Glossary of Terms

Abstract Of Title

A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether…

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Acceleration Clause

Condition in a mortgage that may require the balance of the loan to become due immediately. This may occur if regular mortgage payments are not made or for breach of…

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Adjustment Interval

On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically six months, one, three, or five years, depending on the mortgage terms.

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Adjustable Rate Mortgage (ARM)

A variable or flexible rate mortgage with an interest rate that adjusts periodically according to the financial index it is based upon plus a margin. To limit the borrower¹s risk,…

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Annual Percentage Rate (APR)

The cost of credit expressed as an annual rate. It must be calculated by using a formula set by Federal law and disclosed to the borrower to aid in comparing…

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Percentage Rate (APR)

The cost of credit expressed as an annual rate. It must be calculated by using a formula set by federal law and disclosed to the borrower to aid in comparing…

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Application

A printed form used by a Mortgage lender to record necessary information concerning a prospective Mortgage.

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Application Fee

A sum of money paid towards estimated initial Mortgage processing expenses such as appraisal and credit report.

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Appraisal

An expert judgment or estimate of the quality or value of Real Estate as of a given date.

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Appreciation

A property’s increase in value due to inflation or economic factors.

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As Separate Property

Ownership in real property which is to be specifically excluded from community property.

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Assessed Valuation

The value that a taxing authority places on real or personal property for the purpose of taxation.

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Assessment

Charges levied against a property for tax purposes or to pay for municipality or association improvements such as curbs, sewers, or grounds maintenance.

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Assignment

A means of transferring a contract right or other asset to another person or entity.

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Assumption of Mortgage

An obligation undertaken by the purchaser of property to be personally liable for payment of an existing Mortgage. In an assumption, the purchaser is substituted for the original mortgagor in…

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Balloon Mortgage

A mortgage that has level monthly payments which are insufficient to amortize the loan so that a balloon, or lump sum payment is due at the end of the term….

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Bankruptcy

A proceeding in a federal court in which a debtor (who owes more than his/her assets or cash flow) is relieved from the payment of debts. This can affect the…

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Basis Points

Used to describe mortgage yield, one basis point equals one 100th of 1% or 0.01%. A mortgage yield increase from 9.50 to 9.75% is an increase of 25 basis points.

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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…

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Blanket Mortgage

A mortgage covering at least two pieces of Real Estate as security for the same mortgage.

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Borrower (Mortgagor)

One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

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Bridge Loan

A loan, usually a second Mortgage , that is collateralized by the borrower’s present home (that is usually for sale).

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Building Line of 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…

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Buy-Down

Where the buyer pays additional discount points in return for a below market interest rate; or the buyer or seller deposits sufficient funds with the lender to reduce the rate…

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Cap

A limit on how much an adjustable rate mortgages monthly payment or annual interest rate can increase. A cap is meant to protect the borrower from large increases and may…

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Cash to Close

Liquid assets that are readily available to be used to pay the closing costs involved in a closing of a Mortgage transaction.

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Certificate of Occupancy (CO)

Written authorization given by a local municipality that allows a newly completed or substantially completed structure to be inhabited – not to be confused with “Notice of Completion.”

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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…

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Certificate of Title

Document rendering an opinion on the status of a property’s title based on public records.

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Closed End Mortgage

A mortgage principal amount that is fixed and can not be increased during the life of the loan.

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Closing Costs

The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of Real Estate. These costs are in addition to price of the…

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Closing

A transaction in which the formalities of a Real Estate sale are concluded. The certificate of title, abstract, and deed are generally prepared for the closing by an attorney and…

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Cloud On Title

An outstanding claim or encumbrance which adversely affects the marketability of title.

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Co-Borrower

One who is individually and jointly obligated to repay a mortgage loan and may or may not share ownership of the property with one or more of the borrowers.

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Collateral

Something of value pledged as security for a loan. In mortgage lending, the property itself serves as collateral for a mortgage loan.

