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

Abstract of Title – A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record which may impair the title.

Adjusted Gross Income – Total income including your salary and bonuses, and any rental or seasonal income.

Agreement of Sale – A written contract between seller and buyer in which they reach a meeting of minds on the terms and conditions of the sale.

Amortization – When you reduce a loan or financial obligation on an installment basis; also recovery, over a period, of cost or value.

Annual Percentage Rate – Also referred to as APR. A measurement of different loans offered by competing lenders, which takes into account both the closing fees and interest rate.

Appraisal - An estimate of value of property resulting from an analysis of facts about the property prepared by a qualified appraiser. An opinion of value.

Appraisal Report – A written report by an appraiser containing his opinion as to the value of a property and the reasoning leading to this opinion. The factual data supporting the opinion, such a comparables, appraisal formulas, and qualifications of the appraiser, will also be set forth.

Appraiser - This is a certified professional who estimates the value of your property.

Appreciation – An increase in the value of a property due to changes in the market conditions or other reasons.

APR – A measurement of different loans offered by competing lenders, which takes into account both the closing fees and interest rate.

ARM – Adjustable Rate Mortgage is a mortgage that changes interest rate periodically based upon the changes in a specified index.

Assessed Value – A value placed upon property by the tax assessor.

Asset – Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others(including bank accounts, stocks, mutual funds, and so on).

Balloon Mortgage – A balloon mortgage is a loan with a fixed interest rate and monthly payment that are due in full, usually after 5 to 7 years. A balloon mortgage has lower interest rates than fixed rate mortgages, and can save you money at the beginning.

Balloon Payment - Where the final installment payment on a note is greater than the preceding installment payments and it pays the note in full, such final installment is termed a balloon payment.

Bankrupt – A person, firm, or corporation that, through a court proceeding, is relieved from payment of all debts after the surrender of all assets to a court-appointed trustee.

Bankruptcy – A proceeding in a court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

Before Tax Income – Income that is before taxes are deducted.

Binder - A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Biweekly Payment Mortgage – A mortgage that requires payments to reduce the debt every two weeks (instead of the normal monthly payment schedule). The 26(or perhaps 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30 year fixed-rate mortgage, and they are usually drafted from the borrower`s bank account. The result for the borrower is substantial savings in interest.

Broker - A person who, for a commision, brings parties together and assists in negotiating contracts between them.

Buydown Mortgage - A temporary buydown is a mortgage on which an initial lump sum payment is made by a party to reduce a borrower`s monthly payment during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire lfe of a mortgage.

Cash Out Refinance – This is when a home owner applies for a new, bigger loan with the purpose of paying off their present loan and pocketing the difference. Cash-out refinancing lets you take advantage of the equity that you’ve built over the years and also allows you to free up some cash.

Certificate of Eligibility - A document issued by the federal government certifying a veteran`s eligibility for Department of Veterans Affairs Mortgage.

Certificate of Reasonable Value (CRV) – A document issued by the Department of Veterans Affairs that establishes the maximum value and loan amount for a Veterans Affair mortgage.

Certificate of Title – A statement given by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

Clear Title – A title that is free of liens or legal questions as to ownership of the property.

Closing – A meeting during which the sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs.

Closing Cost Item – A fee that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up individual closing cost items such as origination fees and attorney`s fees.

Closing Costs – Expenses (in addition to the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing Costs normally include an origination fee, an attorney`s fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey.

Closing Statement – The written statement provided by the escrow company to each of the parties to the loan transaction showing the amounts received and the amounts paid out for various items.

Commission – A payment for the performance of specific duties in real estate; a percentage of the selling price of property, percentage of rentals, etc.

Commitment Letter – A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as the “loan commitment“.

Comparables – An abbreviation for “comparable properties“, used for comparative purposes in the appraisal process. Comparables are properties similar to the one under consideration for appraisal.

Condominium – A real estate project in which each owner has title to a unit in a building, and financial responsibility in maintaining the common areas of the building.

Conforming Mortgage Loan - The current confirming loan limit is $240,000 and below.

Construction Loan – Short term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals work progresses.

Consumer Reporting Agency – An organization that creates reports that are used by lenders to help determine a potential borrower`s history. The agency gets this information from many sources.

Contingency - A condition that must be met before a contract is legally binding. For instance, home buyers often include a contingency requires that the contract is not binding until the buyer obtains a satisfactory home inspection report from a qualified home inspector.

Contract – A written or oral agreement stating both parties with do or not do something.

Conventional Mortgage Loan – A loan that`s neither guaranteed nor insured by Federal Housing Administration (FHA) or Veterans` Administration (VA).

Convertible ARM – This is an adjustable rate mortgage (ARM) that can be changed to a fixed rate mortgage during a specific period.

Credit – A agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later specified date.

Credit History – A record of a person`s opena and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts on-time.

Credit Report - A report of a peron`s credit history prepared by the credit bureau and used by a lender to determine whether a loan applicant has creditworthiness.

