Abstract (Of Title) - A summary of the public records relating to the title to a particular piece of land. A title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

 

Acceleration Clause - Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.

ARM - Adjustable Rate Mortgage - A loan that allows the interest rate to be changed.

Agency - A legal relationship in which an owner-principal engages a broker-agent in the sale of property or buyer-principal engages a broker-agent in the purchase of property.

Agreement of Sale - Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.

APR - Annual Percentage Rate - The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.

Amortization - The gradual repayment of a mortgage by periodic installments.

Appraisal - An estimate of the value of a property.

Assessed Value - The valuation placed on property by a public tax assessor as the basis of property taxes.

Assumption of Mortgage - Agreement by the buyer to assume responsibility for a mortgage owned by the seller; the seller remains liable to the lender unless the lender agrees to release him.

Balloon Mortgage - A mortgage that has a substantial amount of the principal due at the maturity of the note.

Binder or "Offer to Purchase" - A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate upon agreed terms for a limited period of time. 

Broker - A person licensed by a state real estate commission to act independently in conducting a real estate brokerage business.

Building Line or Setback - Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

Cap - A maximum amount of interest that can be charged.

Certificate of Title - A certificate issued by a title company or a written opinion rendered by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title which an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence. The protection offered a homeowner under a certificate of title is not as great as that offered in a title insurance policy.

Closing - The final step in transferring ownership of a property from seller to buyer.

Closing Costs - Fees and expenses, not including the price of the home, payable by the seller and the buyer at the time of closing (e.g., brokerage commissions, title insurance premiums, inspection and appraisal fees). This is a typical list:

 

BUYER'S EXPENSES	SELLER'S EXPENSES
Documentary Stamps on Notes Recording Deed and Mortgage Escrow Fees Closing Agent's Fee Title Insurance Appraisal and Inspection Survey Charge	Cost of Abstract Documentary Stamps on Deed Real Estate Commission Survey Charge Escrow Fees Closing Agent's Fee
The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.

 

Cloud (On Title) An outstanding claim or encumbrance which adversely affects the marketability of title.

 

Commission - Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price—6 to 7 percent on houses, 10 percent on land.

 

Condemnation - The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.

 

Condominium - Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multi-unit project.

 

Contingency - A condition that must be satisfied before a contract is binding.

 

Contractor - In the construction industry, a contractor is one who contracts to erect buildings or portions of them. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building, bridge and dam erection, and others

 

Conventional Loan - A fixed-rate, fixed-term loan that is made without government insurance.

 

Cooperative Housing (Co-Op) - An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock

 

Deed - A legal document conveying title to a property.

 

Default - Failure to make mortgage payments as agreed to in a commitment based on the terms and at the designated time set forth in the mortgage or deed of trust. In the event of default, the mortgage may give the lender the right to accelerate payments, take possession and receive rents, and start foreclosure.

 

Depreciation - Decline in value of a house due to wear and tear, adverse changes in the neighborhood, or any other reason.

 

Documentary Stamps - A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.

 

Down payment - Down payment is the difference between the sales price and maximum mortgage amount.

 

Earnest Money - A payment given to the seller by a potential buyer indicating the buyer's intent to complete the purchase of the property.

 

Easement Rights - A right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right- of- way across private property is a common example.

 

Encroachment - An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line.

 

Encumbrance - A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.

 

Equity - The owner's value or interest in a property.

 

Escrow - The placement of money or documents with a third party for safekeeping pending the fulfillment or performance of a specific act or condition.

 

FHA Mortgage - A mortgage loan insured by the Federal Housing Administration, permitting lenders to offer better terms.

 

Fixed-rate Mortgage - A loan that has only one stated interest rate.

 

Foreclosure - A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, or deed of trust, by taking and selling the mortgaged property, and depriving the mortgagor of possession

HUD - Housing and Urban Development - A U.S. governmental agency established to implement certain federal housing and community development programs.

Interest - A charge paid for borrowing money

Lien - A legal claim against a property that must be paid when property is sold.

Loan Origination Fee - The charge you must pay to the lender for processing your mortgage.

Market Value - The highest price a ready, willing and able buyer will pay and the lowest price a seller will accept.

Marketable Title - A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection

Mortgage - A lien on real estate given by the buyer as security for money borrowed from a lender.

Mortgage Commitment - A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house

Mortgage Insurance - A policy that provides protection for the lender in case of default and guarantees repayment of the loan in the event of death or disability of the borrower.

Mortgagee - The lender in a mortgage agreement.

 

Mortgagor - The borrower in a mortgage agreement.

MLS - Multiple Listing Service

Plat - A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements

Points - A dollar amount, expressed as a percentage of the mortgage amount, which is paid to a lender as a consideration for making a loan. A point is 1% of the amount of the mortgage loan; also called discount points.

Postulate - transitive verb Etymology: L postulatus, past participle of postulare; akin to Latin poscere to ask, Old High German forscOn to search, 1: DEMAND, CLAIM  2: to assume or claim as true, existent, or necessary: depend upon or start from the postulate of 

Postulated: put forward as a reality.

Prepayment - Payment of mortgage loan, or part of it, before due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment.

 

Principal - The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.

P&I - Principal and Interest Payment - A periodic (usually monthly) payment that includes the interest charges for the period plus an amount applied to amortization of the principal balance.

PITI - Principal, Interest, Taxes, and Insurance Payment - The periodic payment that includes a principal and interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgage property.

REALTOR® and REALTOR® ASSOCIATE - Registered collective membership marks that identify real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics.

Refinancing - The process of the same mortgagor paying off one loan with the proceeds from another loan.

 

Restrictive Covenants - Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer.

Special Assessments - A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

Special Lien - A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien. (See lien.)

Special Warranty Deed - A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has, or which might in the future, impair the grantee's title.

Survey - A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.

Tax - As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.

 

Title - As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.

 

Title Insurance - Protects lenders or homeowners against loss of their interest in property due to legal defects in title. Title insurance may be issued to a "mortgagee's title policy."

 

Title Search or Examination - A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title.

 

Trustee - A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law. (See deed of trust.)

VA Mortgage - A mortgage loan guaranteed by the Veterans Administration, an agency of the federal government that provides services for eligible veterans.

Zoning Ordinances - The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage