Glossary of Terms



ACCELERATION CLAUSE   
A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. This is usually when the borrower defaults on the loan.

ACTUAL AGE  
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE

ADJUSTMENT DATE   
The date the interest rate changes on an adjustable rate mortgage.

AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements

ADDENDUM
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

ADJUSTABLE-RATE MORTGAGE (ARM)   
A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ADJUSTED BASIS  
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

ADJUSTED SALES PRICE   
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

AFFORDABILITY ANALYSIS   
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT   
A person who has been appointed to act on behalf of another for a particular transaction.

AMORTIZATION   
The repayment of a loan through regular periodic payment.

AMORTIZATION SCHEDULE  
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM  
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

ANNUAL PERCENTAGE RATE (APR)   
The rate of annual interest charged on a loan.

APPLICATION   
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.

APPRAISAL  
A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

APPRAISAL REPORT   
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

APPRAISED VALUE  
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER 
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECIATION   
The natural rise in property value due to market forces.

ARMS LENGTH TRANSACTION  
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

ASSESSED VALUE   
The value of a property according to jurisdictional tax assessment.

ASSESSMENT
The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATIO  
The comparative relationship of a property's assessed value to its market value.

ASSESSOR  
The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET   
Any item of value which a person owns.

ASSIGNMENT 
Transfer of ownership of a mortgage usually when the loan is sold to another company.

ASSUMABLE MORTGAGE  
A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTION
When a buyer takes over, or "assumes" the sellers mortgage.

ATTACHED HOUSING
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

BALLOON MORTGAGE   
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.

BALLOON PAYMENT   
The final large payment at the end of a balloon mortgage term.

BANKRUPTCY   
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.

BILL OF SALE   
A physical receipt indicating the sale of property.

BRIDGE FINANCING 
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.

BROKER
An individual who facilitates the purchase of property by bringing together a buyer and a seller..

BUILDING CODE   
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.

BUY DOWN  
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.

CALL OPTION   
A clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.

CAP 
Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.

CAPITAL 
Accumulated goods and money which is most often used to generate additional income.

CAPITAL EXPENDITURE 
An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

CASH-OUT REFINANCE   
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.

CAVEAT EMPTOR  
Literally translated: ''Let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CERTIFICATE OF DEPOSIT  
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

CERTIFICATE OF DEPOSIT INDEX  
An index based on the interest rate of six month CD's. Used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY   
A document issued by the Veterans Administration that certifies eligibility for a VA loan.

CERTIFICATE OF OCCUPANCY   
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

CERTIFICATE OF REASONABLE VALUE (CRV)  
Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

CERTIFICATE OF TITLE 
A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

CHAIN OF TITLE  
The complete history of ownership of a piece of property.

CLEAR TITLE 
Ownership of property that is not encumbered by any counter-claim or lien.

CLOSING  
The process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).

CLOSING COSTS 
All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

CLOSING STATEMENT
The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.

CO-BORROWER  
A second person sharing obligation on the loan and title on the property.

COLLATERAL
An asset which is placed at risk to secure the repayment of a loan.

COLLECTION   
The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.

CO-MAKER 
A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

COMMON LAW 
As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

COMMISSION 
A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.

COMMUNITY PROPERTY 
In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

COMPARABLES  
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property whose value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

COMPOUND INTEREST   
Interest paid on the principal amount, as well as any accumulated interest.

CONCESSIONS 
Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDOMINIUM  
A development where individual units are owned, but common areas and amenities are shared equally by all owners.

CONDOMINIUM CONVERSION  
Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

CONSTRUCTION LOAN   
A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

CONTINGENCY  
Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer that requires a complete home inspection before it becomes official.

CONTRACT  
A legally binding agreement, oral or written, between two parties.

CONVENTIONAL MORTGAGE   
A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

CONVERTIBLE ARM   
A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.

COOPERATIVE (CO-OP)  
A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.

COST OF FUNDS INDEX (COFI)  
An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT
A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDIT
A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

CREDIT HISTORY   
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

CREDITOR   
A person to whom money is owed.

CREDIT REPORT 
A detailed report of an individuals credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.

CREDIT REPOSITORY 
Large companies that gather and store financial and credit information about individuals who apply for credit.

DEBT   
An obligation to repay some amount owed. This may or may not be monetary.

DEBT EQUITY RATIO  
The ratio of the amount a mortgagor still owes on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.

DEED   
A document indicating the ownership of a property.

DEED-IN-LIEU (OF FORECLOSURE) 
A document given by a borrower to a lender, transferring title of the property. Often used to avoid credit-damaging foreclosure procedures.

DEED OF TRUST   
A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.

DEED OF RECONVEYANCE
A document which transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.

