Simply click on the index letters below to jump quickly to the term you are looking for. If you still have questions, please contact us! We'll be glad to help. Disclaimer: The definitions given below are for general information only. Sundance Mortgage does not guarantee their accuracy. These definitions are not in any way intended to offer or provide legal advice. |
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ACCELERATION CLAUSE - A clause used in most installment notes and mortgages (or deeds of trust), which gives the lender the right to demand payment in full upon the occurrence of a certain event. These events could include (but not be limited to): failure to pay an installment by a certain date, change of ownership without the lender's consent, destruction of the property, or any other event that endangers the security of the loan.
ACKNOWLEDGEMENT - A written declaration by a person executing an instrument stating that the execution is of his/her own will. The acknowledgement is carried out before an officer who is authorized to give an oath (usually lawyer or a notary public).
ACQUISITION COSTS - Costs of acquiring property other than the purchase price, such as escrow fees, title insurance, lender's fees, etc.
ADJUSTABLE RATE MORTGAGES (ARMs) - Mortgage loans under which the interest rate is adjusted periodically to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the start of the loan.
A.L.T.A. (AMERICAN LAND TITLE ASSOCIATION) - An organization composed of title insurance companies, which has adopted certain insurance policy forms to standardize coverage on a national basis.
AMORTIZE - To reduce a debt by making regular payments of both principal and interest, as opposed to interest-only payments.
ANNUAL PERCENTAGE RATE (APR) - The APR consists of all the financing costs of a mortgage, including points, origination fees and other finance charges, and the mortgage interest. The APR is disclosed as a requirement of federal truth in lending statutes. The APR was designed as a tool for consumers to use when shopping for a loan.
APPRAISAL - An estimate of a property's fair market value. A mortgage lender determines the fair market value of a property by arranging an independent appraisal of the property's value. The appraisal uses local real estate market sales activity as a major basis for valuation and makes a detailed comparison of the properties to determine the market value.
ACKNOWLEDGEMENT - A written declaration by a person executing an instrument stating that the execution is of his/her own will. The acknowledgement is carried out before an officer who is authorized to give an oath (usually lawyer or a notary public).
ACQUISITION COSTS - Costs of acquiring property other than the purchase price, such as escrow fees, title insurance, lender's fees, etc.
ADJUSTABLE RATE MORTGAGES (ARMs) - Mortgage loans under which the interest rate is adjusted periodically to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the start of the loan.
A.L.T.A. (AMERICAN LAND TITLE ASSOCIATION) - An organization composed of title insurance companies, which has adopted certain insurance policy forms to standardize coverage on a national basis.
AMORTIZE - To reduce a debt by making regular payments of both principal and interest, as opposed to interest-only payments.
ANNUAL PERCENTAGE RATE (APR) - The APR consists of all the financing costs of a mortgage, including points, origination fees and other finance charges, and the mortgage interest. The APR is disclosed as a requirement of federal truth in lending statutes. The APR was designed as a tool for consumers to use when shopping for a loan.
APPRAISAL - An estimate of a property's fair market value. A mortgage lender determines the fair market value of a property by arranging an independent appraisal of the property's value. The appraisal uses local real estate market sales activity as a major basis for valuation and makes a detailed comparison of the properties to determine the market value.
APPRAISER - A person who is trained and licensed in the methods of determining the value of property through analysis and use of formal appraisal processes.
APPRECIATION - An increase in a property's market value due to factors such as a positive improvement or the elimination of negative factors in the area. Appreciation also refers to an increase in value through inflation.
APPRECIATION - An increase in a property's market value due to factors such as a positive improvement or the elimination of negative factors in the area. Appreciation also refers to an increase in value through inflation.
ARREARS - A payment made after it is due. Interest is paid in arrears, since it is paid to the date of payment rather than in advance.
”AS IS" - A clause in a Purchase Contact, sometimes used in the transfer of property, stating that the present property is being transferred with no guarantee or warranty provided by the seller.
ASSESSED VALUE - Value placed on property for property tax purposes by the County Tax Assessor.
ASSIGNMENT - A transfer of title to another of any property (real or personal) or of any rights or estates in a property. The general term encompasses all transfers of title, although it most commonly applies to leases, mortgages, deeds of trust, or notes.
ASSUMPTION OF MORTGAGE - A buyer's agreement to assume liability under an existing note secured by a mortgage or deed of trust. The lender usually must approve the new debtor in order to release the existing debtor (usually the seller) from liability.
ASSIGNMENT - A transfer of title to another of any property (real or personal) or of any rights or estates in a property. The general term encompasses all transfers of title, although it most commonly applies to leases, mortgages, deeds of trust, or notes.
ASSUMPTION OF MORTGAGE - A buyer's agreement to assume liability under an existing note secured by a mortgage or deed of trust. The lender usually must approve the new debtor in order to release the existing debtor (usually the seller) from liability.
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BALLOON NOTE - A type of mortgage with specific payments at stated regular intervals and a final payment that is considerably more than any periodic payments. Balloon notes usually are paid over a short term, such as five to seven years. This type of mortgage may be beneficial if you move before the final payment, because you can benefit from a slightly lower rate.
