Real Estate Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Abstract
An abstract of title is a summary of the public records relating to the title to a particular property or piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

Acceleration Clause
An acceleration clause is the condition in a mortgage that may require the balance of the remainder of the loan to become due immediately, if regular mortgage payments are not made, or for breach of other conditions of the mortgage.

Adjustable Rate Mortgage
An adjustable rate mortgage, more commonly referred to as an ARM is a mortgage loan subject to changes in interest rates. When rates change, the ARM monthly payments increase or decrease at intervals determined by the lender. The change in the monthly payment amount, is usually subject to a cap.

Agreement of Sale
An agreement of sale, also known as contract of purchase, purchase agreement, or sales agreement (depending on location or jurisdiction) is a contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties. The agreement of sale has nothing to do with mortgages, other than that mortgages can finalize the sale.

Amenity
An amenity is a feature of the home or property that acts as a benefit to the buyer but that is not necessary to its use.

Amortization
Amortization is the repayment of a mortgage loan through monthly installments of principal and interest. The monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period, such as 15 or 30, and possibly even 40 years.

Annual Percentage Rate
The annual percentage rate, more commonly known as the APR shows the cost of the loan to the borrower, and the profit earned by the lender. It is calculated by using a standard formula. The APR includes the interest, points, mortgage insurance, and other fees associated with the loan.

Application
The application is the first step in the official loan approval process. This form is used to track and record important information about the potential borrower. This information is necessary to the underwriting process.

Appraisal
An appraisal is a document that gives an estimate of a property’s fair market value. The property must first be “appraised” by an approved and liscenced appraiser. An appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

Appraiser
An appraiser is a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate. He is commonly well trained, and licensed.

APR = Adjustable Rate Mortgage
An adjustable rate mortgage, more commonly referred to as an ARM is a mortgage loan subject to changes in interest rates. When rates change, the ARM monthly payments increase or decrease at intervals determined by the lender. The change in the monthly payment amount, is usually subject to a cap.

ARM = Adjustable Rate Mortgage
An adjustable rate mortgage, more commonly referred to as an ARM is a mortgage loan subject to changes in interest rates. When rates change, the ARM monthly payments increase or decrease at intervals determined by the lender. The change in the monthly payment amount, is usually subject to a cap.

Assessor
An assessor is a government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable Mortgage
An assumable mortgage is a mortgage that can be transferred from a seller to a buyer. Once the loan is assumed by the buyer, the seller is no longer responsible for repaying it. There is commonly a fee and/or a credit package involved in the transfer of an assumable mortgage.

B

Balloon Mortgage
A balloon mortgage is a mortgage that typically offers low rates for an initial period of time. The time perios is usually 5, 7, or 10 years. After the set time elapses, the balance is due or is refinanced by the borrower.

Bankruptcy
Bankruptcy is a federal law where a person’s possessions and assets are turned over to a trustee and used to pay off outstanding debts. This usually occurs when someone owes more than they have the ability to repay. Filing Fresno Bankruptcy can actually be the first important step in re-establishing credit.

Binder
A binder, or an offer to purchase is a preliminary agreement secured by the payment of cash money between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate upon agreed terms for a limited period of time. The binder does not legally bound the buyer to absolutely purchase the property. If the buyer changes his mind or is unable to purchase, the money is forfeited unless the binder expressly provides that it is to be refunded.

Borrower
A borrower is a person who has been approved to receive a loan or mortgage and is then obligated to repay it and any additional fees according to the loan terms.

Budget
A budget is a detailed record of all income earned and spent during a specific period of time. This can be used by mortgage companies to determine which loan would work best for your budget.

Building Code
A building code is a based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building. These are governmentally decided and construction must abide to them, otherwise buildings can be seized or condemned due to being unsafe.

Building Line
A building line, also known as a setback, are the distances from the ends or sides of the lot beyond which construction is not allowed to extend. The building line may be established by a filed plat of a subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

C

Cap
A cap is a limit. It is normally placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash Reserves
Cash reserves are cash amounts sometimes required to be held in reserve in addition to the down payment and closing costs of a property. The amount is determined by the lender.

Certificate of Title
The certificate of title is the document provided by a qualified source, such as a title company, that shows the property legally belongs to the current owner. Before the title is transferred at the closing of a sale, it should be clear and free of all liens or other claims.

