The total finance charge (interest, loan fees, points expressed
as a percentage of the Loan amount)
Covers the cost of the Loan's initial processing
Covers the cost of the Appraisal, usually collected by the Lender.
A calculated property value by the County Assessor and used as
the basis for taxation
A buyers’ agreement to assume the liability under an existing
note secured by a mortgage or deed of trust. The lender must
approve the buyer in order to assume the loan, and then
release the original borrower’s (usually the seller) liability.
A lump sum principal payment due at the end of some
mortgages or other long term loans, and which will pay the
note in full.
Sometimes known as an offer to purchase or an earnest money
request. A binder is the acknowledgment of a deposit along with
a brief written agreement to enter into a contract for the sale of
real estate.
On ARMs, the limit on how much an interest rate or monthly
payment can change, either at each adjustment, or over the life
of the mortgage.
Covenants, Conditions and Restrictions. A Legal, Enforcable,
document which controls the Requirements, Usage, and
Restrictions of a property
A document which permits a property to by occupied, after it
meets the proscribed minimal standards for human habitation.
A document that establishes the maximum value and loan
amount for a Vetrans Administration (VA) guaranteed mortgage
A history of conveyances and encumbrances affecting the Title
of Real Property.
The financial disclosure statement that accounts for all funds
received and expected at the closing of the escrow, including
deposits for taxes, hazard insurance, and mortgage insurance.
A form of real estate ownership where the owner receives title
to a particular unit and has a proportionate interest in certain
common areas. The unit itself is generally a separately owned
space whose interior surfaces (wall, floors and ceilings) serve
as its boundaries.
A condition that must be satisfied before a contract is binding.
For instance, a sales agreement may he contingent upon the
buyer obtaining financing.
A mortgage securing a loan made by investors, which is not
FHA insured, or VA guaranteed.
A provision in some ARMS permitting changing the ARM to a
fixed-rate loan, usually after the first adjustment period. The
new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may cost extra.
Process of transferring ownership of property from one person
to another.
A form of multiple ownership, in which a corporation or a
business trust entity holds title to a property and grants
occupancy rights to share-holders by means or proprietary
leases or similar arrangements.
Charges for delivery
Assessed by the Lender for a required credit report from a
Credit Bureau.
A document which, when properly executed and delivered,
conveys title of real property.
To make known or public. When dealing with real property,
all disclosures should be made in writing.
A negotiable fee paid to the Lender to secure Buyer's financing.
Discount points are up-front interest charges to reduce the
interest rate on the loan over the life, or a portion, of the loan’s
term. A discount point equals one percent of the loan amount.
An acceleration clause requiring full payment of a mortgage or
deed of trust when the secured property changes ownership.
At the time of the Offer, money deposited by a buyer as
evidence of good faith.
Anything that affects or limits the ownership of real property,
such as mortgages, liens, easements or restrictions of any kind.
A procedure in which a neutral third party (a Title or Escrow
Company) acts as a stakeholder for the buyer and the seller,
carrying out both parties’ instructions, and assuming
responsibility for handling all of the paperwork, and the
distribution of all funds.
The charge by a Title or Escrow company to service the
transaction, and to escrow money and documents.
A written agreement between owner and agent giving agent
the right to sell a property and collect a fee for a set term.
The price at which a willing seller would sell and a willing
buyer would buy, neither being under abnormal pressure.
Popularly known as Fannie Mae. Now a Government entity
created by Congress to support the secondary mortgage
market. It purchases and sells residential mortgages insured
by FHA or guaranteed by VA as well as conventional home
mortgages.
An estate in which the Owner has unrestricted power to
dispose of the property as he wishes, including leaving by will
or inheritance. It is the greatest interest a person can have in
real estate.
A loan insured by the Department of Housing and Urban
Development; the Federal Housing Administration.
The total cost a Borrower must pay, directly or indirectly, to
obtain credit. In Accordance with Regulation ‘Z’ The Truth
in Lending Act.
A process by which a property, whose Buyer’s mortgage is in
default, is reclaimed and owned by the Lender.
A residential mortgage with monthly payments that start at
a low level and at a predetermined rate.
A qualified inspector’s report on a property’s overall condition.
This report consists of an evaluation of both the structure and
mechanical systems.
Provides Protection against mechanical systems failure
within the property. Usually includes the Plumbing, Electrical,
and Heating systems, and Installed Appliances.