BANKRUPTCY – A proceeding under federal bankruptcy statutes designed to relieve a debtor (bankrupt) from insurmountable debt. The court distributes the bankrupt's assets to the creditors as full satisfaction of the debts in accordance with certain priorities and exemptions. The debtor petitions for voluntary bankruptcy while the creditors petition for involuntary bankruptcy.
BASIS POINT - Finance term that means a yield of 1/100th of 1% annually.
BANKRUPTCY – A proceeding under federal bankruptcy statutes designed to relieve a debtor (bankrupt) from insurmountable debt. The court distributes the bankrupt's assets to the creditors as full satisfaction of the debts in accordance with certain priorities and exemptions. The debtor petitions for voluntary bankruptcy while the creditors petition for involuntary bankruptcy.
BASIS POINT - Finance term that means a yield of 1/100th of 1% annually.
BENEFICIARY - The lender on the security of a note and deed of trust
BINDER - A notation of coverage on an insurance policy, issued by an agent and given to the insured before the policy is issued.
BRIDGE FINANCING - A form of interim loan, generally falling between a short-term loan and a long-term loan in duration, that is taken when the borrower needs more time before taking on long-term financing.
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CAP - On an Adjustable Rate Mortgage (ARM) loan, the Caps usually are defined as an initial adjustment, an annual adjustment, and a life-of–loan adjustment. These caps commonly are stated (in percentage) as three numbers, separated by a slash, as in 5/2/5.
- First number (initial adjustment): Represents the possible increase after the end of the fixed rate period.
- Second number (annual adjustment): Represents the maximum annual amount (after the initial adjustment) by which the rate can increase (or decrease). This number usually is 2%.
- Last number (life-of-loan adjustment): Represents the maximum possible interest rate increase over the life of the loan. Example: A 7% loan with a 5% interest rate cap would have a maximum interest rate for the life of the loan that could not exceed 12%.
CC&Rs - Acronym for Covenants, Conditions and Restrictions, a document that controls the use, requirements, and restrictions of a property. CC&Rs usually are found in Condominium Associations and Planned Unit Developments (PUDs).
CERTIFICATE OF REASONABLE VALUE (CRV) - A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.
CLOSING COSTS - Charges associated with the underwriting and funding of a loan, which are paid when the loan is about to be disbursed (paid out) and the borrower is about to take possession of the asset. Mortgage closing costs include title search, appraisal fee, legal and escrow service fees, and mortgage points.
CLOSING STATEMENT - The financial disclosure statement that accounts for all the funds received and expected at the closing, including deposits for taxes, hazard insurance, and mortgage insurance. This document also is called the Final HUD-1.
COMMUNITY PROPERTY - Property owned in common by, and acquired by joint effort of, a husband and wife, which was not acquired as separate property.
CONDOMINIUM - A form of real estate ownership in which the owner receives title to a specific unit and has a proportionate interest in certain common areas. The unit itself generally is a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries.
CONVENTIONAL LOAN - A mortgage or deed of trust not obtained under a government-insured program (such as FHA or VA).
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DEED - Any one of many conveyancing or financing instruments, but generally one that is given to pass fee title to the property upon sale.
DEED OF TRUST - An instrument used in place of a mortgage. The borrower (trustor) transfers property to a trustee, in favor of the lender (beneficiary), and reconveys it upon payment in full.
DEFAULT - Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any act. A mortgage or deed of trust is "in default" when the borrower fails to make the payments as agreed to in the original promissory note.
DEFERRED MAINTENANCE - Repairs needed to put a property in good condition. An owner may have an account for such maintenance.
DEPOSIT - Money given by the buyer with an offer to purchase. Because the deposit shows good faith, it is commonly called Earnest Money.
DEPRECIATION - Loss of value in any asset brought about by age, physical deterioration, or functional or economic obsolescence.
DISBURSEMENTS - Payments made during the course of an escrow or at closing.
DOWN PAYMENT - Cash portion paid by buyers from their own funds, as opposed to the portion of the purchase price that is financed.
DEED OF TRUST - An instrument used in place of a mortgage. The borrower (trustor) transfers property to a trustee, in favor of the lender (beneficiary), and reconveys it upon payment in full.
DEFAULT - Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any act. A mortgage or deed of trust is "in default" when the borrower fails to make the payments as agreed to in the original promissory note.
DEFERRED MAINTENANCE - Repairs needed to put a property in good condition. An owner may have an account for such maintenance.
DEPOSIT - Money given by the buyer with an offer to purchase. Because the deposit shows good faith, it is commonly called Earnest Money.
DEPRECIATION - Loss of value in any asset brought about by age, physical deterioration, or functional or economic obsolescence.
DISBURSEMENTS - Payments made during the course of an escrow or at closing.
DOWN PAYMENT - Cash portion paid by buyers from their own funds, as opposed to the portion of the purchase price that is financed.
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EARNEST MONEY - See DEPOSIT.