Closing
Closing, also known as settlement, is the time at which the property is formally sold and transferred from the seller to the buyer. It is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives the title from the seller.

Closing Costs
Closing costs are customary costs above and beyond the sale price of the property. These must be paid to cover the transfer of ownership at closing. These costs vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Cloud
A cloud is an outstanding claim or limitation of the title which adversely affects the marketability of title.

Cooperative
A cooperative, more commonly known as a co-op, is when residents purchase stock in a cooperative corporation that owns a structure. Each stockholder is entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Commission
A commission is an amount, usually a percentage of the property sales price, that is collected by a real estate agent as a fee for negotiating the transaction. This percentage or fee varies per each real estate agent, but is commonly around 7%.

Condemnation
Condemnation is the taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government’s power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building fails building code and is unsafe or unfit for use.

Condominium
A condominium is a form of ownership of a property in which individuals purchase and own a unit of housing in a multi-unit complex. The owner also shares financial responsibility for common areas. Also called condos, they can be used for vacation use as well.

Contractor
In the construction industry, a contractor is the person in charge who contracts to erect buildings or portions of them. There are also contractors for various phases of construction:

  • heating
  • electrical
  • plumbing
  • air conditioning
  • road building
  • bridge and dam erection

Conventional Loan
A conventional loan is a private sector loan, one that is not guaranteed or insured by the U.S. government. These loans do not include FHA loans or VA loans.

Cooperative
A cooperative, more commonly known as a co-op, is when residents purchase stock in a cooperative corporation that owns a structure. Each stockholder is entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Credit Bureau Score
A credit bureau score is a number representing the possibility a borrower may default. These scores are based on credit history and are used to determine an individual’s ability to qualify for a mortgage loan.

Credit History
A person’s credit history is the tracking and past information of their debt payment. Lenders use this information to gauge a potential borrower’s ability to repay a loan.

Credit Report
A credit report is a record that lists all past and present debts and the timeliness of their repayment of a particular person. It documents an individual’s credit history.

D

Debt-to-Income Ratio
A debt-to-income ratio is a comparison of gross income to housing and non-housing expenses. According to the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income before taxes. The mortgage payment combined with non-housing debts should not exceed 41% of income.

Deed
A deed is a document composed under truth and law that transfers the ownership of a property from one person to another, along with the title.

Deed of Trust
A deed of trust is similar to a mortgage, wherein a security instrument, normally real property, is given as security for a debt. However, in a deed of trust there are three parties to the instrument: the borrower, the trustee, and the lender. In these transactions, the borrower transfers the legal title for the property to the trustee who holds the property (in trust) as security for the payment of the debt to the lender. If the borrower pays the debt as agreed, the deed of trust becomes void. If the borrower defaults in the payment of the debt, the trustee may sell the property at a public sale, under the terms of the deed of trust. A few states have begun in recent years to treat the deed of trust like a mortgage.

Deed-in-Lieu
In order to avoid foreclosure (“in lieu” of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt. This process does not allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default
A default is the inability to pay the monthly mortgage payments in a timely manner, or to otherwise meet the mortgage terms.

Delinquency
Delinquency is the failure of a borrower to make timely mortgage payments under a loan agreement. Similar to default.

Department of Housing and Urban Development
The United States Department of Housing and Urban Development, abbreviated HUD, is a department of the United States government. It was founded in 1965 to develop and execute policy on housing and cities. The department was established in September 1965 when President Lyndon Johnson signed the Department of Housing and Urban Development Act into law. They have many sub departments which go further indept in loans and the like.

Department of Veterans Affairs
The Department of Veterans Affairs, known as VA is a federal agency which guarantees loans made to veterans. They are similar to mortgage insurance, as in that they are a loan guarantee which protects lenders against loss that may result from a borrower default.

Depreciation
Depreciation is the decline in value of a house. Reasons may include:

  • wear and tear
  • changes in the neighborhood
  • taste changes of the public
  • building code changes

Discount Points
In real estate, points, also called discount points, are one percent (1%) of the amount of the mortgage loan. For example, if a loan is for $35,000, one point is $350. Points are charged by a lender to raise the yield on his loan at a time when money is tight, interest rates are high, and there is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or VA guaranteed loans. On a conventional mortgage, points may be paid by either buyer or seller or split between them.