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Certificate of Reasonable Value (CRV)

A Veteran’s Administration appraisal that establishes the maximum VA Mortgage loan amount for a specified property.

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Commitment Fee

A fee charged when an agreement is reached between a lender and a borrower for a loan on specific terms and conditions. Rate and points may be locked-in or may…

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Commitment Letter

A formal offer by a lender stating the terms under which it agrees to loan money to a homebuyer.

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Common Elements / Areas / Ground

Those portions of a building, land, and amenities of a PUD, condo or co-op that are used by all the unit owners, who share in the common expense of their…

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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…

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Condominium

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

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Conforming Loan

A loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home.

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Construction Loan

A short-term loan financing improvements to Real Estate, such as the building of a new home. The lender advances funds to borrower as needed while construction progresses. Upon completion of…

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Contract Sale or Deed

A contract between the purchaser and a seller of Real Estate to convey title after certain conditions have been met. It is a form of installment sale.

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Commitment

A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgage from a lender…

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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…

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Conventional Mortgage

A mortgage loan not insured by HUD or guaranteed by the Veterans’ Administration. It is subject to conditions established by the lending institution and State statutes. The mortgage rates may…

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Cooperative Housing

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…

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Consumer Handbook on Adjustable Rate Mortgages

A disclosure required by the federal government to be given to any borrower applying for an adjustable rate Mortgage (ARM).

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Conventional Loan

A Mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA), or Rural Economic Community Development (RECD), (formerly Farmers Home Administration).

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Convertible Mortgage

An adjustable rate mortgage (ARM) that allows a borrower to switch to fixed-rate Mmortgage during a specified period.

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Co-Signer

A person who agree to assume a debt obligation if the principal borrower defaults on the payments. A cosigner is not on the security instrument and is only responsible for…

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Covenants

Rules and restrictions governing the use of property.

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Credit Bureau Repositories

An organization that complies credit history data directly from lenders and creditors to build in-file credit reports for individuals; the main repositories are Experian, Transunion, & Equifax.

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Credit Report

A report detailing an individual’s credit history.

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Debt-To-Income Ratio

The ratio of the borrower’s total monthly obligations, including housing expenses and recurring debts, to monthly income. It is used to determine the borrower’s capacity to repay the Mortgage and…

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Deed

A formal written instrument by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should…

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Deed of Trust

Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties to the instrument: the…

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DeMinimus PUD

A PUD in which the common property has less than a 2% influence upon the value of the premises. The 2% rule of thumb is calculated by dividing the dollar…

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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. It…

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Deferred Interest

Occurs when your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid principal balance of the…

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Delinquency

Failure to make payments on time. This can lead to foreclosure.

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Deposit

A sum of money given to bind a sale of Real Estate. Also known as earnest money.

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Depreciation

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

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Department of Housing and Urban Development

The U.S. government agency that administers FHA , GNMA and other housing programs.

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Discount

The amount by which the sales price of a note (or financial instrument) is below or less than its face value. The purpose of a discount is to adjust the…

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Discounted Loan

When the note rate on a loan is less than the market rate, the lender requires additional points to raise the yield on the loan to the market rate.

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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…

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Down Payment

The amount of money to be paid by the purchaser to the seller upon the signing of the agreement of sale. The agreement of sale will refer to the down…

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Due-On-Sale

A clause in a mortgage or deed of trust allowing a lender to require immediate payment of the balance of the loan if the property is sold.

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Earnest Money

The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying…

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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.

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Economic Obsolescence

The loss of value due to changes outside the particular property affected (e.g., high power lines, busy streets, proximity to an airport or any other structure perceived to be less…

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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.