EARNINGS - Money received for labor or personal services as opposed to a return on capital. Corporate income from all sources also is described as earnings.
E.C.O.A. (EQUAL CREDIT OPPORTUNITY ACT) - Regulation "B" of Federal Regulations, which prohibits the lender from discriminating in lending policies.
EQUITY - The value that an owner has in property over and above all liens held against it.
ESCROW - The deposit of instruments and funds, along with instructions to a neutral third party to carry out the provisions of a set agreement or contract. Escrow is completed when everything is deposited and recorded to carry out the instructions.
EARNINGS - Money received for labor or personal services as opposed to a return on capital. Corporate income from all sources also is described as earnings.
E.C.O.A. (EQUAL CREDIT OPPORTUNITY ACT) - Regulation "B" of Federal Regulations, which prohibits the lender from discriminating in lending policies.
EQUITY - The value that an owner has in property over and above all liens held against it.
ESCROW - The deposit of instruments and funds, along with instructions to a neutral third party to carry out the provisions of a set agreement or contract. Escrow is completed when everything is deposited and recorded to carry out the instructions.
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FAIR CREDIT REPORTING ACT - A federal law giving people the right to see their credit reports so that errors may be corrected. Under the Act, any lender who refuses credit based on a credit report must inform the buyer which company issued the report, and the buyer may see the report without charge if refused credit.
FAIR MARKET VALUE - The price that would be negotiated by a willing buyer and a willing seller within a reasonable time.
FEDERAL FAIR HOUSING LAW - Title VIII of the Civil Rights Act, which forbids discrimination in the sale or rental of residential properties because of race, color, sex, religion, or national origin.
FHA (FEDERAL HOUSING ADMINISTRATION) - A federal agency that insures first mortgages and enables lenders to loan a very high percentage of the sale price.
F.H.L.M.C. (FEDERAL HOME LOAN MORTGAGE CORPORATION) (FREDDIE MAC) - A semi-governmental purchaser of mortgages in the secondary market.
FICO - A scoring model (named after Fair, Isaac and Company, the company that developed it) to evaluate credit reports statistically and assign a corresponding "Risk Score." The FICO model determines the likelihood that a loan will be repaid.
FINANCING COSTS - The costs involved in borrowing money to build or purchase real estate, including interest.
FIRE INSURANCE - Insurance against loss or damage by fire, which also may include other coverage.
FIRST MORTGAGE - A mortgage that has priority over all other voluntary liens on a specific property.
FIXED RATE MORTGAGE - A mortgage having a rate of interest that remains the same for the entire term of the mortgage.
FNMA (FEDERAL NATIONAL MORTGAGE ASSOCIATION) (FANNIE MAE) - A private corporation that purchases first mortgages at discounts.
FORECLOSURE - A proceeding to extinguish all rights, title, and interest of, the owner(s) in order to sell the property to satisfy a lien against it. Foreclosure proceedings may take place in or out of court.
FULLY AMORTIZED LOAN - A loan of equal, regular payments that completely pays off the principal and interest by the due date.
FAIR MARKET VALUE - The price that would be negotiated by a willing buyer and a willing seller within a reasonable time.
FEDERAL FAIR HOUSING LAW - Title VIII of the Civil Rights Act, which forbids discrimination in the sale or rental of residential properties because of race, color, sex, religion, or national origin.
FHA (FEDERAL HOUSING ADMINISTRATION) - A federal agency that insures first mortgages and enables lenders to loan a very high percentage of the sale price.
F.H.L.M.C. (FEDERAL HOME LOAN MORTGAGE CORPORATION) (FREDDIE MAC) - A semi-governmental purchaser of mortgages in the secondary market.
FICO - A scoring model (named after Fair, Isaac and Company, the company that developed it) to evaluate credit reports statistically and assign a corresponding "Risk Score." The FICO model determines the likelihood that a loan will be repaid.
FINANCING COSTS - The costs involved in borrowing money to build or purchase real estate, including interest.
FIRE INSURANCE - Insurance against loss or damage by fire, which also may include other coverage.
FIRST MORTGAGE - A mortgage that has priority over all other voluntary liens on a specific property.
FIXED RATE MORTGAGE - A mortgage having a rate of interest that remains the same for the entire term of the mortgage.
FNMA (FEDERAL NATIONAL MORTGAGE ASSOCIATION) (FANNIE MAE) - A private corporation that purchases first mortgages at discounts.
FORECLOSURE - A proceeding to extinguish all rights, title, and interest of, the owner(s) in order to sell the property to satisfy a lien against it. Foreclosure proceedings may take place in or out of court.
FULLY AMORTIZED LOAN - A loan of equal, regular payments that completely pays off the principal and interest by the due date.
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GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GINNIE MAE) - A federal association that works with FHA to offer special assistance in obtaining mortgages and that buys mortgages in a secondary capacity.
GOOD FAITH ESTIMATE - An estimate of all settlement charges likely to be incurred at closing. This estimate must be made with good intentions, without knowledge of fraudulent circumstances or reason to inquire further, and must be presented within three business days after borrowers submit a loan application.