Documentary Stamps
Documentary stamps are a state tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of the stamps required changes from state to state.

Down Payment
A down payment is the portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan. A down payment can also refer to the initial payment of 3% of a FHA loan.

E

Earnest Money
Earnest money is money put down by a potential buyer of a property to show that they are serious about purchasing the home. The money becomes part of the down payment if the offer is accepted, or is returned if the offer is rejected. It can be forfeited if the buyer pulls out of the deal.

Easement Right
An easement right is a right-of-way granted to a person or company which authorizes access to or over the owner’s land, for a set time period. For example, a gas company could obtain an easement right to repair pipes.

Energy Efficient Mortgage
An energy efficient mortgage, more popularly called EEM is a FHA program that helps homebuyers save money on utility bills by enabling them to budget the cost of adding energy efficiency features to a new or existing home as part of the home purchase. A common type of FHA loan.

Encroachment
An encroachment can be an obstruction, a building, or part of a building that extendsbeyond a legal boundary onto neighboring land, private or public, or a building extending beyond the building line.

Encumbrance
An encumbrance is a legal right or interest in land that affects a good or clear title, and diminishes the land’s value. It can take many forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, unpaid taxes, a pending legal action, or restrictive convenants. Legally, an encumbrance does not prevent transfer or sale of the property to another. A search of the title’s history is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.

Energy Efficient Mortgage
An energy efficient mortgage, more popularly called EEM is a FHA program that helps homebuyers save money on utility bills by enabling them to budget the cost of adding energy efficiency features to a new or existing home as part of the home purchase. A common type of FHA loan.

Equity
Equity is the owner’s financial interest in a property. Equity is calculated by subtracting the amount still owed on the mortgage loan or loans from the fair market value of the property.

Escrow Account
An escrow account is a separate account into which the lender puts a portion of each monthly mortgage payment. An escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, and mortgage insurance, among others.

F

Fair Housing Act
A Fair Housing Act is a law that prohibits discrimination in all steps of the homebuying process on the basis of race, national origin, sex, religion, familial status, or disability.

Fair Market Value
The fair market value of a property is the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation. A fair market value takes into accounts appraisals and encumbrances.

Federal National Mortgage Association
The Federal National Mortgage Association, also called FNMA or Fannie Mae, is a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities to sell to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers, creating a sort of “circle of loans”.

Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation, also known as FHLM and Freddie Mac, is a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors. this provides lenders with funds for new homebuyers, and thus creates a “circle of loans”.

Federal Housing Administration
The Federal Housing Administration, abbreviated FHA is a United States government agency created as part of the National Housing Act of 1934. The objectives of this organization are to improve housing standards and conditions; to provide an suubstantial home financing system through insurance of mortgage loans; and to stabilize the mortgage market.

Federal National Mortgage Association
The Federal National Mortgage Association, also called FNMA or Fannie Mae, is a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities to sell to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers, creating a sort of “circle of loans”.

Federal Housing Administration
The Federal Housing Administration, abbreviated FHA is a United States government agency created as part of the National Housing Act of 1934. The objectives of this organization are to improve housing standards and conditions; to provide an suubstantial home financing system through insurance of mortgage loans; and to stabilize the mortgage market.

FHA 203(b) Loan
A 203(b) loan is a FHA program which provides mortgage insurance to protect lenders from the possible default of borrowers. It is used to finance the purchase of new or existing one to four family home. They are commonly characterized by a low down payment, flexible qualifying guidelines, and limited fees, but have a limit on maximum loan amount.

FHA 203(k) Loan
The FHA has a program set up to rehabilitate and repair single family properties. This program is known as the FHA 203K loan. The loan is a great way to allow low income families an opportunity to own a house in a newer neighborhood to raise their children.

FHA Loans

About FHA loans
The United States Department of Housing and Urban Development is completly focused on the development of urban areas in America, and to have anybody who desires to be a homeowner to become one. They have created programs involving the assistance of, and education of loans and mortgages. Included in this long list of programs and organizations is the Federal Housing Administration, or “FHA”. Serving more as an insurance company to lenders rather than lenders themselves, the FHA provides peace-of-mind to lender and borrower. With rates as low as 3% of the house price and some options requiring no money down, a FHA loan is the perfect answer to borrowing questions. The FHA has many opportunities to obtain loans for various reasons such as: Purchasing a home, Repairing or fixing up a home, or Making a home more energy efficient. These loans are available in all fifty states.