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Equal Credit Opportunity Act

A federal law prohibiting lenders and other creditors from discriminating based on race, color, sex, religion, national origin, age, marital status, receipt of public assistance or because an applicant has…

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Equity

The value of a homeowner’s unencumbered interest in Real Estate. Equity is computed by subtracting from the property’s fair market value the total of the unpaid mortgage balance and any…

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Escrow Funds

Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual. In…

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Escrow Closing

In certain regions, an escrow agent holds in escrow funds as well as documents to be signed by both buyer and seller. Once all conditions of the closing have been…

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Fair Credit Reporting Act (FCRA)

A federal law which requires a lender who is rejecting a loan request because of adverse credit information to inform the borrower of the source of such information. This law…

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Fair Market Value

The price established in a free market between a buyer and seller in an arms-length transaction where neither one is compelled to buy or sell. In an appraisal, this is…

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Fannie Mae

Nickname for Federal National Mortgage Association (FNMA).

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Environmental Hazard

Natural or man-made forces that may be hazardous to the health or safety of the homeowner. Examples include: hazardous wastes, toxic substances, radon gas and materials containing asbestos. These types…

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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,…

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FNMA

See: Federal National Mortgage Association

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Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)

A quasi-governmental, federally sponsored organization that acts as a secondary market investor to buy and sell mortgage loans. FHLMC sets many of the guidelines for conventional mortgage loans, as does…

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Federal Housing Administration ( FHA )

An agency within the Department of Housing and Urban Development that sets standards for underwriting and insures residential Mortgage loans made by private lenders. One of FHA’s objectives is to…

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Federal National Mortgage Association (FNMA or Fannie Mae)

A private corporation that acts as a secondary market investor to buy and sell mortgage loans. FNMA sets many of the guidelines for conventional mortgage loans, as does FHLMC. The…

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Fee Simple

The maximum form of ownership, with the right to occupy a property and sell it to a buyer at anytime. Upon the death of the owner, the property goes to…

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FHLMC

See: Federal Home Loan Mortgage Corporation

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First Mortgage

A Real Estate loan that has priority over any subsequently recorded mortgages.

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Fixed Rate Mortgage

The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower. See also: Adjustable Rate Mortgage.

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Farmers Home Administration (FmHA)

The government agency that guarantees mortgages secured by residential properties located in rural areas, concentrating on borrowers with income less than HUD’s local median income for the area in which…

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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…

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Freddie Mac

Nickname for Federal Home Loan Mortgage Corporation.

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General Warranty Deed

A deed which conveys not only all the grantor’s interests in and title to the property to the grantee, but also warrants that if the title is defective or has…

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Gift Funds

Funds donated to the borrower from certain eligible sources to assist the borrower in meeting closing costs. Generally, eligible sources are: a relative, church, municipality, or nonprofit organization.

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Gift Letter

A written explanation signed by the individual giving the gift stating, “This is a bona fide gift and there is no obligation expressed or implied to repay this sum at…

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Ginnie Mae

Nickname for Government National Mortgage Association (GNMA).

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Government National Mortgage Association

A government organization that participates in the secondary market, buying, selling and guaranteeing FHA and VA loans.

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Graduated Payment Mortgage (GPM)

A Mortgage that has initial monthly payments set at an amount lower than that required for full amortization of the debt. The payments are then increased by a specified percentage…

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Grantee

That party in the deed who is the buyer or recipient.

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Homeowners’ Association Dues

The fees imposed by a condominium or homeowners’ association for maintenance of common areas.

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Gross Monthly Income

Total monthly income earned before tax and other deductions.

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Guaranty

A promise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

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Hazard Insurance

Protects against damages caused to property by fire, windstorms, and other common hazards.

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High-Ratio Loan

Mortgage loans in excess of 80 percent of the loan amount divided by the lower of the sales price or appraised value.

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Home Equity Line Of Credit (HELOC)

A Real Estate loan, usually in a subordinate position, that allows a borrower to borrow against equity in Real Estate owned with specific limitations. This is an open-end loan that…

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Home Equity Loan

A mortgage on the borrower’s principal residence, usually for the purpose of making home improvements or debt consolidation. This is closed-end loan repayable in accordance with a fixed schedule.