DEED OF RELEASE
A document which dismisses a lien or other claim on a property.

DEED OF SURRENDER   
A document used to surrender any claim a person has to a property.

DEFAULT   
The condition in which a borrower has failed to meet the obligations of a loan or mortgage.

DELINQUENCY 
The state in which a borrow has failed to meet payment obligations on time.

DEPOSIT   
Cash given along with an offer to purchase property, Also called EARNEST MONEY

DEPRECIATION  
The natural decline in property value due to market forces or depletion of resources.

DETACHED SINGLE-FAMILY HOME
A single building improvement intended to serve as a home for one family.

DISCOUNT POINTS   
Points paid in addition to the loan origination fee to get a lower interest rate. One point is equal to one percent of the loan amount.

DISTRESSED PROPERTY
A mortgaged property which has been foreclosed on.

DUE-ON-SALE PROVISION   
A clause in a mortgage giving the lender the right to demand payment of the full balance when the borrower sells the property.

DUPLEX  
A single-building improvement which is divided and provides two units which serve as homes to two families.

DOWN PAYMENT   
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.

EARNEST MONEY DEPOSIT   
A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.

ECONOMIC LIFE  
The amount of time which any income-producing property is able to provide benefits to its owner.

EFFECTIVE AGE 
The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive wear and tear can cause a property's effective age to be greater than its actual age.

EQUAL CREDIT OPPORTUNITY ACT (ECOA
U.S. federal law requiring that lenders afford people equal chance of getting credit without discrimination based on race, religion, age, sex etc

EQUITY   
The difference between the fair market value of a property and that amount an owner owes on any mortgages or loans secured by the property.

EQUITY BUILDUP 
The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

ESCROW  
An amount retained by a third party in a trust to meet a future obligation. Often used in the payment of annual taxes or insurance for real property.

ESCROW ACCOUNT   
An account setup by a mortgage servicing company to hold funds with which to pay expenses such as homeowners insurance and property taxes. An extra amount is paid with regular principal and interest payments that go into the escrow account each month.

ESCROW ANALYSIS
An analysis performed by the lender usually once each year to see that the amount of money going into the escrow account each month is correct for the forecasted expenses.

ESCROW DISBURSEMENTS
The payout of funds from an escrow account to pay property expenses such as taxes and insurance.

FAIR CREDIT REPORTING ACT 
A federal law regulating the way credit agencies disclose consumer credit reports and the remedies available to consumers for disputing and correcting mistakes on their credit history.

FAIR MARKET VALUE  
The price at which two unrelated parties, under no duress, are willing to transact business.

FANNIE MAE   
A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nation's largest source of financing for home mortgages.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)  
The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nation's financial system by insuring deposits and promoting safe and sound banking practices.

FEDERAL HOUSING ADMINISTRATION (FHA)   
A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930's to facilitate the purchase of homes by low-income, first-time home buyers. It currently provides federally-subsidized mortgage insurance for private lenders.

FHA MORTGAGE   
A mortgage that is insured by the Federal Housing Administration (FHA).

FIRST MORTGAGE
The primary loan or mortgage secured by a piece of property.

FIXED-RATE MORTGAGE (FRM)   
A mortgage which has a fixed rate of interest over the life of the loan.

FLOOD INSURANCE   
Supplemental insurance which covers a home owner for any loss due to water damage from a flood. Often required by lenders for homes located in FEMA-designated flood zones.

FORECLOSURE  
The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.

FORFEITURE   
The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

FULL-APPROVAL 

Full-Approval is a written statement from a mortgage consultant stating that a borrower is fully approved based on the income and asset documentation they provide. A Full-Approval strengthens your offer which significantly increases the likelihood of its being accepted.  

GENERAL LIEN  

 

A broad-based claim against several properties owned by a defaulting party.

GINNIE MAE  
A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income homebuyers.

GOVERNMENT MORTGAGE   
Any mortgage insured by a government agency, such as the FHA or VA.

HAZARD INSURANCE   
Insurance covering damage to a property caused by hazards such as fire, wind and accident.

HOME EQUITY CONVERSION MORTGAGE (HECM)   
Also known as a reverse annuity mortgage. It allows home owners (usually older) to convert equity in the home into cash. Normally paid by the lender in monthly payments. HECM's typically do not have to be repaid until the borrower is no longer occupying the home.

HOME EQUITY LINE OF CREDIT  
A type of mortgage loan that allows the borrower to draw cash against the equity in his home.

HOME INSPECTION  
A complete examination of a building to determine its structural integrity and uncover any defects in materials or workmanship which may adversely affect the property or decrease its value.

HOMEOWNER'S INSURANCE 
A policy which covers a home owner for any loss of property due to accident, intrusion or hazard.