Qualification
There are fewer restrictions for a FHA loan qualification as opposed to a standard mortgage loan. The requirements are simple. You will need to have two years of steady employment, not necessarily by the same employer but it is preferred. Your income should be similar or increasing for the past two years. You should have less than two 30 day periods of late payments on your credit reports. If you have declared bankruptcy, then it must be at least two years old and you will have to have good credit since then. Foreclosures will also need to be older than three years and have good credit since then. Mortgage payment should be about 30% of your gross income.

Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation, also known as FHLM and Freddie Mac, is a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors. this provides lenders with funds for new homebuyers, and thus creates a “circle of loans”.

Fixed-Rate Mortgage
A fixed-rate mortgage is a mortgage with payments that remain the same throughout the entire timeframe of the loan because the interest rate and other terms are agreed upon by borrower and lender, therefore being fixed and unchangable

Flood Insurance
Flood insurance is a particular type of insurance that protects homeowners against losses from a flood. If a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Foreclosure
Foreclosure is the legal process in which mortgaged property is sold by auction to pay the loan of the defaulting borrower.

Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation, also known as FHLM and Freddie Mac, is a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors. this provides lenders with funds for new homebuyers, and thus creates a “circle of loans”.

G

General Warranty Deed
A general warranty deed is a deed which dictates all the grantor’s interests in and title to the property to the grantee, and warrants that if the title is defective or has a cloud on it, the grantee may hold the grantor liable.

Government National Mortgage Association
Redirected from Ginnie Mae
The Government National Mortgage Association, more commonly known as GNMA and Ginnie Mae, is a government-owned corporation overseen by the U.S. Department of Housing and Urban Development. Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment. Similar to Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Government National Mortgage Association
Redirected from GNMA
The Government National Mortgage Association, more commonly known as GNMA and Ginnie Mae, is a government-owned corporation overseen by the U.S. Department of Housing and Urban Development. Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment. Similar to Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good Faith Estimate
A good faith estimate is an estimate of all closing fees including pre-paid and escrow items as well as lender charges. The estimate must be given to the borrower within three days after submission of a loan application.

Government National Mortgage Association
The Government National Mortgage Association, more commonly known as GNMA and Ginnie Mae, is a government-owned corporation overseen by the U.S. Department of Housing and Urban Development. Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment. Similar to Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Grantee
A grantee is the party in the deed who is the buyer or recipient.

Grantor
A grantor is the party in the deed who is the seller or giver.

H

Hazard Insurance
Hazard insurance is a type of insurance that protects against damages caused to property by fire, windstorms, and other common hazards. Similar to flood insurance.

Homebuyer Education Learning Program
The Homebuyer Education Learning Program, often called HELP is an educational program organized by the FHA that counsels people about the homebuying process. HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium.

Home Inspection
A home inspection is an examination of the structure and mechanical systems of a house to determine its safety. It makes the potential homebuyer aware of any repairs that may be needed. Inspections are usually required before obtaining any type of loan.

Home Warranty
A home warranty is a warrenty which offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance. Coverage usually extends over a specific time period and does not cover the home’s structure.

Homebuyer Education Learning Program
The Homebuyer Education Learning Program, often called HELP is an educational program organized by the FHA that counsels people about the homebuying process. HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium.

Homeowner’s Insurance
Homeowner’s insurance is an insurance policy that combines protection against damage to a building and its contents. It includes protection against claims of negligence or inappropriate action that result in someone’s injury or property damage.

Housing Counseling Agency
The housing counseling agency is a government sponsored agency that provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.

Department of Housing and Urban Development
The United States Department of Housing and Urban Development, abbreviated HUD, is a department of the United States government. It was founded in 1965 to develop and execute policy on housing and cities. The department was established in September 1965 when President Lyndon Johnson signed the Department of Housing and Urban Development Act into law. They have many sub departments which go further indept in loans and the like.