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Homeowner’s Association (HOA)

A non-profit association, whose directors and officers are elected by the unit owners of a condominium or PUD project; primary responsibilities are to manage the common areas, expenses and services…

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Grantor

That party in the deed who is the seller or giver.

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Housing and Urban Development (HUD)

The U.S. government agency that administers FHA, GNMA and other housing programs.

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Housing Debt-To-Income Ratio (DTI)

The sum of all monthly housing Mortgage expenses such as principal, interest, taxes and insurance (PITI), Homeowners dues, private mortgage insurance and any special assessments as a percentage of gross…

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Impound

That portion of a borrower’s monthly payment held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due….

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Index

A published interest rate complied from other indicators such as U.S. Treasury bills or the monthly average interest rate on loans closed by savings and loan organizations. Mortgage lenders use…

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Installment Debt

Borrowed money that is repaid in successive payments, usually at regular intervals.

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Insured Loans

A loan insured by HUD-FHA or a private mortgage insurance company.

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Interest

A charge paid for borrowing money.

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Interest Rate

The simple interest rate, stated as a percentage, charged b a lender on the principal amount of borrowed money.

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Interim Financing

A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.

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Investor

A money source for a lender.

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Lien

A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

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Liquidity

Cash or cash equivalents that a borrower has accumulated or the ability to readily convert other assets or investments into cash; a.k.a. cash reserves.

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Loan-To-Value Ratio (LTV)

The relationship, expressed as a percentage, between the amount of the proposed loan and a property’s appraised value or purchase price. For example, a $75,000 loan on a property appraised…

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Lock-In Rate

The guarantee of a specific interest rate and/or points for a specific period of time. Some lenders will charge a fee for locking in an interest rate.

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Margin

The amount a lender adds to the index of an adjustable rate mortgage to establish an interest rate. For example, a margin of 1.50 added to a 7 percent index…

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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…

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Market Value

The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed under no pressure to act. The market…

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Keogh

A retirement plan for self-employed individuals. Similar to an IRA, contributions may be deductible and the tax liability is deferred until the funds are withdrawn.

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Maturity

The termination or due date on which final payment on a loan must be paid in full.

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Mortgage Insurance Premium (MIP)

MIP is one-half percent borrowers pay each month on FHA insured Mortgage loans. It is insurance from FHA to the lender against incurring a less due to the borrower’s default. On September…

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Monthly Payment

Usually, the amount of PITI (principal, interest, taxes, and insurance) paid each month on a mortgage loan.

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Mortgage

A legal instrument in which a lien on real property is granted as security for the repayment of a loan. In some states, a deed of trust is used rather…

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Mortgage (Open-End)

A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no…

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Mortgagee

The lender in a mortgage agreement.

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Mortgagor

The borrower in a mortgage agreement.

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Mortgage Broker

An intermediary between a borrower and a lender. A broker’s expertise is to help borrowers find financing that they might not otherwise find themselves.

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Mortgage Commitment

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.

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Mortgage Insurance Premium (MIP / MI)

The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund…

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Mortgage Note

A written agreement to repay a loan. The agreement is secured by a mortgag , serves as proof of an indebtedness, and states the manner in which it shall be…

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Negative Amortization

A situation in which a borrower is paying less interest than what is actually being charged for a mortgage loan. The unpaid interest is added to the loan’s principal. The…

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Net Effective Income

The borrower’s gross income minus federal tax.

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Net Rental Income

The remaining income generated by an investment property after deducting all mortgage related expenses, including HOA fees (if applicable) and operating expenses from the gross rental income.

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Net Worth

The amount by which an individual’s assets (or assets of a business) exceed total liabilities.

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Non-Assumption Clause

In a mortgage contract, a statement that disallows a new buyer to assume a Mortgage payment without the approval of the lender.