GRANT DEED - One of the many types of instruments used to transfer real property. Sometimes called a "Warranty Deed," the grant deed contains warranties against prior conveyances or encumbrances.
GROSS INCOME - Total income before deducting any expenses or taxes.
GOOD FAITH ESTIMATE - An estimate of all settlement charges likely to be incurred at closing. This estimate must be made with good intentions, without knowledge of fraudulent circumstances or reason to inquire further, and must be presented within three business days after borrowers submit a loan application.
GRANT DEED - One of the many types of instruments used to transfer real property. Sometimes called a "Warranty Deed," the grant deed contains warranties against prior conveyances or encumbrances.
GROSS INCOME - Total income before deducting any expenses or taxes.
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HAZARD INSURANCE - Insurance protecting against loss from various hazards including fire, some natural-causes, vandalism, etc., depending upon the policy's terms.
HOMEOWNER'S ASSOCIATION - An association of people who own homes in a given area. The builder usually forms this association in order to maintain or improve the quality of the area. Homeowner's Associations are required by statute for Condominiums, Townhouses and Planned Unit Developments in some states, with both the builder's and the association's duties controlled by statute.
HOME WARRANTY INSURANCE - Private insurance to protect the buyer of a new or re-sale home against defects in the home (usually in air conditioning, plumbing, heating and electrical). The insurance period varies.
HOUSING AND URBAN DEVELOPMENT, DEPARTMENT OF (HUD) – The federal department that oversees the major residential housing programs in the United States, including the Fair Housing Administration.
HOMEOWNER'S ASSOCIATION - An association of people who own homes in a given area. The builder usually forms this association in order to maintain or improve the quality of the area. Homeowner's Associations are required by statute for Condominiums, Townhouses and Planned Unit Developments in some states, with both the builder's and the association's duties controlled by statute.
HOME WARRANTY INSURANCE - Private insurance to protect the buyer of a new or re-sale home against defects in the home (usually in air conditioning, plumbing, heating and electrical). The insurance period varies.
HOUSING AND URBAN DEVELOPMENT, DEPARTMENT OF (HUD) – The federal department that oversees the major residential housing programs in the United States, including the Fair Housing Administration.
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IMPOUND ACCOUNT - A trust type account held by a lender to protect its interests and used to pay taxes, insurance premiums, mortgage insurance premiums or other periodic debts against real property. The impound account is funded initially when the loan closes, and continues to build via included amounts in the monthly mortgage payments.
INDEX - A measure of interest rate changes used to determine changes in an ARM's interest rate over the term of the loan.
INSTRUMENT - Any writing that has legal form and significance, such as a deed, mortgage, will, lease, etc.
INTEREST RATE - The percentage that is charged for using a sum of money for a specified period of time.
INTEREST RATE CAP – See CAP.
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JOINT NOTE - A promise to pay that is executed by two or more persons, each having equal liability.
JOINT TENANCY - An undivided interest in property taken by two or more joint tenants. The interests must be equal, accruing under the same conveyance, and beginning at the same time. If a joint tenant dies, the interest passes to the surviving joint tenant(s), rather than to the heirs of the deceased.
JUDGEMENT LIEN – An involuntary lien against the debtor's property.
JUMBO LOAN - A loan on residential property for an amount greater than that which is allowable under conventional loan limits set by FHLMC and FNMA.
JOINT TENANCY - An undivided interest in property taken by two or more joint tenants. The interests must be equal, accruing under the same conveyance, and beginning at the same time. If a joint tenant dies, the interest passes to the surviving joint tenant(s), rather than to the heirs of the deceased.
JUDGEMENT LIEN – An involuntary lien against the debtor's property.
JUMBO LOAN - A loan on residential property for an amount greater than that which is allowable under conventional loan limits set by FHLMC and FNMA.
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LAND CONTRACT - Installment plan for buying a house, used instead of obtaining a loan from a traditional source such as a mortgage banker or savings and loan.
LATE CHARGE - A penalty charged for failure to pay an installment on time. The late charge amount usually is set by statute or must be "reasonable."
LEASE - A contract between an owner of real property (lessor) and a tenant (lessee) setting forth conditions upon which the tenant may occupy and use the property, along with the term of occupancy.
LENDER – Any person or entity that advances funds to a borrower, which are to be repaid.
LIEN – An encumbrance, either voluntary or involuntary, against property for money. Examples: Deed of Trust, Judgment, Taxes, etc.
LEASE - A contract between an owner of real property (lessor) and a tenant (lessee) setting forth conditions upon which the tenant may occupy and use the property, along with the term of occupancy.
LENDER – Any person or entity that advances funds to a borrower, which are to be repaid.
LIEN – An encumbrance, either voluntary or involuntary, against property for money. Examples: Deed of Trust, Judgment, Taxes, etc.
LISTING - An agreement between an owner of real property and a real estate agent, whereby the agent agrees to secure a buyer or tenant for specific property at a certain price and terms in return for a fee or commission.