HUD1 Statement
A HUD1 Statement, also known as the settlement sheet, is a statement that itemizes all closing costs. IT must be given to the borrower at or before closing.

HVAC
HVAC stands for the tree common amenities in modern real estate: heating, ventilation and air conditioning. It is a quick way to refer to a home’s heating and cooling system.

I

Index
An index is a measurement used by lenders to determine changes to the interest rate charged on an adjustable rate mortgage.

Inflation
Inflation is a general rise in prices measured against a standard level of purchasing power of the dollar. Usually, as the number of dollars in circulation exceeds the amount of goods and services available for purchase, prices go up because the dollar is worth less.

Insurance
Insurance is a gaurenteed protection against a specific loss due to specific events. They are secured by the payment of a regularly scheduled premium.

Interest
Interest is the fee paid on borrowed money, which is profit to the lender. Interest is determined by the interest rate.

Interest Rate
The interest rate is the amount of interest charged on a monthly loan payment. It is usually expressed as a percentage.

J

Judgment
Judgment is a legal decision which occurs when a lender requires debt repayment. A judgment may include a property lien that protects the creditor’s claims by providing a collateral source.

K

There are currently no terms that begin with this letter.

L

Lease Purchase
A lease purchase assists homebuyers in their quest to purchase a home by allowing them to lease a home with the later option to buy. The rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

The Advantages to the Seller are numerous:

  • No real estate commission to pay (not realtors)
  • No maintenance problems
  • Prompt payment of rent
  • All the terms of the purchase are negotiated in advance
  • Seller retains all tax benefits until the sale and much more
  • Positive monthly cash flow to offset losses

The Advantages for the Buyer:

  • Time to shop around for best financing options
  • Live in the house before you buy it
  • Meet the neighbors and neighborhood before making long term decision
  • Large rent credits (25-100%) for prompt payment

Lien
A lien is a legal claim against a specific property that must be satisfied when the property is sold.

Loan
A loan is an amount of money borrowed that is usually repaid with interest.

Loan Fraud
Loan fraud is purposely giving false information on a loan application in order to better met the requirements for a loan. Loan fraud may result in civil liabilities or criminal penalties.

Loan-to-Value Ratio
The loan-to-value ratio, also known as LTV, is a percentage calculated by dividing the amount borrowed in the loan by the price or appraised value of the home to be purchased. The higher the LTV, the less cash a borrower is required to pay as down payment.

Lock-In
A borrower may lock-in to an interest rate to guarantee a specific rate. Lenders can let borrowers do so if the loan is closed within a specific time.

Loss Mitigation
Loss mitigation is a process to avoid foreclosure. The lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.

Loan-to-Value Ratio
The loan-to-value ratio, also known as LTV, is a percentage calculated by dividing the amount borrowed in the loan by the price or appraised value of the home to be purchased. The higher the LTV, the less cash a borrower is required to pay as down payment.

M

Margin
A Margin is an amount the lender adds to an index to calculate and determine the interest rate on an adjustable rate mortgage.

Marketable Title
A marketable title is a title that is free and clear of objectionable liens, clouds, and other title defects. Being free from these holdbacks, the owner has the go-ahead to sell his property freely to others.

Mortgage Insurance Premium
Redirected from MIP
A mortgage insurance premium, called MIP, is a monthly payment which is usually part of the mortgage payment. It is paid by a borrower for mortgage insurance.

Mortgage
A mortgage is the act of using property, normally real estate, as security for the payment of a debt.
Mortgages are normally connected with home loans. These loans can include FHA loans or other forms. When mortgages occur, the owner of the house risks the house if he defaults on a payment, and the lender then has the right to sell the property at an auction if the borrower does, in fact, default on a payment. A mortgage is a type of lien.

Mortgage Banker
A mortgage banker is a company that originates loans and resells them to secondary mortgage lenders such as Fannie Mae or Freddie Mac.

Mortgage Broker
A mortgage broker is a firm that originates and processes loans for a number of lenders.

Mortgage Commitment
A mortgage commitment is a written notice from the bank or other lending institution which declares the institution will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Mortgage Insurance
Mortgage insurance is a type of insurance which protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan. Mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price. FHA home loans are a very common type of insured loan.

Mortgage Insurance Premium
A mortgage insurance premium, called MIP, is a monthly payment which is usually part of the mortgage payment. It is paid by a borrower for mortgage insurance.

