage Rate (APR) |
A measure of the cost of credit, expressed as a yearly
rate. It includes interest as well as other charges. Because all lenders follow
the same rules to ensure the accuracy of the annual percentage rate, it
provides consumers with a good basis for comparing the cost of loans, including
mortgage plans.
|
| Appraised
Value |
An option of the value of a property at a given time,
based on facts regarding the location, improvements, etc., of the property and
surroundings.
|
| Arrears |
Payment made after its due is in arrears. Interest is
said to be paid in arrears since it is paid to the date of payment rather than
in advance.
|
| Assessment
Base |
The total assessed value of all property in a given
assessment district.
|
| Assumability |
When a home is sold, the seller may be able to transfer
the mortgage to the new buyer. This means the mortgage is assumable. Lenders
generally require credit review of the new borrower and may charge a fee for
the assumption. Some mortgages contain a due-on-sale clause, which means that
the mortgage may not be transferable to the new buyer. Instead, the lender may
make you pay the entire balance that is due when you sell the home.
Assumability can help you attract buyers if you sell your home.
|
| Assumption of Mortgage |
Agreement by a buyer to assume the liability under an
existing note secured by a mortgage or deed of trust.
|
| Balloon
Note |
A note calling for periodic payments which are
insufficient to fully amortize the face amount of the note prior to maturity,
so that a principal sum known as a "Balloon" is due at maturity.
|
| Balloon Payment |
The final payment of a
mortgage which is larger than the regular payment; it usually extinguishes the
debt.
|
| Binder |
A report issued by a title insurance company setting
forth the condition of title and setting forth conditions, which, if satisfied,
will cause a policy of title insurance to be issued.
|
| Blanket
Mortgage |
A mortgage covering more than one property of the
mortgage.
|
| Bridge
Financing |
A form of interim loan, generally made between a short
term loan and a long term loan, when the borrower needs to have more time
before taking on long term financing.
|
| British Thermal
Unit (B.T.U.) |
Unit of heat required to raise one pound of water one
degree Fahrenheit.
|
| Buydown |
With a buydown, the seller pays an amount to the lender
so that the lender can give you a lower rate and lower payments, usually for an
early period of a loan. The seller may increase the sales price to cover the
cost of the buydown.
|
| Cap |
A limit on how much the interest rate or monthly payment
of an ARM can change, either at each adjustment or during
the life of the mortgage. Payment CAP's don't limit the amount of interest the
lender is earning so the may cause negative
amortization.
|
| Certificate of Eligibility |
A certificate obtained by a veteran from a Veteran's
Administration office which states that the veteran is eligible for a V.A.
insured loan.
|
| Certified
Copy |
A true copy, attested to be true by the officer holding
the original.
|
| Cestui que
trust |
One having an equitable interest in property, legal
title being vested in trustee.
|
| Chain of
Title |
The chronological order of conveyancing of a parcel of
land, from the original owner to the present owner.
|
| Chattel |
Personal property.
|
| Closing
Costs |
Expenses incurred in the closing of a real estate or
mortgage transaction.
|
| Closing
Statement |
The statement which lists the financial settlement
between buyer and seller, and also the costs each must pay. A separate
statement for buyer and seller is sometimes prepared.
|
| Cloud on
Title |
An invalid encumbrance on real property, which if valid,
would affect the rights of the owner.
|
| Co-Maker |
Equally responsible for repayment as the
borrower.
|
| Commitment |
A written promise to make or insure a loan for a
specified amount and on specified items.
|
| Comparables |
Properties used as comparisons to determine the value of
a specified property.
|
| Condominium |
A structure of two or more units, the interior space of
which are individually owned.
|
| Construction Loan |
Short term financing of real estate construction.
Generally followed by the long term financing called a "take out" loan, issued
upon completion of improvements.
|
| Contingency |
The dependence upon a stated event which must occur
before a contract is binding.
|
| Contract of
Sale |
Depending on area of country it may be a Land Contract
or a Purchase Agreement.
|
| Contract Sales Price |
The full purchase price as stated in the
contract.
|
| Conventional Mortgage |
A loan neither insure by the FHA nor guaranteed by the
VA.
|
| Conversion Clause |
A provision in some ARMs that allows
you to change the ARM to a fixed-rate loan at some point
during the term. Usually the conversion is allowed at the end of the first
adjustment period. At the time of the conversion, the new fixed rate is
generally set at one of the rate then prevailing for fixed-rate mortgages. The
conversion feature may be available at extra cost.
|
| Cost Plus
Contract |
A building contract setting the builder's profit at a
set percentage of actual cost of labor and materials.
|
| County |
A political division within a state. In Virginia, cities
are not a part of counties but separate political units.
|
| Certificate of
Reasonable Value (CRV) |
An appraisal of property for the purpose of insurance by
the Veteran's Administration.
|
| Declaration of Restrictions |
A set of restrictions filed by a subdivider to cover an
entire tract or subdivision.
|
| Defective
Title |
Title to a negotiable instrument obtained by fraud.
