Rate Mortgage (ARM): A mortgage with an interest rate that changes
over time in line with movements in the index.
Periods: The length of time between interest rate changes on an
ARM. For example: A loan with an adjustment period of one year is
called a one year ARM, which means that the interest rate can
change once a year.
A change that alters, adds or corrects a part of an agreement
without changing the key idea or content.
Gradual repayment of a loan in equal installments of principal and
interest, rather than interest only payments.
Percentage Rate (APR): The total finance charge (interest, loan
fees, points expressed as percentage of the loan amount) stated as
a yearly rate.
A written analysis of the estimated value of a property prepared
by a qualified appraiser.
Of Mortgage: A buyer's agreement to assume the liability under an
existing note that is secured by a mortgage or Deed of Trust. The
lender must approve the buyer in order to assume the loan.
Mortgage: A mortgage that has level monthly payments of principal
and interest that do not fully amortize the loan. The balance is
due in a lump sum payment at a specified date, usually at the end
of the term.
A proceeding in a federal court in which a debtor who has greater
debts than assets can get debt relief by transferring those assets
to a trustee or agreeing to reorganization of assets and
The recipient of benefits, usually a lender, and often from a deed
- Broker: A
person who brings parties together and assists in negotiating
contracts between them for a commission or fee.
Mortgage: A mortgage in which an initial lump sum payment is made
to reduce a borrower's monthly payments during the early years in
- Cap: The
limit of how much an interest rate or monthly payment can change,
either at each adjustment or over the life of the mortgage.
Refinance: A refinance transaction in which the borrower receives
additional cash for any purpose.
Covenants, Conditions, and Restrictions: A document controlling
the use, requirements and restrictions of a property.
Of Reasonable Value (CRV): A document that establishes the maximum
value and loan amount for a VA guaranteed loan.
- Close Of
Escrow: The date the documents are recorded and title passes from
seller to buyer. On this date, the buyer becomes the legal owner
and title insurance becomes effective.
Statement: The financial disclosure statement that accounts for
all of the funds received and expected at the closing including
deposits for taxes, hazard insurance, and mortgage insurance.
- 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.
Sales: Sales with similar characteristics as the subject property,
used for appraisal analysis. Commonly known as "comps."
Clause: The condition or dependence upon a stated event which must
occur before a contract is binding. For example: The sale of a
house, contingent upon the buyer obtaining financing.
Provision: A provision in some ARM's to convert the
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
mortgage. This conversion feature may be an extra cost.
Bureau: An organization that gathers, records and keeps financial
and public records data about the payment records of persons being
considered for credit.
- Creditor: A
person to whom money is owed.
- Deed: The
legal document transferring or conveying title to a property from
one party to another.
- Deed Of
Trust: An instrument used in many states in place of a
Restrictions: Limitations in a deed to a property that dictates
certain uses that may or may not be made of the property.
Failure to make payments when payments are due.
Payment: The part of the purchase price that a buyer pays in cash
and does not finance with a mortgage.
- Due On Sale
Clause: An acceleration clause that requires full payment of a
mortgage or Deed of Trust when the secured property changes
Money: The portion of the down payment delivered to the seller or
escrow agent by the buyer with a written offer as evidence of good
- Easement: A
right, privilege or interest limited to a specific purpose that
one party has in the land of another.
- Escrow: An
impartial third-party stakeholder for both buyer and seller who is
responsible for completing paperwork and distributing funds.
- Equity: The
difference between the value of a property and the amount still
owed on its mortgage.
- Fair Market
Value: The price at which a property will sell from a willing
buyer to a willing seller.
National Mortgage Association (FNMA):Popularly known as Fannie
Mae. A privately owned corporation created by Congress to support
the secondary mortgage market. It purchases and sells residential
mortgages insured by the FHA or guaranteed by VA, as well as
conventional home mortgages.
- Fee Simple:
An estate in which the owner has unrestricted power to dispose of
the property as he/she wishes including leaving by will or
inheritance. It is the greatest interest a person can have in real
Charge: The total cost a borrower must pay, directly or
indirectly, to obtain credit according to Regulation Z.