Mortgage Modification
Mortgage modification is a loss mitigation option that allows a borrower to refinance the mortgage, and possibly extend the term of the mortgage loan and thus reduce the monthly payments. Also known as refinancing.

Mortgage Note
A mortgage note is a written agreement to repay a loan. The agreement is secured by a mortgage and serves as proof of an indebtedness to the lender. It states the details 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.

Mortgagee
A mortgagee is the lender in a mortgage agreement.

Mortgagor
A moortgagor is the borrower in a mortgage agreement.

N

National Association of Realtors
The National Association of Realtors, more commonly called NAR, whose members are known as Realtors, is North America’s largest trade association, representing over 1 million members. REALTOR is a trademark of theirs, as marks a member of this association.

O

Offer
In real estate, the offer is the indication by a potential buyer of their willingness to purchase a home at a specific price. It is commonly put forth in writing.

Origination
Origination is the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and anappraisal of the property.

Origination Fee
An origination fee is the fee charged by the lender for originating a loan. This fee is usually calculated in the form of points and paid at closing.

P

Partial Claim
The partial claim process is a loss mitigation option offered by the FHA that allows a borrower, with assistance from a lender, to get an interest-free loan from HUD to update their mortgage payments up to date.

Special Lien
Redirected from Particular lien
A special lien is a lien that binds a specified piece of property which is used as collateral against all one’s assets. It creates a right to retain something of value belonging to the other person as compensation for labor, material, or money expended in that person’s behalf. In some localities it is called particular lien or specific lien.

PITI
PITI stands for the four most important elements of mortgage payments: principal, interest, taxes, and insurance. Payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance goes into an escrow account to cover the fees when they are due.

Plat
A plat is a map or chart of a lot, subdivision, or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

PMI = Private mortgage insurance
Private mortgage insurance, more commonly refered to as PMI, are privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

Points
In real estate, points, also called discount points, are one percent (1%) of the amount of the mortgage loan. For example, if a loan is for $35,000, one point is $350. Points are charged by a lender to raise the yield on his loan at a time when money is tight, interest rates are high, and there is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or VA guaranteed loans. On a conventional mortgage, points may be paid by either buyer or seller or split between them.

Pre-Approve
When a lender commits to lend a specified amount of money to be potential borrower at set terms, they can be pre-approved. The lender cannot change the pre-approval as long as the borrower still meets the qualification requirements at the time of purchase.

Pre-Foreclosure Sale
A pre-foreclosure sale is the sale of a property which allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.

Pre-Qualify
When a borrower pre-qualifies for a loan, it is when the lender informally determines the maximum amount an individual is eligible to borrow.

Premium
A premium is an amount paid on a regular schedule by someone who has insurance that maintains insurance coverage.

Prepayment
Prepayment is the act of paying the entirety of the mortgage loan before the scheduled due date. They may be subject to a prepayment penalty.

Principal
The principal is the amount borrowed from a lender. It does not include interest or additional fees.

Private Mortgage Insurance
Private mortgage insurance, more commonly refered to as PMI, are privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

Q

Quitclaim Deed
A quitclaim deed is a deed which transfers whatever interest the maker of the deed may have in the particular piece of land. A quitclaim deed is commonly given to clear the title when the grantor’s interest in a property is questionable. By accepting this form of deed, the buyer assumes all risks. Such a deed makes no warranties to the title, but simply transfers to the buyer whatever interest the grantor has.

R

Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act, more commonly refered to as RESPA, is a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.

Real Estate
Real estate encompasses land along with anything permanently affixed to the land, such as buildings.

Real Estate Agent
A real estate agent is an individual who is licensed to negotiate and arrange real estate sales. They commonly works for a real estate broker.

Real Estate Broker
A real estate broker is a middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.

Refinancing
Refinancing is the act of paying off one loan by obtaining another. Refinancing is generally done to secure better loan terms, such as a lower interest rate. Streamline refinancing is a popular type of refinancing.

Rehabilitation Mortgage
A rehabilitation mortgage is a mortgage that covers the costs of repairing or improving a property. Some rehabilitation mortgages, such as the FHA 203K loan allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

RESPA = Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act, more commonly refered to as RESPA, is a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.