LOAN APPLICATION – The form (commonly called the 1003) used to obtain the borrower's information and to define the terms of the loan in a uniform manner. The loan application gives the name(s) of the borrower, place of employment, salary, bank accounts, credit references, assets, and so forth, and it is the source of information the lender uses to decide whether to approve the loan.
LOAN CLOSING - The process (also called "funding" the loan) that occurs when all the loan conditions have been met. During loan closing, the escrow officer authorizes the recording of the trust deed and the disbursal of loan funds.
LOAN APPLICATION – The form (commonly called the 1003) used to obtain the borrower's information and to define the terms of the loan in a uniform manner. The loan application gives the name(s) of the borrower, place of employment, salary, bank accounts, credit references, assets, and so forth, and it is the source of information the lender uses to decide whether to approve the loan.
LOAN CLOSING - The process (also called "funding" the loan) that occurs when all the loan conditions have been met. During loan closing, the escrow officer authorizes the recording of the trust deed and the disbursal of loan funds.
LOAN ORIGINATION FEE - A one-time setup fee charged by the lender.
LOAN SERVICING - The collection, bookkeeping and follow-up of a loan while it is being repaid.
LOAN TO VALUE (LTV) - The ratio, expressed as a percentage, of the loan amount to the lesser of the sales price or the appraised value (value) of real property.
LOSS PAYABLE CLAUSE - A clause in a Hazard Insurance policy listing the priority of claims in case the insured property is lost due to a covered hazard.
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MARKET DATA APPROACH - A process that involves appraising a property's value by comparing the sales price of similar recently sold properties in the area and also considering the properties' similarity to each other, their distance from the subject property, and terms of the sales. The market data approach is one of three methods used in the appraisal process and usually is the most reliable for residential properties.
MARKET PRICE - The “price” a property brings in a given market, regardless of pressures, motives or intelligence.
MARKET VALUE - The highest price that a willing buyer would pay and a willing seller would accept if both parties were fully informed and the property were exposed on the open market for a reasonable amount of time.
MARKET PRICE - The “price” a property brings in a given market, regardless of pressures, motives or intelligence.
MARKET VALUE - The highest price that a willing buyer would pay and a willing seller would accept if both parties were fully informed and the property were exposed on the open market for a reasonable amount of time.
MECHANICS LIEN - A lien created by statute for securing priority of payment for work performed and materials furnished in construction or repair of improvements to land. The lien is attached to the land as well as to the improvements.
MORTGAGE – The instrument by which a specific real property (land with or without improvements) is hypothecated (mortgaged) as security for the repayment of a loan.
MORTGAGE BANKER – The company that provides mortgage financing with its own funds. These funds usually are borrowed and the financing is either short-term; or, if long-term, the mortgages are sold to investors within a short time.
MORTGAGE BROKER - A person who, for a fee, brings together a borrower and a lender and handles the necessary applications and paperwork for the borrower to obtain the loan against real property.
MORTGAGE COMPANY – A company of Brokers and Agents that, for a fee, brings together a borrower and lender and handles the necessary applications and paperwork for the borrower to obtain the loan against real property.
MORTGAGEE - The party that is lending the money and receiving the mortgage (usually called the lender).
MORTGAGE INSURANCE (PMI) - Insurance written to protect the mortgage lender against loss due to default. PMI enables the lender to lend a higher percentage of the sales price.
MORTGAGOR - The party who is borrowing the money and giving the mortgage (better known as the borrower).
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NEGATIVE AMORTIZATION - A situation that occurs when the monthly payments on a loan fail to cover the interest cost. The interest that isn't covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren't high enough to cover the interest.
NOTE - A unilateral written agreement acknowledging the debt and containing the signer's express and absolute promise to repay the debt under specified terms, amounts, and conditions.
NOTICE OF DEFAULT - A notice filed with the county recorder to show that the borrower is in default of the borrower(s) note under a deed of trust or mortgage. Borrowers usually are considered in default if they fall 4 months or more behind in payments.
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OFFER - A presentation or proposal for acceptance, in order to form a contract. To be legally binding, an offer must define the price and terms.
ORIGINAL COST - The purchase price the current owner paid for a property.
ORIGINATION FEE - A fee the lender charges the borrower for handling and making a real estate loan (also known as points).
OVERIMPROVEMENT - An improvement that is excessive in cost, size, or type with respect to the value of the land or surrounding properties and that could not reasonably be expected to receive a compensating return.
OWNER OCCUPIED - Property that is physically occupied by the owner(s) of record.
ORIGINAL COST - The purchase price the current owner paid for a property.
ORIGINATION FEE - A fee the lender charges the borrower for handling and making a real estate loan (also known as points).
OVERIMPROVEMENT - An improvement that is excessive in cost, size, or type with respect to the value of the land or surrounding properties and that could not reasonably be expected to receive a compensating return.
OWNER OCCUPIED - Property that is physically occupied by the owner(s) of record.
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PAR VALUE - The value of the mortgage, without discount or a buydown.
PERSONAL PROPERTY - Any property that is not designated by law as real property.