Title to real property which lacks some of the elements necessary to transfer
good title.
|
| Depreciation |
Decrease in value to real property improvements caused
by deterioration or obsolescence.
|
| Devise |
Real estate left by will.
|
| Devisee |
One to whom real estate is given by will.
|
| Devisor |
A testator who leaves real estate.
|
| Direct
Reduction Mortgage |
An amortized mortgage. One on which principal and
interest being computed on the remaining balance.
|
| Disbursements |
Payments made during the course of an escrow or at
closing.
|
| Discount |
Is an ARM with an initial discount,
the lender gives up a number of percentage points of interest to give you a
lower rate and lower payments for part of the mortgage term. After the discount
period, the ARM rate will probably go up depending on the rate.
|
| Documentary Tax Stamps |
Stamps, affixed to a deed, showing the amount of
transfer tax.
|
| Dragnet
Clause |
A clause in a mortgage or deed or trust which places the
real estate as security for existing debts between the parties.
|
| Easement |
A right created by grant, reservation, agreement,
prescription, or necessary implication, which one has in the land of
another.
|
| Eminent
Domain |
A Government right to acquire private property for
public use by condemnation, and the payment of just compensation.
|
| Encroachment |
Construction onto the property of another, wall, fence,
etc.
|
| Encumbrance |
A claim, line charge, attached to and binding real
property.
|
| Equity |
The difference between the market value of the property
and the homeowner's mortgage debt.
|
| Escrow |
Delivery of a deed by a grantor to a third party for
delivery to the grantee upon the happening of a contingent event.
|
| Escrow
Payment |
That portion of a mortgagor's monthly payment held in
trust by the lender to pay for taxes mortgage
insurance, hazard insurance, lease payments, and other items as they become
due, also know as "impounds" in some states.
|
| Escrow Reimbursement |
An assumptions or wrap loan transactions, the buyer
reimburses the seller for the current balance of his escrow (or impounded)
funds.
|
| Federal
Home Board |
The board which charters and regulates federal savings
and loan associations, as well as controlling the system of Federal Home Loan
Banks.
|
| Federal Home Loan Board |
The board which charters and forbids discrimination in
the sale
|
| Federal Housing Administration |
A federal Agency which insures first mortgages, enabling
lenders to loan a very high percentage of the sale price.
|
| Federal
Tax Lien |
A lien attached to property for nonpayment of a federal
tax.
|
| Fee Simple |
An estate under which the owner is entitled to
unrestricted powers to dispose of the property, and which can be left by will
or inherited.
|
| Freddie Mac
(FHLMC) |
Federal Home Loan Mortgage Corporation. A federal Agency
purchasing first mortgages, both conventional and federally insured, from
members of the Federal Reserve System, and the Federal Home Loan Bank
System.
|
| Foreclosure |
A proceeding in or out of court, to extinguish all
rights, title, and interest, of the owner(s) of property in order to sell the
property to satisfy a lien against it.
|
| Full
Disclosure |
Revealing all the known facts which may affect the
decision of a buyer or tenant.
|
| General
Lien |
A lien such as a tax
lien or judgment lien which attaches to all property of the debtor rather than
the lien of, for example, a trust deed, which attaches only to a specific
property.
|
| Ginnie Mac
(GNMA) |
Government National Mortgage Association. A federal
association working with FHA which offers special assistance in obtaining
mortgages, and purchases mortgages in a secondary capacity.
|
| Grandfather Clause |
The clause in a law permitting the continuation of a
use, business, etc., which, when was permissible but, because of a change in
the law is now not permissible.
|
| Ground
Rent |
Rent paid for vacant land. If the property is improved,
ground rent is the portion attributable to the land only.
|
| Heir and
Assigns |
Words usually found in a deed, showing the interest the
grantee is receiving.
|
| Home Owner
Association |
An association of people who own homes in a given area
for the purpose of improving or maintaining the quality of the area.
|
| Impound
Account |
Account held by a lender for payment of taxes,
insurance, or other escrowed expenses.
|
| Index |
The index if the measure of interest rate changes that
the lender uses to decide how much the interest rate on an
ARM will change over time. You should ask your lender how the index for any
ARM you are considering has change in recent years, and where it is
reported.
|
| Independent Contractor |
The term is most important as used to describe the
relationship of broker and salesperson, employee or independent contractor. If
employee, the broker must withhold income tax and pay social security, provide
workmen's compensation, and may be liable for some negligent acts of the
salesperson while on the job. All of this is avoided by the broker if
salesperson is an independent contractor.
|
| Installment Sale |
A tax term used to describe a sale which is usually
accomplished by use of a land contract.
