Adjustable-Rate Mortgage (ARM)
A mortgage that changes interest rate periodically based upon the changes in a specified index.
Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between the adjustment dates for an adjustment-rate mortgage (ARM).
Amortization
The re-payment of a mortgage loan by installments with regular payments to cover the principal and interest.
Amortization Term
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).
Application
A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.
Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.
Appraiser
A person qualified by education, training, and an experience to estimate the value of real property and personal property.
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Appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Asset
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
Assignment
The transfer of a mortgage from one person to another.
Assumable Mortgage
A mortgage that can be take over (assumed) by the buyer when a home is sold.
Assumption
The transfer of the seller's existing mortgage to the buyer.
Assumption Clause
A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.
Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.
Balloon Mortgage
A mortgage that has level monthly payments that will amortize it over a state term but that provides for a lump sum payment to be due at the end of an earlier specified term.
Balloon Payment
The final lump sum payment that is made at the maturity date of a balloon mortgage.
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Bankrupt
A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
Bankruptcy
A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
Before-tax Income
Income before taxes are deducted.
Beneficiary
The person designated to receive the income from a trust, estate, or a deed of trust.
Binder
A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.
Bi-weekly Payment Mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account.
Blanket Mortgage
The mortgage that is secured by a cooperative project as opposed to the share loans on individual units within the project.
Bond
An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.
Breach
A violation of any legal obligation.
Bridge Loan
A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also know as swing loan.
Broker
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.
Buy down Mortgage
A temporary buy down is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buy down reduces the interest rate over the entire life of a mortgage.
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Call Option
A provision in the mortgage that gives the mortgage the right to call the mortgage due and payable at the end of a specified period for whatever reason.Cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.
Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.
Cash-out Refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.
Certificate of Eligibility
A document issued by the federal government certifying a veteran's eligibility for a Department of VA Affairs (VA) mortgage.
Certificate of Reasonable Value (CRV)
A document issued by the Department of VA Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.
Certificate of Title
A statement provided by an abstract company, title company, or attorney, stating that the title to real estate is legally held by the current owner.
Chain of Title
The history of all of the documents that transfer title to a parcel of real property, stating with the earliest existing document and ending with the most recent.
Change Frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).
Clear Title
A title that is free of liens or legal questions as to ownership of the property.
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Closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called settlement.
Closing Cost Item
A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement.
Closing Costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, and attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey.
Closing Statement
Also referred to as the HUD-1. The final statement of costs incurred to close on a loan or to purchase a home.
Cloud On Title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quit-claim deed, release, or court action.
Collateral
An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
Collection
The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.
Co-maker
A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment.
Commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
Commitment Letter
A formal offer by a lender stating the terms under which it agrees to lend money to a homebuyer. Also known as a loan commitment.
Common Areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD), or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
Community Home Improvement Mortgage Loan
An alternative financing option that allows low and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.Community Property
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.
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Comparables
An abbreviation for comparable properties; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
Condominium
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
Condominium Conversion
Changing the ownership of and existing building (usually a rental project) to the condominium form of ownership.
Construction Loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
Consumer Report Agency (or bureau)
An organization that prepares reports that will be used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.
Contingency
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Contract
An oral or written agreement to do or not to do a certain thing.
Conventional Mortgage
A mortgage that is not insured or guaranteed by the federal government.
Convertability Clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
Convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
Cooperation (co-op)
A type of multiple ownership in which the residents of a multi-unit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
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Corporate Relocation
Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part of all of its operations and employees to another area because it is relocating its headquarter or expanding its office capacity.
Cost of Funds Index (COFI)
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowing, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.
Covenant
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
Credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
Credit History
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has history of repaying debts in a timely manner.
Credit Report
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
Credit Repository
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.
Debt
An amount owed to another.
Deed
The legal document conveying title to a property.
Deed-in-Lieu
A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure.
Deed of Trust
The document used in some states instead of a mortgage; title is conveyed to a trustee.
Default
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
Delinquency
Failure to make mortgage payments when mortgage payments are due.
Deposit
A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.
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Depreciation
A decline in the value of property; the opposite of appreciation.
Down Payment
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Due-on-sale Provision
A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
Department of Housing and Urban Development
The U.S. Government agency that administers FHA, GNMA and other housing programs.
Discount
The amount of which the sales price of the note is below than its face value.Documentary Stamps
A state tax, in the form of stamps, required on deeds and mortgages when real estate title passes from one owner to another.
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 the home.
Easement Rights
The 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-of way across private property is a common example.
Economic Obsolescence
The loss of value due to changes outside the particular property affected. Also called economic depreciation.