PHYSICAL DEPRECIATION - Loss in value due to wear and tear, disintegration, use and action of the elements, or lack of maintenance. When it is economically feasible to correct physical depreciation, it is called "curable"; otherwise, it is "incurable".
PI (PRINCIPAL AND INTEREST) - A term used to indicate that only principal and interest are included in a quoted monthly payment on real property.
PITI (PRINCIPAL, INTEREST, TAXES, AND INSURANCE) - A term used to indicate that the four major portions of a monthly payment on real property — Principal, Interest, Taxes, and Insurance — are included in the quoted payment.
PLANNED UNIT DEVELOPMENT (PUD) - A subdivision of five or more individually-owned lots, with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.
PHYSICAL DEPRECIATION - Loss in value due to wear and tear, disintegration, use and action of the elements, or lack of maintenance. When it is economically feasible to correct physical depreciation, it is called "curable"; otherwise, it is "incurable".
PI (PRINCIPAL AND INTEREST) - A term used to indicate that only principal and interest are included in a quoted monthly payment on real property.
PITI (PRINCIPAL, INTEREST, TAXES, AND INSURANCE) - A term used to indicate that the four major portions of a monthly payment on real property — Principal, Interest, Taxes, and Insurance — are included in the quoted payment.
PLANNED UNIT DEVELOPMENT (PUD) - A subdivision of five or more individually-owned lots, with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.
POINTS - A point is equal to one percent of the principal amount of your mortgage. Example: On a mortgage for $100,000, one point means you pay $1000 to the lender. Lenders frequently charge points in both fixed-rate and adjustable-rate mortgages to increase the mortgage yield and to cover loan-closing costs. Points describe some of the cost of obtaining a loan, including the fees charged by the originating lender or broker and the discount fees charged by lenders to increase the overall yield. Points usually are collected at closing. They may be paid by the borrower or the home seller, or they may be split between them.
PRELIMINARY TITLE REPORT - A report showing the condition of title before a sale or loan transaction. A title policy is issued after the transaction is complete.
PREPAID INTEREST - The interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month. Example: If a loan closed on the 15th of the month, and the first payment is due 45 days later, the lender will charge 15 days of prepaid interest.
PREPAYMENT PENALTY - A penalty specified under a note, mortgage, or deed of trust and imposed when the loan (or a percentage of it) is paid before it is due. Prepayment penalties usually are for a set period of time from loan inception (e.g., one year, three years, five years.).
PRINCIPAL - (1) The person giving authority to an agent, (2) The amount of debt, not including interest.
PRIVATE MORTGAGE INSURANCE (PMI) - Insurance against loss by a lender in case the borrower defaults on the loan. The borrower pays the premium, which is included in the mortgage payment.
PROFIT AND LOSS STATEMENT - A statement showing the income and expenses of a business over a stated time, with the difference being the profit or loss for the period.
PROMISSORY NOTE - A promise in writing that establishes personal liability for repayment of a debt. The promissory note contains the terms and conditions of the loan, including how and when the loan must be repaid. (Also called "Note".)
PROPERTY TAX - Generally, a tax levied on both real and personal property; the amount of the tax is determined by the property's assessed value.
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QUITCLAIM DEED - A deed that transfers, without warranty, whatever interest or title a grantor may have when the conveyance is made. The grantor who gives the deed releases and waives all present rights. If the grantor has good and merchantable title, this is what is conveyed. If the grantor actually has no interest in the property, no interest is conveyed. Quitclaim deeds often are used to remove a cloud on a title.
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RANGE - A legal description for a division of land in the government survey. It is a six-mile wide row of townships running North and South.
RATE INDEX (INDEX) – An index that is used to adjust the interest rate of an Adjustable Rate Mortgage (e.g., COFI, LIBOR, 6 month T-Bill, etc.)
REAL ESTATE - (1) Land plus anything permanently affixed to the land, such as buildings, fences, and anything attached to the buildings (e.g., light fixtures, plumbing and air conditioners, or other such items) that would be personal property if not attached. (2) May refer to rights in real property as well as the property itself.
REAL ESTATE BOARD - A board composed of regular members (licensed real estate brokers, sales agents) and affiliated members (lenders, title companies, appraisers, etc.) whose purpose is to self-govern and further the real estate business in a given area.
REALTOR - A designation given to a real estate broker or sales agent who holds active membership in a real estate board associated with the National Association of Realtors.
RECONVEYANCE - An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt and the debt has been discharged fully. A reconveyance is commonly used when a trust deed is paid in full. Also called a "Deed of Reconveyance" or "Release."
RECORDATION (RECORDING) - The process of filing instruments for official public record (and notice) with the County Recorder's Office.
REGULATION Z (TRUTH IN LENDING) - A regulation that requires a borrower to be advised in writing — in a specific, uniform manner and before signing — of the interest rate and all costs and fees incurred in a proposed loan transaction.
REHABILITATION - Restoring a property to satisfactory condition without drastically changing its plan, form or style or architecture.
REINSTATEMENT – (1) Payment of a note, mortgage, deed of trust, etc. to bring it from default to good standing. (2) Restoring a veteran's previously used entitlement to enable the veteran to purchase real property under the VA program.