Debt – An amount owed to another.

Deed – A written instrument which, when properly executed and delivered, conveys title to real property.

Default - Failure to fulfill a duty or promise or to discharge an obligation, or to perform any act in an instrument in writing, that has been agreed upon.

Delinquency - Failure to make mortgage payments when mortgage payments are due.

Deposit - A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

Depreciation – Loss of value in real property brought about by age, physical deterioration or functional or economic obsolescence. Broadly, the loss in value from any cause.

Discount Fee – Sometimes referred to as “points,“ a fee charged by the lender in order to obtain a higher earning than the interest stated in the mortgage note. Very common on FHA and GI loans, since the interest rate is restricted.

Downpayment - The part of the purchase price of a property that the buyer pays up front in cash and does not finance with a mortgage.

Earnest Money - This is sum of money that a buyer gives to the seller when making an offer on a home.

Effective Gross Income – Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source.

Effective Rate - This is the total cost of a loan over the number of years that you will have it. The effective rate assumes that most people don’t stay in a home for the full length of a loan’s term, which is usually 30 years.

Endorsement – The signature on the back of a check, bill, note or the like required on negotiable instruments.

Equal Credit Opportunity Act (ECOA) – A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity – The interest or value which an owner has in real estate over and above the liens against it.

Escrow – The deposit of instruments and funds with instructions to a third party to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow.

Escrow Disbursements – Using escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses when they are due.

Escrow Payment – The part of a mortgagor`s monthly payment that is held by the servicer to pay for taxes, mortgage insurance, hazard insurance, lease payments, and other items as they become due.

Exclusive Agency Listing – A written instrument giving one agent the right for a specified time to sell a property, but reserving the right of the owner to sell the property himself without payment of a commission to the agent.

Exclusive Right to Sell Listing – A written agreement between an owner and an agent giving the agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

Execute – To complete, to make, to perform, to do, to follow out. To execute deed is to make a deed, including especially the signing, sealing, and delivery; to execute a contract is to perform the contract, to follow it out to the end, to complete it.

Executed Contract – A contract that is fully performed.

Execution of Contract – To sign a contract.

Fair Credit Reporting Act - A consumer protection law that regulates the disclosures of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one`s credit report.

Fair Market Value - The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest the seller willing but not compelled to sell, would accept.

Fannie Mae – A private corporation dealing in the purchase of first or second mortgages, at discounts.

Fee Simple – In modern estates, the terms “fee“ and “fee simple“ are substantially synonymous. The term “fee“ is of old English derivation. “Fee simple absolute“ is an estate in real property by which the owner has the greatest power over the title which it is possible to have, being an absolute estate. In modern use, it expressly established the title of real property in the owner, without limitation or end. He may dispose of it by sale, or trade or will, as he chooses.

FHA Loan - A loan that is guaranteed by the Federal Housing Administration with certain restrictions.

First Mortgage - A mortgage that is the primary lien against a property.

Fixed Rate Mortgage – A loan with the same interest rate and payment for the life of the loan. When you lock in the interest rate for a fixed rate loan, you’ll have the same rate and monthly payment for the loan’s full term.

Flood Insurance - Insurance that would provide reimbursement for physical property damage resulting from flooding. It is required for properties that are located in federally deisgnated flood areas.

FNMA (Fannie Mae) – A private corporation dealing in the purchase of first or second mortgages, at discounts.

Foreclosure - procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.

Freddie Mac – Shareholder-owned government sponsored enterprise established by Congress to provide a continuous flow of funds to mortgage lenders through the purchase of mortgage loans. Offers and sells its securities to investors directly and through selected dealers.

Front Ratio – This is a calculation of your total monthly housing expenses divided by your income. Lenders use a front ratio as a guideline to see if you qualify for a loan.

Fully Amortized ARM – An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amoritization term.

GI Loan – Analyzed by – and approval granted by – Veterans` Administration. Also called VA loan. Only eligible veterans may apply. Veterans` Administration guarantees a portion of the loan to the lender against loss.

Good Faith – This is an estimate of the total costs to get a loan when buying or refinancing a home. When you apply for a loan, a lender is required by law to give you a Good Faith Estimate within 3 days.

Good Faith Estimate – An estimate of charges which a borrower will most likely incur in connection with a settlement.

Gross Income - Total income from property before any expenses are deducted.

Guarantee of Title - The opinion of a title company backed by its assets as to the true condition of the title to a certain piece of land at a particular time, as shown by the public records in the recording office. Hazard Insurance - Insurance protecting against loss to property caused by fire, some natuarl cuases, vandalism, etc, depending on the term of the policy.

House Ratio - The ratio of the monthly housing payment in total (PITI – Principal, Interest, Taxes, and Insurance) divided by the gross monthly income.

HUD – The U.S. Department of Housing and Urban Development.