Restrictive Covenants
Restrictive covenants are private restrictions limiting the use of real property. Restrictive covenants are created by deed and may bind all future purchasers of the land to the covenant. It may also be personal and binding only between the original seller and buyer. Who the covenant binds to is determined by local law and the seller. Restrictive covenants that run with the land, or bind to all future buyers, are encumbrances and may affect the value and marketability of title.

Reverse Mortgage
A reverse mortgage is a loan available to seniors aged over 62. It is used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves.

S

Settlement Sheet
The Settlement Sheet, also known as the HUD1 Statement, is a statement that itemizes all closing costs. IT must be given to the borrower at or before closing.

Special Assessment
A special assessment is a special tax imposed on property, individual lots or all property in the immediate area. These taxes are collected for road construction, sidewalks, sewers, and street lights, among other government plans.

Special Forbearance
Special forbearance is a loss mitigation option where the lender arranges a revised repayment plan for the borrower that can include a temporary reduction or suspension of monthly loan payments.

Special Lien
A special lien is a lien that binds a specified piece of property which is used as collateral against all one’s assets. It creates a right to retain something of value belonging to the other person as compensation for labor, material, or money expended in that person’s behalf. In some localities it is called particular lien or specific lien.

Special Warranty Deed
A special warranty deed is a deed in which the grantor conveys the title to the grantee and agrees to protect the grantee. It can protect the grantee against title defects or claims asserted by the grantor and other people who claim possession of the title. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time the title was in his possession to impair the title.

Specific Lien
A specific lien, or special lien, is a lien that binds a specified piece of property which is used as collateral against all one’s assets. It creates a right to retain something of value belonging to the other person as compensation for labor, material, or money expended in that person’s behalf. In some localities it is called particular lien or specific lien.

Survey
A survey is a property diagram that indicates legal boundaries, easements, encroachments, rights of way, and improvement locations, among others.

Sweat Equity
Sweat equity is the act of using labor to build or improve a property as part of the down payment.

T

Title
The Title, also known as the certificate of title, is the document provided by a qualified source, such as a title company, that shows the property legally belongs to the current owner. Before the title is transferred at the closing of a sale, it should be clear and free of all liens or other claims.

Title 1
Title 1 is an FHA loan that allows a borrower to make non-luxury improvements, such as renovations or repairs, to their home. Title 1 loans less than $7,500, and don’t require a property lien.

Title Examination
A title examination, or title search is a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

Title Insurance
Title insurance is a form of insurance that protects the lender against any claims that arise from arguments about ownership of the property. It is also available for homebuyers.

Trustee
A trustee is a party who is given legal responsibility to hold and operate property in the best interest of or “for the benefit of” another, usually under a deed of trust. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.

Truth-in-Lending
Truth-in-lending is a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan’s initial period and then adjusts to another rate that lasts for the term of the loan.

U

Underwriting
Underwriting is the process of analyzing a loan application to determine the risk involved in making the loan. It includes a review of the borrower’s credit history and a judgment of the property value.

V

Department of Veterans Affairs
The Department of Veterans Affairs, known as VA is a federal agency which guarantees loans made to veterans. They are similar to mortgage insurance, as in that they are a loan guarantee which protects lenders against loss that may result from a borrower default.

VA Loan
VA loans are mortgage loans guaranteed by the United States’ Veterans Administration. These loans were originally designed to assist American veterans, or their surviving spouses, purchase homes. These VA loans act very similarly to FHA loans, as in that the United Stated Department of Federal Affairs acts as insurance to the lender if the borrower has any difficulties or problems making a payment.

W

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Y

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Z

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0-9

203(b)
A 203(b) loan is a FHA program which provides mortgage insurance to protect lenders from the possible default of borrowers. It is used to finance the purchase of new or existing one to four family home. They are commonly characterized by a low down payment, flexible qualifying guidelines, and limited fees, but have a limit on maximum loan amount.

203(k)
An FHA 203(k). The FHA has a program set up to rehabilitate and repair single family properties. This program is known as the FHA 203K loan. The loan is a great way to allow low income families an opportunity to own a house in a newer neighborhood to raise their children.

NOTE: Arizona, like most states, has specific real estate laws or regulations which varies from other states … click here for more information on Arizona Real Estate Law

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