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Non-Conforming Loan

A loan that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines because the loan amount is too high or FNMA/FHLMC underwriting…

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Non-Permanent Resident Alien

A non-U.S. citizen who resides in the United States on a temporary basis on a government-issued work visa.

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Non-Resident Alien

A non-U.S. citizen who resides outside of the United States.

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Power Of Attorney

A legal document authorizing one person to act on behalf of another.

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Origination Fee

The amount charged by a lender to originate and close a mortgage loan.

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Permanent Buydown

A permanent reduction to the interest rate for the life of the loan. The funds for the buydown may come from the borrower, lender, seller or a third party.

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PITI (Principal, Interest, Taxes, and Insurance)

The most common components of a monthly Mortgage payment.

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Planned Unit Development (PUD)

A Real Estate project in which each unit owner has title to a residential lot and building and a non-exclusive easement on the common areas of the project.

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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.

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Points

A point is one percent of the amount of the mortgage loan.

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Occupancy

The use of a property as a full-time residence, either by the title holder (owner-occupancy) or by another party through a formal agreement (rental).

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Payment To Income Ratio (P/I)

The ratio of the borrower¹s total housing payment (principal, interest, taxes insurance, HOA fees, special assessments, and subordinate financing) that is used to measure the borrower’s capacity to manage the…

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Prepaid Items

Items that generally must be paid for at the time of closing and are generally recurring charges. Prepaid items may include the following: – First year premiums for hazard, flood,…

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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…

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Pre-Payment Penalty

Money charged for an early repayment of debt. Prepayment penalties are allowed in some form in 36 states and the District of Columbia.

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Pre-Qualification

Tentative establishment of a borrower¹s qualification for a mortgage loan amount of a specific amount or ability to make monthly payments at a certain level, based solely on debt-to-income ratios….

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Primary Mortgage Market

Lenders making mortgage loans directly to borrower’s such as savings and loan association, commercial banks and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such…

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Primary Residence

A residence which the borrower intends to occupy as the principal residence.

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Prime Rate

The interest rate designated by a lender as its prime rate and which serves as a basis for the interest rate charged to certain customers.

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Principal

The remaining balance due on a debt, exclusive of accrued interest.

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Preliminary Title Report

The results of a title search by a title company prior to issuing a title binder or commitment to insure clear title.

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Private Mortgage insurance

Insurance coverage that many lenders, investors, and government agencies require the borrower to obtain to protect the lender against loss in event of a mortgage default for higher LTV mortgages.

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Processing

The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer.

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Prorate

To proportionally divide amounts owed by the buyer and the seller at closing.

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Planned Unit Development (PUD)

A planned combination of diverse land uses, such as housing, recreation, and shopping in one contained development or subdivision. A major feature of a PUD includes areas of common land…

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Purchase Contract (Agreement/Offer)

An agreement between a buyer and seller of real property, setting forth the price and terms of the sale. Also known as a sales contract.

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Qualification

As determined by a lender, the ability of the borrower to repay a mortgage loan based on the borrower’s credit history, employment history, assets, debts, income and other factors.

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Qualifying Ratios

The percentage of payment to income (P/I) and debt-to-income (D/I) that is used to measure the borrower’s capacity to repay the mortgage debt.

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Quitclaim Deed

A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when…

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Rate Lock Option

An agreement guaranteeing an individual a specified interest rate on a loan provided the loan is closed within a set period of time.

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Real Assets

Real estate or real property owned by an individual of business.

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Real Estate Broker

An agent who buys and sells Real Estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents…

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Real Property

Land and that which is affixed to it.

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Refinance

Retirement of an existing debt from the proceeds of a new loan, using the same collateral as security.

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Rental Income

Income generated by renting property to a tenant.