HOMEOWNER'S WARRANT
An insurance policy covering the repair of systems and appliances within the home for the coverage period.

HUD-1 STATEMENT   
A standardized, itemized list, published by the U.S. Department of Housing and Urban Development (HUD), of all anticipated CLOSING COSTS connected with a particular property purchase.

INSURABLE TITLE   
The title to property which has been sufficiently reviewed by a title insurance company, such that they are willing to insure it as free and clear.

INTEREST RATE  
A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

INVESTMENT PROPERTY  
Any piece of property that is expected to generate a financial return. This may come as the result of periodic rents or through appreciation of the property value over time.

JOINT TENANCY  
A situation where two or more parties own a piece of property together. Each of the owners has an equal share, and may not dispose of or alter that share without the consent of the other owners.

JUDGMENT
An official court decision. If the judgment requires payment from one party to another, the court may put a lien against the payee's property as collateral.

JUMBO LOAN   
A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.

LATE CHARGE   
An extra charge, or penalty added to a regular mortgage payment when the payment is made late by an amount of time specified in the original loan document.

LEASE
A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.

LEASEHOLD ESTATE 
A type of property ''ownership'' where the buyer actually has a long-term lease on the property.

LEASE OPTION   
A lease agreement that gives the tenant an option to buy the property. Usually, a portion of the regular monthly rent payment will be applied towards the down payment.

LEGAL DESCRIPTION  
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

LENDER   
The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.

LIABILITIES  
A person's outstanding debt obligations.

LIABILITY INSURANCE   
Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.

LIEN   
Any claim against a piece of property resulting from a debt or other obligation.

LIFE CAP  
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.

LINE OF CREDIT  
An extension of credit for a certain amount for a specific amount of time. To be used by the borrower at his discretion.

LIQUID ASSET 
Any asset which can be quickly converted into cash at little or no cost, or cash itself.

LOAN   
Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.

LOAN OFFICER (MORTGAGE CONSULTANT)
A person that "sells" loans, representing the lender to the borrower, and the borrower to the lender.

LOAN ORIGINATION   
How a lender refers to the process of writing new loans.

LOAN SERVICING   
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.

LOAN-TO-VALUE RATIO (LTV)   
The comparison of the amount owed on a mortgaged property to its fair market value.

LOCK-IN    
An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.

LOCK-IN PERIOD  
The amount of time the lender has guaranteed an interest rate to a borrower.

MARGIN  
The difference between the interest rate and the index on an adjustable rate mortgage.

MASTER ASSOCIATION  
An umbrella organization that is made up of multiple, smaller home owner's associations. Often found in very large developments or condominium projects.

MATURITY 
The date on which the principal balance of a financial instrument becomes due and payable.

MERGED CREDIT REPORT  
A credit report derived from data obtained from multiple credit agencies.

MISREPRESENTATION   
A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.

MORTGAGE 
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.

MORTGAGE BANKER 
A financial institution that provides primary and secondary mortgages to home buyers.

MORTGAGE BROKER   
A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

MORTGAGEE 
The entity that lends money in a real estate transaction.

MORTGAGE INSURANCE   
A policy that fulfills those obligations of a mortgage when the policy holder defaults or is no longer able to make payments.

MORTGAGE INSURANCE PREMIUM (MIP)  
A fee that is often included in mortgage payments that pays for mortgage insurance coverage.

MORTGAGOR  
The entity that borrows money in a real estate transaction.

NEGATIVE AMORTIZATION   
When the balance of a loan increases instead of decreases. Usually due to a borrower making a minimum payment on an Adjustable Rate Mortgage during a period when the rate fluctuates to a high enough point that the minimum payment does not cover all of the interest.

NO-COST LOAN 
Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.

NO-POINT LOAN
A loan with no "points". The interest rate on such a loan will be higher than a loan with points paid. Also sometimes refers to a refinance loan where closing costs are included in the loan.

NONLIQUID ASSET   
Any asset which can not be quickly converted into cash at little or no cost.

NOTE   
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

NOTE RATE  
The interest rate stated on a mortgage note.

NOTICE OF DEFAULT  
Formal written notice from a lender to a borrower that default has occurred.

OCCUPANCY   
A physical presence within and control of a property.

ORIGINAL EQUITY  
The amount of cash a home buyer initially invests in the home.

ORIGINAL PRINCIPAL BALANCE   
The total amount of principal owed on a mortgage loan at the time of closing.

ORIGINATION FEE  
Refers to the total number of points paid by a borrower at closing.

OWNER FINANCING   
A transaction where the property owner provides all or part of the financing.

OWNER OCCUPIED
The state of property wherein the owner occupies at least some portion of the property.

PLANNED UNIT DEVELOPMENT (PUD)   
A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.