The measure of interest rate changes used to determine
adjustments in an ARM’s interest rate over the term of the loan.
An equal, undivided ownership of property by two or more
persons. Upon death of any owner, the survivors take the
decedent’s interest in the property.
A legal hold or claim on property as security for a debt or charge.
A written agreement from the Lender to make the Borrower a loan
for a specified amount on specific terms.
A fee or charge for work involved in evaluating, preparing, and
submitting a purposed mortgage loan. Normally 1% of the loan
amount is charged by the lender to the buyer. The fee is limited
to 1 percent for FHA and VA loans.
The relationship between the amount of the appraised value of
the property, expressed as a percentage of the appraised value.
Types of factory pre-constructed homes. Manufactured homes
can be converted to real property once set up according to code
on private property. Modular units are usually assembled on a
pre-poured, pre-plumbed, concrete slab.
The number of percentage points the lender adds to the index
rate to calculate the ARM interest rate at each adjustment.
A legal document which provides the security for repayment
of a promissory note.
A type of term life insurance often bought by Mortgagors.
The coverage decreases as the mortgage balance declines.
If the Borrower dies while the policy is in force, the debt is
automatically covered by insurance proceeds.
Required by Lenders to ensure that the Lender has a valid lien.
It does not protect the Buyer. Also required for 2nd. mortgages.
Occurs when monthly payments fail to cover the interest cost.
The interest not covered is added to the unpaid principal
balance so that even after several payments the Buyer could
owe more than they did at the beginning of the loan. Negative
Amortization can occur when an ARM has a payment cap that
results in monthly payments which aren’t sufficient to cover
the loan's interest.
Insures the buyer against loss due to any defect of the title not
excepted to, or excluded from the policy.
Acronym for: Principal, Interest, Taxes, and Insurance.
An amount equal to 1% of the principal amount of the note or
investment, and is paid by either the Buyer or Seller.
The Lender assesses loan discount points at closing to increase
the yield on the mortgage to a position which is competitive
with other types of investments.
A fee charged the Mortgagor if payments are made on the
principle of a loan before it is due. Prepayment Penalties are
not allowed on FHA or VA loans.
The parties to a contract or an agreement. Also, the employer
of an agent in an agency relationship.
Insurance written by a Private Company which protects
the Lender against loss if the Borrower defaults on a mortgage.
A Planned Unit Development a zoning designation for
property developed at the same or slightly greater overall
density than conventional development, sometimes with
improvements clustered between open, common areas.
Uses may be residential, commercial or industrial.
A Document by which, under certain terms and conditions, the
purchaser agrees to buy certain real estate, and the Owner agrees
to sell. Also called a Sales Contract, or an Offer and Acceptance.
A real estate Broker or Associate active in a Local Real Estate
Board affiliated with the National Association of Realtors®.
Charged by the County Recorder to record documents in the
public records. Charges are based on number of pages recorded.
The set of rules governing Consumer Lending issued by the
Federal Reserve Board of Governors in accordance with the Consumer Protection Act.
A Septic System must be certified by a City or County Health Department's licensed Inspector, before an Escrow can close.
A process through which a property, in which the Buyer has
negative equity, is listed and sold at a price and terms set by
the Lender.
A home constructed on site, usually with wood-framed walls
and roof
Done by a Licensed Surveyor, at the request of the Buyer or the
Lender. A property survey shows lot size, easements, any
encroachments, locations of improvements, etc.
Required by the lender for collection and disbursement of tax
impounds (escrow) by a servicing company.
A type of joint ownership of property by two or more persons
with no right of survivorship, unless survivorship is specified
on the deed.
Required by Lenders to show that the property is free and clear
of active termites, pests, and fungus infestations before Escrow
can close.
Demands punctual performance in executing a binding contract.
In dealing with Real Property, 'Title' means Ownership.
Insurance Policy which protects the Purchaser, Mortgagee,
or the Party against liens or encumbrances against the property.
Insurance policy on the ownership of real property, against
defects (also called a 'cloud') on the Title.
Charged by a Lender to underwrite the loan.
A loan which is guaranteed by the Veterans Administration,
and made by a private, non-government lender.
The Veteran’s Administration charge for originating a VA loan.
Charged by a Lender to hold the loan locally before selling it
in the Secondary Mortgage Market to an Investor.
A City Authorities action by which land areas are specified
for the type of use property may be used.