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Reserves

Sometimes referred to as “cash reserves” or “post closing reserves”; this is the amount of liquid assets the borrower has remaining after completion of the Mortgage loan transaction and payment…

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Resident Alien

A non-U.S. citizen who is granted most of the rights of an U.S. citizen, including permanent residency in the United States. Resident Alien status is usually evidenced by a “Green…

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RESPA

Abbreviation for the federal Real Estate Settlement Procedures Act, which requires lenders to disclose information on the nature and costs of the Real Estate settlement process, limits certain fees and…

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Reverse Annuity Mortgage (RAM)

A form of mortgage in which the lender makes periodic payments to the borrower using the borrower’s equity in the home as satisfaction of the mortgage (The document issued by…

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Settlement

The closing of a mortgage loan.

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Satisfaction of Mortgage

The recordable instrument issued by the lender verifying full payment of a mortgage debt.

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Second Mortgage

A loan that is junior to a primary or first mortgage and often has a higher interest rate and a shorter term.

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Second Home / Vacation Home

A second home/vacation home that is occupied by the borrower for some portion of the year for his/her exclusive use and enjoyment but which is suitable for year-round occupancy. It…

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Secondary Market

A market in which investors like GNMA, FHLMC, FNMA and private organizations buy large numbers of mortgages from the primary lenders and either hold them in a portfolio or package…

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Security

In lending, the collateral given, deposited, or pledged to secure the payment of a debt.

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Self-Employed Borrower

A borrower whose income is derived from a business in which he/she has an ownership interest of 25%or more.

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Servicing

The responsibility of collecting monthly mortgage payments and properly crediting them to the principal, interest, taxes and insurance, as well as keeping the borrower informed of any changes in the…

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Revolving Debt

A debt that does not have a fixed payment, although repayment is usually a percentage of the outstanding balance and made at regular intervals; most common are credit cards issued…

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Special Assessments

A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, streetlights, etc.

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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…

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Subdivision

An area of land that is platted and subdivided into individual lots.

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Survey

A physical measurement of the property done by registered professional showing the boundaries, dimensions and location of any buildings as well as easements, rights of way, roads, etc.

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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…

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Temporary Buydown

A loan on which the interest rate has been “bought down” for a temporary period of time at the beginning of the loan by escrowing funds at the time of…

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Sweat Equity

Equity created by a purchaser’s work on a property purchased.

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Term

The time limit within which a loan must be repaid.

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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…

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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.” Insurance benefits will…

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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…

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Title Search

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…

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Wraparound Mortgage

A junior mortgage taken back by the seller for the amount of the property’s purchase price less the buyer’s down payment. The existing loan is retained and combined with a…

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Warranty Deed

A document protecting a homebuyer against any and all claims to the property.

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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…

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Truth-In-Lending Act

A Federal law requiring full disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms and financial institutions.

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Underwriter

A professional who approves or denies a loan to a potential homebuyer based on the homebuyer’s credit history, employment history, assets, debts, property appraisal and other factors.

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Underwriting

The decision whether to make a loan to a potential home buyer based on credit, employment, assets and other factors and the matching of this risk to an appropriate rate…

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Uniform Settlement Statement

A standard document prescribed by the Real Estate Settlement Procedures Act disclosing all costs paid in connection with the settlement of a Real Estate transaction. Also called a HUD-1.

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Verification of Deposit (VOD)

A document signed by the borrower’s financial institution verifying the status and balance of his or her financial accounts.

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Verification of Employment (VOE)

A document signed by borrower’s employer verifying his or her position and salary.

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Veteran’s Administration (VA)

The federal agency responsible for the VA loan guarantee program as well as other services for eligible veterans. In general, qualified veterans can apply for home loans with no down…

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Walk-Through

An inspection of a property by the prospective buyer prior to closing on a mortgage.

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Yield

The ratio of investment income to the total amount invested over a given period of time; also known as “return on investment” or ROI.

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Zero Point Option

An option which allows the borrower to opt to pay a slightly higher loan interest rate in lieu of paying the loan origination points generally charged for the particular loan…

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Zoning Ordinances

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

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