REMAINING ECONOMIC LIFE - Number of years between an appraisal and the point when an improvement becomes economically valueless.
REPLACEMENT COST - The current cost to construct an exact duplicate of a property with the same utility, design, layout, and quality of workmanship as the original, but using modern materials.
R.E.S.P.A. (REAL ESTATE SETTLEMENT PROCEDURES ACT) - A federal statute, effective June 20, 1975, requiring disclosures of certain costs in the sale of residential (one- to four-family) improved property.
RIGHT OF WAY – An easement either by grant, by fee, by condemnation, or by agreement that gives another the right to cross over, under, or through a parcel of land. Rights of way usually are given to the utility companies. Typically, they grant rights to pass over a strip of land set aside to construct a roadway; to construct telephone or electric power lines through and over the land; or to place underground water mains, gas mains, or sewer mains.
RATE INDEX (INDEX) – An index that is used to adjust the interest rate of an Adjustable Rate Mortgage (e.g., COFI, LIBOR, 6 month T-Bill, etc.)
REAL ESTATE - (1) Land plus anything permanently affixed to the land, such as buildings, fences, and anything attached to the buildings (e.g., light fixtures, plumbing and air conditioners, or other such items) that would be personal property if not attached. (2) May refer to rights in real property as well as the property itself.
REAL ESTATE BOARD - A board composed of regular members (licensed real estate brokers, sales agents) and affiliated members (lenders, title companies, appraisers, etc.) whose purpose is to self-govern and further the real estate business in a given area.
REALTOR - A designation given to a real estate broker or sales agent who holds active membership in a real estate board associated with the National Association of Realtors.
RECONVEYANCE - An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt and the debt has been discharged fully. A reconveyance is commonly used when a trust deed is paid in full. Also called a "Deed of Reconveyance" or "Release."
RECORDATION (RECORDING) - The process of filing instruments for official public record (and notice) with the County Recorder's Office.
REGULATION Z (TRUTH IN LENDING) - A regulation that requires a borrower to be advised in writing — in a specific, uniform manner and before signing — of the interest rate and all costs and fees incurred in a proposed loan transaction.
REHABILITATION - Restoring a property to satisfactory condition without drastically changing its plan, form or style or architecture.
REINSTATEMENT – (1) Payment of a note, mortgage, deed of trust, etc. to bring it from default to good standing. (2) Restoring a veteran's previously used entitlement to enable the veteran to purchase real property under the VA program.
REMAINING ECONOMIC LIFE - Number of years between an appraisal and the point when an improvement becomes economically valueless.
REPLACEMENT COST - The current cost to construct an exact duplicate of a property with the same utility, design, layout, and quality of workmanship as the original, but using modern materials.
R.E.S.P.A. (REAL ESTATE SETTLEMENT PROCEDURES ACT) - A federal statute, effective June 20, 1975, requiring disclosures of certain costs in the sale of residential (one- to four-family) improved property.
RIGHT OF WAY – An easement either by grant, by fee, by condemnation, or by agreement that gives another the right to cross over, under, or through a parcel of land. Rights of way usually are given to the utility companies. Typically, they grant rights to pass over a strip of land set aside to construct a roadway; to construct telephone or electric power lines through and over the land; or to place underground water mains, gas mains, or sewer mains.
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SECOND MORTGAGE - A mortgage that ranks after a first mortgage in priority.
SEPARATE PROPERTY - Property owned by one spouse, in which the other spouse has no legal ownership interest.
SETTLEMENT STATEMENT (HUD-1) - A statement prepared by broker, escrow, or lender, which gives a complete breakdown of costs and disbursements involved in a real estate sale.
SIMPLE INTEREST - Interest that is computed on the principal amount alone (as opposed to compound interest, which is calculated not only on the initial principal but also on the accumulated interest of prior periods).
SINGLE FAMILY RESIDENCE - (1) Originally, a house designed for use by one family from an apartment house. (2) More recently, a residential structure designed to include one dwelling and no common area (as opposed to a planned development or condominium, which has a common area).
STATEMENT OF INFORMATION (STATEMENT OF IDENTITY) - A confidential form filled out by a buyer, a seller, or both to determine whether any liens are recorded against either party.
SEPARATE PROPERTY - Property owned by one spouse, in which the other spouse has no legal ownership interest.
SETTLEMENT STATEMENT (HUD-1) - A statement prepared by broker, escrow, or lender, which gives a complete breakdown of costs and disbursements involved in a real estate sale.
SIMPLE INTEREST - Interest that is computed on the principal amount alone (as opposed to compound interest, which is calculated not only on the initial principal but also on the accumulated interest of prior periods).
SINGLE FAMILY RESIDENCE - (1) Originally, a house designed for use by one family from an apartment house. (2) More recently, a residential structure designed to include one dwelling and no common area (as opposed to a planned development or condominium, which has a common area).
STATEMENT OF INFORMATION (STATEMENT OF IDENTITY) - A confidential form filled out by a buyer, a seller, or both to determine whether any liens are recorded against either party.
