A B C D E F G H I J K L M N O P Q R S T U V W Y Z

ADJUSTABLE RATE MORTGAGE: A mortgage that has a rate that is adjusted at certain intervals during the loan period. The adjustment can either be higher or lower depending on the current market rate at the time adjustment is due.

AMORTIZATION LOAN: A loan that is paid off - both interest and principal- by regular payments that are equal or nearly equal.

APPRAISAL: An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

APR (ANNUAL PERCENTAGE RATE): The yearly interest percentage of the loan based on the actual interest paid on the loan. The APR is disclosed as a requirement of federal truth in lending statutes.

ASSESSED VALUE: Value placed upon property for property tax purposes by the tax collector.

ASSESSMENT: A levy against property in addition to general taxes. Usually for improvements such as for streets or sewers, etc.

ASSUMPTION: Taking over another person's financial obligation; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.

B 

BALLOON PAYMENT: A note calling for periodic payments which are insufficient to fully amortize the face value of the note prior to maturity, so that a principle sum known as a "balloon" is due at maturity.

BENEFICIARY: The recipient of benefits, often from a deed of trust; usually the lender.

BUY DOWN: A fixed rate loan where the interest rate and payment are reduced for a specific period of time by paying the interest up front to subsidize lower payment.BALLOON PAYMENT: A note calling for periodic payments which are insufficient to fully amortize the face value of the note prior to maturity, so that a principle sum known as a "balloon" is due at maturity.

C

CLEAR TITLE: Real property in which there are no liens

CLOUD ON TITLE: A claim, encumbrance or condition that impairs the title to real property until disproved or eliminated through such means as a quitclaim deed or a quiet title legal action.

COMPARABLE SALES (COMPS): Sales that have similar characteristics as the subject property, used for analysis in the appraisal.

CONVENTIONAL MORTGAGE: A mortgage that is not obtained program such as FHA or VA.

CONVEYANCE: An instrument in writing, such as a deed or deed of trust, used to transfer (convey) title to property from one person to another.

COVENANTS, CONDITIONS AND RESTRICTIONS (CC&R'S): Restrictive limitations which may be placed on a property.

D 

DEED OF TRUST: An instrument used in many states in place of a mortgage.

DISCOUNT POINTS: A negotiable fee paid to the lender to secure financing for the Buyer. Discount points are up from interest charges to reduce the interest rate on the loan over a life, or a portion of the loan's term. One discount point equals one percent of the loan amount.

DISPOSABLE INCOME: Income, usually monthly income, left over after fixed obligations and living expenses for that period of time are paid.  

E 

EARNEST MONEY DEPOSIT: Down payment made by the purchaser of real estate as evidence of good faith; a deposit or partial payment.

EASEMENT: A right, or privilege or interest limited to a specific purpose that one party has in the land of another.

EQUITY: The market value of real property, less the amount of existing liens.

F 

F.H.A.: Federal Housing Administration is a federal agency that insures first mortgages, enabling lenders to loan a very high percentage of the home price.

FANNIE MAE (FNMA): A private corporation dealing in the purchase of first mortgages, at discounts.

FREDDIE MAC (FHLMC): A mortgage that has a rate that is adjusted at certain intervals during the loan period. The adjustment can either be higher or lower depending on the current market rate at the time adjustment is due.

G 

GINNIE MAE (GNMA): A federal association, working with FHA, which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary position.

H 

HAZARD INSURANCE: Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended-coverage for personal property.

I

IMPOUND ACCOUNTS: A trust type of account established by lenders for the accumulation of borrower's funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.

L 

LEGAL DESCRIPTION: A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

LIEN: A form of encumbrance that usually makes a specific property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.

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 ORIGINATION FEE: A one time set up fee charged by the lender.

M 

MECHANICS LIEN: A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.

MORTGAGE: The instrument by which real property is pledged as security for repayment of a loan.

MORTGAGEE: The party lending the money and receiving the mortgage. Some states treat the mortgagee as the "legal" owner, entitled to rents from the property. Other states treat the mortgagee as a secured creditor, the mortgagor being the owner. The latter is the more modern and accepted view.

MORTGAGE INSURANCE: Insurance written by an independent mortgage Insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price. The Federal government writes this form of insurance through FHA and VA. 

MORTGAGOR: The party who borrows the money and gives the mortgage.

N 

NOTE: A unilateral agreement containing an express and absolute promise of the signer to pay' to a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and concerning real property, is secured by a mortgage or deed of trust.

NOTICE OF DEFAULT: A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the Payments).

O 

ORIGINATION FEE: A fee made by a lender for making a real estate loan. Usually a percentage for the amount loaned, usually one percent.

P 

PITI: A payment that combines Principal, Interest, Taxes and Insurance

PRORATION: To divide (prorate) property taxes, insurance premiums. rental income, etc. between the Buyer and Seller
proportionately to time of use, or the date of closing.

POWER OF ATTORNEY: A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an "Attorney-in-Fact".

PREPAYMENT PENALTY: A penalty under a note, deed of trust or mortgage imposed when the loan is paid before it is due.

PURCHASE AGREEMENT: The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.

Q 

QUITCLAIM DEED: A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.

R 

RECORDING: Filing documents affecting real property with the County Recorder as a matter of public record.

S 

SPECIAL ASSESSMENT: Lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street lights, etc) which directly benefits the assessed property.

T 

TRUST: A fiduciary relationship under which one holds (real or personal) for the benefit of another. The party creating the trust is called the settler, the party holding the property is the trustee, and the party for whose benefit the property is held is called the beneficiary.

TRUSTEE: One who is appointed, or required by law, to execute the trust. Another definition is someone who holds title to real property under the terms of the deed of trust.

TRUSTOR: The borrower under a deed of trust.

V 

V.A. (Veterans Administration): An agency with the Federal government which, among other things, insures and guarantees loans for veterans.

W 

WARRANTY DEED: A real-estate oriented document used to convey fee title to real property from the grantor (usually the Seller) to the grantee (usually the Buyer).

WRAP-AROUND MORTGAGE: A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgage under the wrap-around collects a payment based on its face value then pays the first mortgagee. It is most effective when the first has a lower interest rate than the second, since the mortgagee under the wraparound gains the difference between the interest rates, or the mortgagor under the wraparound may obtain a lower rate than if refinancing.

For More Information Call: 702-454-1936 or email at director@realtyschool.com