|
| Insured
Mortgage |
A mortgage insured against loss to the mortgagee in the
event of default and failure of the mortgaged property to satisfy the balance
owing plus costs of foreclosure.
|
| Interest
Rate |
The percentage of an amount of money which is paid for
its use for a specified time.
|
| Joint and
Several |
A liability which allows the creditor to sue any one of
the debtors or sue all together.
|
| Joint
Tenancy |
An undivided interest in property, taken by two or more
joint tenants. The interests must equal, accruing under the same conveyance,
and beginning at the same time. Upon death of a joint tenant the interest
passes to the surviving joint tenants, rather than to the heirs of the
deceased.
|
| Judgement |
The decision of a court of law. Money judgments, when
recorded, become a lien on real property of the defendant.
|
| Late
Charge |
A penalty for failure to pay an installment on
time.
|
| Lease with
Option to Purchase |
A lease under which the lessee has the right to purchase
the property. The option may run for the length of the lease or only for a
portion of the lease period.
|
| Lender |
A general term encompassing all mortgages, and
beneficiaries under deeds of trust.
|
| Letter of
Intent |
A formal method of stating that a prospective developer,
buyer or lessee, is interested in property.
|
| Liber |
A Latin word for book.
|
| Lien |
An encumbrance against property for money, either
voluntary or involuntary.
|
| Life
Estate |
An estate in real property for the life of a living
person. The estate then reverts back to the grantor or on to a third
party.
|
| Limited
Partnership |
A partnership consisting of one or more general partners
who conduct the business and are responsible for losses, and one or more
special partners, contributing capital and liable only to the amount
contributed.
|
| Lis Pendens |
A legal notice recorded to show pending litigation
relating to real property and giving notice that anyone acquiring an interest
in said property subsequent to the date of the notice may be bound by the
outcome of the litigation.
|
| Loan
Package |
The information given to the lender regarding the
borrower and the property necessary to decide to give or not to give the
loan.
|
| Loan
Ratio |
The amount of a loan to the value or selling price of
real property.
|
| Loan-to-Value Ratio |
The ratio of the mortgage loan amount to the properties
appraised value (or the selling price whichever is less).
|
| Margin |
The number of percentage points the lender adds to the
index rate to calculate the ARM
interest rate at each adjustment.
|
| Marketable Title |
Title which can be readily marketed to a reasonably
prudent purchaser aware of the facts and their legal meaning concerning liens
and encumbrances.
|
| Mechanics
Lien |
A lien created by statue for the purpose of securing
priority of payment for the price of value of work performed and materials
furnished in construction of repair of improvements to land, and which attached
to the land as well as the improvements.
|
| Mortgage
Broker |
One who for a fee, brings together a borrower and
lender, and handles the necessary applications for the borrower to obtain a
loan against real property by giving a mortgage or deed of trust as security.
Also known as a loan broker.
|
| Mortgage
Guaranty Insurance Corporation (MGIC) |
A private corporation which, for a fee, insures mortgage
loans similar to FHA and VA insurance, although not insuring as great a
percentage of the loan.
|
| Mortgage or Deed of Trust |
Written pledge of real property given by the
mortgagor to secure a debt. Should be recorded in the
County Recorders Office.
|
| Mortgagee |
The lender of money or the receiver of the
mortgage document.
|
| Mortgagor |
The borrower of money or the giver of the
mortgage document.
|
| Mortgage Insurance |
Insurance required for loans with a loanabove 80.01%.
|
| Mortgage Warehousing |
A system whereby a mortgage company will hold loans
which would ordinarily be sold, in order to sell later at a lower discount.
These are used as collateral security with a bank to borrow new money to
loan.
|
| Negative
Amortization |
Amortization means that monthly payments are large
enough to pay the interest and reduce the principal on your mortgage. Negative
amortization occurs when the monthly payments do not cover all of the interest
cost. The interest cost which is not covered by the payment is added to the
unpaid principal balance. This means that even after making many payments, you
could owe more than you did at the beginning of the loan. Negative amortization
can occur when an ARM has a payment cap that results if
monthly payments not high enough to cover the interest due.
|
| Nonconforming Use |
A property which does not conform to the zoning of an
area.
|
| Note |
A written promise to repay a certain sum of money on
specified terms.
|
| Open End
Mortgage |
A mortgage permitting
the mortgagor to borrow additional money under the same mortgage, with certain
conditions, usually, as to the assets of the mortgage.
|
| Origination Fee |
A fee or charge for work involved in the evaluation,
preparation and submission of a proposed mortgage loan.
|
| Owner's
Policy |
Title insurance for the owner of property, rather than a
lienholder.
|
| Package
Mortgage |
Mortgage covering both real and personal
property.
|
| Paper |
A mortgage, deed of trust, or land contract, which is
given instead of cash.