Encroachment
An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building beyond the building line.
Encumbrance
A legal right or interest in land that affects a good or clear title, and diminishes the land's value.
Environmental Hazard
Natural or man made forces that may be hazardous to the health or safety of the homeowner.
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 exercised his or her rights under the Consumer Credit Protection Act.
Equity
The value of a homeowner's encumbered interest in real estate. Equity is computed by subtracting from the property's fair market value other total of the unpaid mortgage balance and any outstanding liens or other debts against the property.
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.
Fair Market Value
The price established in a free market between a buyer and seller in an arms-length by both buyer and seller.
Fannie Mae
Nickman for Federal Mortgage Association (FNMA).
Farmer's Home Administration
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 they reside.
Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac)
A quasi-government, federally sponsored organization that acts as a secondary market investor to buy and sell mortgage loans.
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Federal Housing Administration
A agency within the Department of Housing and Urban Development that sets standards for underwriting and insures residential mortgage loans made by private lenders.
Federal National Mortgage Association (FNMA or Fannie Mae)
A private corporation that acts as a secondary market investor to buy and sell mortgage loans.Fee Simple
The maximum form of ownership, with the right to occupy a property and sell it to a buyer at any time.
FHA
See: Federal Housing Administration
FHLMC
See: Federal Home Loan Mortgage Corporation
Fixed Rate Mortgage
The mortgage interest rate will remain the same on these mortgages through out the term o f the mortgage for the original borrower.
FmHA
See: Farmer's Home Administration
FNMA
See: Federal National Mortgage Association
Foreclosure
A legal term applied to any of the various methods of enforcing payment of the debt secured by the mortgage, or deed of trust, by taking and selling the mortgaged property, and depriving the mortgagor of possession.
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 titles is defective or has a cloud on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.
Gift Funds
Funds donated to the borrower from certain eligible sources to assist the borrower in meeting closing costs.
Government National Mortgage Association
A government organization that participates in the secondary market, buying, selling and guaranteeing FHA and VA loans.
Graduated Payment Mortgage (GPM)
A mortgage that has initial monthly payments set at an amount lower than that required for full amoritization of the debt.
Grantee
That party in the deed who is the buyer or recipient.
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Grantor
That party in the deed who is the seller or giver.
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.
Hazard
Protects against damages caused to property by fire, windstorms, and other common hazards.
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.
Home Equity Loan
A mortgage on the borrower's principal residence, usually for the purpose of making home improvements or debt consolidation.
Homeowner's Association (HOA)
A non-profit association, whose directors and offices are elected b the unit owners of a condominium or PUD project; primary responsibilities are to manage the common areas, expenses and services of the project.
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
The sum of all monthly housing mortgage expenses such as principal, interest, taxes and insurance (PITI), homeowners dues, private mortgage insurance and nay special assessments as a percentage of gross qualifying income.
HUD
See: Housing and Urban Development.
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. Also known as Reserves.
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.
Installment Debt
Borrowed money that is repaid in successive payments, usually at regular intervals.
Interim Financing
A construction loan made during completion of a building or a project. A permanent loan usually replaces this loan after completion.
Investor
A money source for a lender.
Jumbo Loan
A loan that is for a larger dollar amount that the limits set by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.
Koegh
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.
Lien
A claim by one person on the property of another as security for money owned. Such claims may include obligations not met or satisfied, judgements, unpaid taxes, materials, or labor.
Liquidity
Cash or cash equivalents that a borrower has accumulated or the ability to readily convert other assets or investments into cash.
Loan Discount
See: Origination fee.
Loan Origination Fee
See: Origination Fee.
Loan-to-value Ratio
The relationship, expressed as a percentage, between the amount of the proposed loan and a property's appraised value or purchase price.
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Lock-in
The guarantee of a specific interest rate and/or points for a specific period of time
.Margin
The amount a lender adds to the index of an adjustable rate mortgage to establish an interest rate.
Marketable Title
A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.
Market Value
The price a property can realistically sell for, based upon comparable selling prices of other properties in the same area.
Mortgage
A legal instrument in which a lien on real property is granted as secured for repayment of a loan.
Mortgage (Open-End)
A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional finance charges.
Mortgagee
The lender in a mortgage agreement.
Mortgagor
The borrower in a mortgage agreement.
Mortgage Broker
An intermediary between a borrower and a lender.
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.
Mortgage Insurance Premium (MIP or 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 to protect lenders against loss in insured mortgage transactions.
Mortgage Note
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
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 borrower may end up owing more than the original amount of the mortgage.
Net Effective Income
The borrower's gross income minus federal tax.