POINT  
A percentage of a mortgage amount (one point = 1 percent).

PRE-APPROVAL
This is the industry standard; however, it is less effective than the Full-Approval service we provide. (See: Full-Approval) Pre-Approval is a written statement from a mortgage consultant indicating their opinion that a borrower will be able to become approved for a mortgage loan based on the verbal information they provide.

PREPAYMENT   
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.

PREPAYMENT PENALTY   
A fee that may be charged to a borrower who pays off a loan before it is due.

PRIME RATE   
The interest rate that banks and other lending institutions charge other banks or preferred customers.

PRINCIPAL  
The amount owed on a mortgage which does not include interest or other fees.

PRINCIPAL BALANCE   
The outstanding balance of principal on a mortgage. Does not included interest due.

PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI)  
The most common constituents of a monthly mortgage payment.

PRIVATE MORTGAGE INSURANCE (PMI)  
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.

PROPERTY   
Any item which is owned or possessed.

PURCHASE AGREEMENT 
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold..

QUALIFYING RATIOS   
Two ratios used in determining credit worthiness for a mortgage loan. One is the ratio of a borrower's monthly housing costs to monthly income. The other is a ratio of all monthly debt to monthly income.

QUITCLAIM DEED  
A legal document which transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear..

RATE LOCK 
A guarantee from a lender of a specific interest rate for a period of time.

REAL ESTATE 
A piece of land and any improvements or fixtures located on that land.

REAL ESTATE AGENT  
A licensed professional who facilitates the buying and selling of real estate.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)  
A federal law requiring lenders to give full disclosure of closing costs to borrowers.

REAL PROPERTY   
Land, improvements and appurtenances, and the interest and benefits thereof.

REALTOR
A real estate agent or broker who is a member of the NATIONAL ASSOCIATION of REALTORS

RECORDER 
A local government employee whose role it is to keep records of all real estate transactions within the jurisdiction.

RECORDING   
The filing of a real estate transaction with the appropriate government agent (normally the RECORDER). A real estate transaction is considered final when it is recorded.

REFINANCE TRANSACTION  
A new loan to pay off an existing loan. Typically to gain a lower interest rate or convert equity into cash.

REMAINING BALANCE   
The amount of principal, interest and other costs that has not yet been repaid.

REMAINING TERM  
The amount of time remaining on the original amortization schedule.

REVOLVING DEBT  
A type of credit that allows the borrower/customer to make charges against a predetermined line of credit. The customer then pays monthly installments on the amount borrowed, plus interest.

RURAL  
An area outside of an established urban area or metropolitan district.

SECOND MORTGAGE   
A loan secured by the equity in a home, when a primary mortgage already exists.

SECONDARY MORTGAGE MARKET  
An economic marketplace where mortgage bankers buy and sell existing mortgages.

SERVICER
A financial institution which collects mortgage payments from borrowers and applies the appropriate portions to principal, interest and any escrow accounts.

SERVICING
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.

SURVEY
A specific map of a piece of property which includes the legal boundaries and any improvements or features of the land. Surveys also depict any rights-of-way, encroachments or easements.

THIRD PARTY ORIGINATION   
When a lender uses a third party to originate and package loans for sale to the secondary market (Fannie Mae, Freddie Mac).

TITLE  
A specific document which serves as proof of ownership.

TITLE COMPANY  
An organization which researches and certifies ownership of real estate before it is bought or sold. Title companies also act at the facilitator ensures all parties are paid during the real estate transaction.

TITLE INSURANCE   
A policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. This also covers a lender should a question of ownership arise.

TITLE SEARCH   
The process whereby the TITLE COMPANY researches a properties title history and ensures that no outstanding claims exist.

TRANSFER OF OWNERSHIP  
Any means by which the ownership of a property changes hands.

TRANSFER OF TAX   
Taxes payable when title passes from one owner to another.

TRUSTEE  
A fiduciary that holds or controls property for the benefit of another.

TRUTH IN LENDING  
A federal law requiring full disclosure by lenders to borrowers of all terms, conditions and costs of a mortgage.

VA MORTGAGE   
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

VESTED
Having the right to use a portion of a fund such as an IRA. Typically vesting occurs over time. If you are 100% vested, you have a right to 100% of the fund.

VETERANS AFFAIRS, DEPARTMENT OF (VA) 
The successor to the Veteran's Administration, this government agency is responsible for ensuring the rights and welfare of our nation's veterans and their dependents. Among other duties, the VA insures home loans made to veterans.

WARRANTY   
An affidavit given to stipulate the condition of a property. The person giving the warranty assumes liability if the condition turns out to be untrue.


Have questions about mortgage terms? Call us at (707) 290-5167. We are here to help!