|
| Partial
Release |
A release of a portion of property covered by a
mortgage.
|
| Perc Test
(Percolation) |
The test to determine the capability of the soil to
absorb liquid, both for construction and septic systems.
|
| Permanent
Mortgage |
A mortgage on completed construction on the same
property under one mortgage or trust deed.
|
| PMI Private
Mortgage Insurance |
Insurance similar to FHA or VA insurance, insuring part
of the first mortgage or deed of trust, enabling a lender to make a
conventional loan of a higher percentage of the property value.
|
| Points |
A point is equal to one percent of the principal amount
of your mortgage. For example, if you get a mortgage for $100,000, one point is
means you pay $1000 to the lender. Lenders frequently charge points in both
fixed-rate and adjustable-rate mortgages in order to
increase the yield of the mortgage and to cover loan closing costs. These
points are usually collected at closing and may be paid
by the borrower or the home seller, or may be split between them.
|
| Property
Tax |
Generally, tax levied on both real and personal
property.
|
| Prorate |
To divide in proportionate shares, such as taxes,
insurance, rent, or other items.
|
| Purchase
Money Mortgage |
A Mortgage given by the buyer to the seller as part of
the purchase consideration, as opposed to a hard money mortgage.
|
| Quit Claim
Deed |
A deed operating as a release; intended to pass any
title, interest, or claim which the grantor may have in the
property.
|
| Real
Estate |
Land and anything permanently affixed to the land, and
those things attached to the building.
|
| Recital |
Setting forth in a deed or other writing some
explanation for the transaction.
|
| Recourse |
The right of the holder of a note secured by a mortgage
or deed of trust to look personally to the borrower or endorser for
payment.
|
| Refinancing |
The repayment of a debt from the proceeds of a new loan
using the same property as security.
|
| Reissuerate |
A charge for a title insurance policy if a previous
policy on the same property was issued within a specified period. Reissue is
less than the original charge.
|
| REIT (Real
Estate Investment Trusts) |
A method in investing in real estate in a group, with
certain tax advantages.
|
| Release |
An instrument releasing property from the lien of the
mortgage, judgment, etc.
|
| Recision of
Contract |
Annulling a contract and placing the parties to it in a
position as if there had not been a contract.
|
| Renter's
Insurance |
Insurance specially designed to protect the property of
persons renting a home or apartment. This coverage is very inexpensive and
highly recommended.
|
| RESPA (Real
Estate Settlement Procedures Act) |
A federal statute requiring disclosure of certain costs
in the sale of residential improved property which is to be financed by a
federally insured lender.
|
| Revenue
Stamps |
Formerly federal tax on a sale of real property.
Canceled and replaced by state tax stamps.
|
| Secondary Financing |
A loan secured by a mortgage or trust deed, which lien
is junior to another mortgage or trust deed.
|
| Secondary Mortgage |
The buying and selling of first mortgages of trust deeds
by banks, insurance companies, government agencies, and other
mortgagees.
|
| Security |
Real or personal property
pledged by a borrower, as additional protection for the lender's
interest.
|
| Septic
System |
A sewage system, whereby waste is drained through pipes
and a tile field into a septic tank.
|
| Set Back
Ordinance |
Regulates the distance from the lot line to the point
where improvements may be constructed.
|
| Settlement Statement |
A statement prepared by broker, escrow, or lender,
giving a complete breakdown of costs involved in a real estate sale.
|
| Sheriff's
Deed |
Deed given at sheriff's sale in foreclosure of
mortgage.
|
| Signed Sealed
and Delivered |
A phrase indicating that everything necessary to convey
has been done by the grantor.
|
| Specific
Performance |
An action to compel the performance of a contract, when
money damages for breach would not be satisfactory.
|
| Statutory
Lien |
An involuntary lien, includes tax liens, judgment liens,
mechanic liens, etc.
|
| Substitute of Trustee |
A document which is
recorded to change the trustee under the deed of trust.
|
| Tax
Lien |
Lien for nonpayment of
taxes.
|
| Tax
Sale |
Public sale of
property at auction by governmental authority, after a period of nonpayment of
property taxes.
|
| Tenancy by
the Entirety |
A form of ownership by husband and wife whereby each
owns the entire property. In event of death of one, the survivor owns the
property without probate.
|
| Title |
Often used interchangeably with the work ownership. It
indicates the accumulation of all rights in property, the owner and
others.
|
| Title
Insurance |
An insurance policy which protects the insured
(purchaser and lender) against loss arising from defects in title.
|
| Variable Rate
Mortgage (VRM) |
A mortgage where the interest rate is not fixed, but
changes during the life of the loan in line with movements in an index rate.
You may also see VRM's referred to as AML's or ARM's.
|
Questions,
Comments, or Want to Know More?