Net Rental Income
The remaining income generated by an investment property after deducting all mortgage related expenses, included HOA fees (if applicable) and operating expenses from the gross rental income.
Net Worth
The amount by which an individual's asses (or assets of a business) exceed total liabilities.
Non-assumption Clause
In mortgage contract, a statement that disallows a new buyer to assume a mortgage payment without the approval of the lender.
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 or other criteria are not met.
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.
Origination Fee
The amount charged by a lender to originate and close a mortgage loan.
Payment to Income (P/I) Ratio
The ratio of the borrower's total housing payment (principal, interest, taxes insurance, HOF fees, special assessments and subordinate financing) that is used to measure the borrower's capacity to manage the housing expense: also known as housing debt-to-income ratio.
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Permanent Buy down
A permanent reduction to the interest rate for the life of the loan. The funds for the buy down may come from the borrower, lender, seller or a third party.
PITI
Abbreviation for principal, interest, taxes and insurance.
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.
Plat
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, building, improvements on the land and easements
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A point is one percent of the amount of the mortgage loan.
Power of Attorney
A legal document authorizing one person to act on behalf of another.
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, and mortgage insurance, as applicable to the transaction Prorated interest Any special assessments which must be prepaid (i.e., water/sewer connection, etc.)
- Escrow accounts for any of the above
Prepayment
Payment of mortgage loan, or part of it, before due date.
Pre-payment Penalty
Money charged for an early repayment of debt.
Pre-qualification
Tentative establishment of a borrower's 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.
Primary Mortgage Market
Lenders making mortgage loans directly to borrower's such as savings and loan association, commercial banks and mortgage companies.
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.
Principal
The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.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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Prorate
To proportionally divide amounts owed by the buyer and the seller at closing.
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.
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.
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 the grantor's interest in a property is questionable.
Real Estate Broker
An agent who buys and sells real estate for a company, firm, or individual on a commission basis.
Refinance
Retirement of an existing debt from the proceeds of a new loan, using the same collateral as security.
Rental Income
Income generated by renting property to a tenant.
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 of any other debt(s) that had to be satisfied in order for the borrower to qualify for the loan.
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.
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 charges, and regulates the amount home buyers are required to place in escrow.
Restrictive Convents
Private restrictions limiting the use of real property.
Reverse Annuity Mortgage (RAM)
A form of mortgage in which the lender makes periodic payment to the borrower using the borrower's equity in the home as satisfaction of the mortgage.
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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 regular intervals; most common are credit cards issued by banks or department stores.
Second Mortgage
A loan that is junior to a primary or first mortgage and often has a higher interest rate and shorter term.
Second/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.
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 them for sale to others.
Self-employed Borrower
A borrower whose income is derived from a business in which she/he has an ownership of 25% or more.
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 status of the loan.
Settlement
The closing of a mortgage loan.
Special Assessments
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.
Special Lien
A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material or money expended in that person's behalf.
Special Warranty Deed
A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property.
Subdivision
An area of land that is platted and subdivided into individual lots.
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.
Sweat Equity
Equity created by a purchaser's work on a property purchased.
Tax
As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State.
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Temporary Buy down
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 closing, which can be applied to the total monthly mortgage payment as each becomes due.
Title
As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.
Title Insurance
Protects lenders or homeowners against loss of their interest in property due to legal defects in title. Title insurance may be issued to a mortgagee's title policy.
Title Search
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title.
Trustee
A party who is given legal responsibility to hold property in the best interest of or for the benefit of' another.
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.
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 and term or loan amount.
Uniform Settlement Statement
A standard document prescribed b the Real Estate Settlement Procedures Act disclosing all costs paid in connection with the settlement of a real estate transaction.
VA Loan
See: VA Administration.
Variable Rate Mortgage
See: Adjustable Rate Mortgage
Verification of Deposit (VOD)
A document signed by the borrower's financial institution verifying the status and balance of his or her financial accounts.
Verification of Employment (VOE)
A document signed by borrower's employer verifying his or her position and salary.
Veteran's Administration (VA)
The federal agency responsible for the VA loan guarantee program as well as other services for eligible VA.
Walk-through
An inspection of a property by the prospective buyer prior to closing on a mortgage.
Warranty Deed
A document protecting a homebuyer against any and all claims to the property.
Wrap-a-around 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 new, larger loan and the interest is set somewhere between the old rate and the current market rate.
Yield
The ratio of investment income to the total amount invested over a give period of time; also known as return on investment or ROI.
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Zoning Ordinances
The acts of an authorized local government establishing building codes and setting forth regulation for property land usage.
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