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TAX LIEN - A lien imposed on property by law to secure payment of taxes. Tax liens may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes. With tax liens on real estate, a property owner becomes responsible for payment even if the tax obligation was incurred by a prior owner. The property owner also may be personally liable for paying the taxes.
TAX RATE - The ratio of dollars of tax per hundred dollars of assessed valuation, expressed as a percentage of valuation.
TITLE - (1) A legal term for an owner's interest in a piece of property. (2) A formal document that serves as evidence of ownership. Conveyance of the document may be required to transfer ownership in the property to someone else.
TITLE INSURANCE - Insurance that is designed to protect an owner's or lender's financial interest in real property against loss due to title defects, liens, or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance policy.
TRANSFER - The act by which the title to property is conveyed from one person to another.
TRUST DEED - See DEED OF TRUST.
TRUSTEE - (1) One who is appointed or required by law to execute a trust. (2) One who holds title to real property under the terms of a deed of trust.
TRUSTOR - The borrower under a deed of trust. That is, the person who deeds his/her property to a trustee as security for the repayment of a loan.
TAX RATE - The ratio of dollars of tax per hundred dollars of assessed valuation, expressed as a percentage of valuation.
TITLE - (1) A legal term for an owner's interest in a piece of property. (2) A formal document that serves as evidence of ownership. Conveyance of the document may be required to transfer ownership in the property to someone else.
TITLE INSURANCE - Insurance that is designed to protect an owner's or lender's financial interest in real property against loss due to title defects, liens, or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance policy.
TRANSFER - The act by which the title to property is conveyed from one person to another.
TRUST DEED - See DEED OF TRUST.
TRUSTEE - (1) One who is appointed or required by law to execute a trust. (2) One who holds title to real property under the terms of a deed of trust.
TRUSTOR - The borrower under a deed of trust. That is, the person who deeds his/her property to a trustee as security for the repayment of a loan.
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UNDERIMPROVEMENT - An improvement that is deficient in size or quality in relation to the site on which it is built.
UNDERWRITING - The lender's process of determining risk inherent in making a particular loan and establishing suitable loan terms and conditions. Underwriting includes a review of the potential borrower's credit history, ability and willingness to pay the loan, and a judgment of the property value.
UNDUE INFLUENCE - A situation in which a third party takes fraudulent or unfair advantage of another's weakness of mind, distress, or necessity, causing the other party to sign a contract or other instrument that would not have been signed otherwise. A contract or instrument may be set aside as not binding on any party who signs it while under undue influence.
USURY - Charging a rate, or amount, of interest that is greater than the law permits.
UNDERWRITING - The lender's process of determining risk inherent in making a particular loan and establishing suitable loan terms and conditions. Underwriting includes a review of the potential borrower's credit history, ability and willingness to pay the loan, and a judgment of the property value.
UNDUE INFLUENCE - A situation in which a third party takes fraudulent or unfair advantage of another's weakness of mind, distress, or necessity, causing the other party to sign a contract or other instrument that would not have been signed otherwise. A contract or instrument may be set aside as not binding on any party who signs it while under undue influence.
USURY - Charging a rate, or amount, of interest that is greater than the law permits.
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VA - See VETERANS ADMINISTRATION.
VALUATION - The estimate of value that usually is determined through an appraisal.
VALUE – (1) The usefulness of an object. (2) The monetary worth of an object. (3) In real estate lending, the lesser of the property's sales price or its appraised value.
VERIFICATION – The confirmation of truth, correctness, or authenticity.
VESTED – Ownership rights, even though they may be on a land contract or subject to a mortgage or deed of trust.
VALUATION - The estimate of value that usually is determined through an appraisal.
VALUE – (1) The usefulness of an object. (2) The monetary worth of an object. (3) In real estate lending, the lesser of the property's sales price or its appraised value.
VERIFICATION – The confirmation of truth, correctness, or authenticity.
VESTED – Ownership rights, even though they may be on a land contract or subject to a mortgage or deed of trust.
VETERAN’S EXEMPTION – A tax exemption for veterans or their widows.
VOLUNTARY LIEN – A lien placed against real property by the owner's voluntary act. Most commonly, a mortgage or deed of trust.
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WAIVE – To knowingly abandon, relinquish or surrender a right, benefit or claim.
WARRANTY DEED – A deed used to convey fee title to real property, which contains warranties to clear title. (See also GRANT DEED).
WRAP-AROUND MORTGAGE (also called A.I.T.D.or ALL-INCLUSIVE TRUST DEED) – A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgage under the wrap-around collects a payment based on its face value and then pays the first mortgagee.
WARRANTY DEED – A deed used to convey fee title to real property, which contains warranties to clear title. (See also GRANT DEED).
WRAP-AROUND MORTGAGE (also called A.I.T.D.or ALL-INCLUSIVE TRUST DEED) – A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage. The mortgage under the wrap-around collects a payment based on its face value and then pays the first mortgagee.
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ZONING – The division, by legislative regulations, of a city or county into areas called zones. The zones specify the allowable uses for the real property in these areas.
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