- Fixed Rate
Mortgage: A mortgage in which the payments and interest rate do
not change during the term of the loan.
A legal action allowing a lender to sell a borrower's property in
order to satisfy the debt.
Mortgage: A mortgage insured by the Federal Housing Administration
(FHA) or guaranteed by the Veteran's Administration (VA) or the
Rural Housing Service (RHS).
Payment Mortgage: A residential mortgage with monthly payments
that start at a low level and increase at a predetermined
- Grant Deed:
A deed used to transfer real property, containing warranties
against prior conveyances or encumbrances.
- Grantor :
The person transferring title, or an interest in real property. A
grantor must be competent to convey title. The grantor must be
clearly identified in the deed.
Insurance: Insurance that compensates for fire, wind, vandalism or
hazardous physical damage to a property. Buyer may add liability
insurance and extended coverage for personal property.
Inspection Report: A qualified inspector's report on a property's
overall condition, usually including an evaluation of the
structure and internal mechanical systems.
Owner's Association (HOA): A nonprofit, formal group of
condominium owners who desire to manage, maintain and improve the
development's common areas.
Warranty Plan: Type of insurance that covers against failure of
mechanical systems on a property, such as plumbing, electrical,
heating systems and installed appliances.
- Impounds: A
trust type of account established by lenders for the accumulation
of borrower funds to meet periodic payments of taxes, mortgage
insurance premiums and/or future insurance policy premiums
required to protect their security.
- Index: A
published rate plus a margin that determines interest rates on an
An agreement covering home owners for specific losses in exchange
for a periodic payment.
Tenancy: An equal undivided ownership of property by two or more
persons, including the right of survivorship.
Description: A highly specific description recognized by law,
based on government surveys, that identifies the exact boundaries
of an entire piece of land.
- Lien: A
legal hold or claim on property as security for a debt or charge
that must be repaid when that property is sold.
- Loan: An
amount of borrowed money (principal) that is usually repaid with
Commitment: A written promise to make a loan for a specified
amount on specific terms.
- Loan To
Value (LTV) Ratio: The relationship between the amount of the
appraised value of the property and the amount of the loan,
expressed as a percentage.
- Margin: The
number of percentage points the lender adds to the index rate to
calculate the adjustable mortgage (ARM) interest rate at each
- Mortgage: A
legal document that pledges a property to a lender as security for
Amortization: Increase in mortgage debt that occurs when monthly
payments are too low to cover the full amount of interest due.
When this shortfall is added to the remaining balance, it creates
Fee: A fee or charge paid for establishinga loan.
- PITI: A
payment combining Principal, Interest, Taxes & Insurance
- Point: A
fee collected by a lender that is equal to 1 % of the principal
amount of an investment or note.
- Power Of
Attorney: A written instrument whereby a principal gives authority
to an agent, who may also be called an "Attorney-in-Fact."
Title Report: A report showing the condition of title before a
sale or loan transaction,
Penalty: A fee charged to a mortgagor who pays a loan before it is
Mortgage Insurance (PMI): Insurance written by a private company
protecting the lender against loss if the borrower defaults on the
Agreement: Written document stating terms and conditions between a
property buyer and seller.
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
- Realtor: A
real estate broker or associate active in a local real estate
board affiliate with the National Association of Realtors.
Filing documents affecting real property with the County Recorder
as a matter of public record.
- Tenancy In
Common: A type of joint ownership in a property with no right of
- Title: A
legal document that confirms a person's right to own or ownership
of a property.
Insurance Policy: A policy that protects the purchaser, mortgagee,
or other party against losses.
- VA Loan: A
loan that is guaranteed by the Veterans Administration and made by
a private lender.
Deed: A real estate oriented document used to convey fee title to
real property from the grantor to the grantee (usually the seller to
A deed in which the grantor fully warrants good clear title to the
premises; also called a general warranty deed. The usual covenants
of title are covenant of possession, covenant of quiet enjoyment,
covenant against encumbrances, covenant of warranty forever and
covenant of further assurance. A warranty deed warrants the title,
not the quality of construction of the real property. A warranty
deed is used in most real estate deed transfers and offers the
greatest protection of any deed.