HUD-1 - A document that gives a breakdown of the costs that the seller and buyer may pay at closing. Income Property - Property which produces income from residential or commercial rentals and profits attributable to real estate other than rent.

Indemnity Agreement - An agreement by which one party agrees to repay another for any loss or damage the latter may suffer.

Index – A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Commonly used indices include the 1 Year Treasury Bill, the 11th District Cost of Funds, and the 6 Month Libor.

Instrument – A legal document in writing to create, alter, modify or terminate a right.

Interest Rate – The percentage of a sum of money charged for its use. Rent or charge paid for the use of money, expressed as a percentage, usually per year, of the sum borrowed.

Investment – Money put in property or other ventures with the expectation of making a profit, with sufficient security to return and protect the capital; not speculation.

Involuntary Lien - A lien imposed against property without consent of owner. Examples: taxes, assessments, federal income tax liens, judgments, etc.

Joint Note – A note signed by two or more persons with equal liability for payment.

Joint Tenancy - Joint ownership by two or more persons with right of survivorship.

Jumbo Mortgage – The current jumbo loan limit is $240,000 and above.

Land Contract - An agreement for the purchase or sale of real property. (See agreement of sale, conditional sales contract.)

Late Charge - The amount charged, in addition to the regular payment, by a lender if the borrower is delinquent in making the mortgage payment.

Legal Description – A written description by which property can be located definitely by reference to government surveys or approved recorded maps.

Lien - An encumbrance against property for money that is due, either voluntary or involuntary.

Lifetime Cap - A provision of an ARM that limits the highest rate that can happen during the life of the loan.

Listing – An employment contract between owner and broker authorizing broker to perform services involving the principal`s property.

Listing - Oral or written employment of a broker by the owner to sell or lease real estate; the written description of a loan available for placement with a lender.

Loan Application - A request to a lender for loan approval, giving a personal financial statement, income and debts.

Loan Commitment - Approval by lender of loan application, stating loan amount, interest rate, number of years on the loan and the amount of monthly payment.

Loan Costs – The actual expense for services rendered in obtaining a loan. Includes appraisal fees, attorney fees, survey fees, loan commissions. Usually itemized for the benefit of the borrower.

Loan to Value Ratio – Also called LTV. A percentage that shows how much equity a borrower will have in a home. The LTV will affect programs available to the borrower.

Lock Period – The period of time that a lender will guarantee a loan’s interest rate.

Margin - The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period. A representative margin would be 2.75%.

Market Price – The price the property brings in a given market.

Market Value - The price a willing buyer would pay and a willing seller would accept, both being fully informed and property exposed for a reasonable time period.

Mortgage - An instrument by which property is hypothecated to secure the payment of a debt.

Mortgage Broker – One who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. Also called loan broker.

Mortgage Insurance – This is an insurance contract that protects the lender against loss if a borrower can’t repay a loan.

Mortgagee – A person or company that receives a mortgage as a pledge for repayment of the loan.

Mortgagor – One who borrows money on his property and gives a mortgage as security.

Net Worth – Value remaining after subtracting the liabilities from the assets of a company or an individual.

Non-conforming Loan – Also referred to as a Jumbo Loan. Conventional home mortgages that are not eligible for sale and delivery to either Fannie Mae or Freddie Mac because of various reasons, including loan amount, loan characteristics, or underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium. The current non-conforming loan limit is $240,000 and above.

Note – A signed written instrument acknowledging a debt and promising payment.

Notice of Default – A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).

Notice of Rescission – A recorded notice to rescind a notice of default of a mortgage or deed of trust. Origination Fee – A service fee charged by a lender/ broker that the borrower pays on the closing date

Personal Property – Any property which is not real property.

Planned Development - Five or more individually owned lots where one or more other parcels are owned in common or there are reciprocal rights in one or more other parcels. A subdivision.

Points – Charges levied by the mortgage lender and usually payable at closing. One point represents 1% of the face value of the mortgage loan.

Power of Attorney - An instrument authorizing a person to act as the agent of the person granting it.

Preliminary Title Report - A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title insurance policy is issued.

Prepayment Penalty - The percentage a lender may require to be paid in addition to the unpaid principal balance when a loan is paid off ahead of schedule.

Principal, Interest, Taxes and Insurance (PITI) – The four major costs that a home owner’s mortgage payment covers.

Private Mortgage Insurance (PMI) - An insurance contract that protects the lender against loss if a buyer can’t repay a loan.

Promissory Note - The document signed by the borrower promising repayment of the loan showing the amount of monthly payments, interest rate, first payment date, last payment date, and the late charge and prepayment provisions.

Qualifying Ratios – Guidelines used by a lender to evaluate a home buyer’s borrowing potential.

Quitclaim Deed – A deed used to remove clouds on title by relinquishing any right, title or interest that the grantor may have.

Rate Cap - A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.

Rate Lock-in - A written agreement where the lender guarantees the borrower a certain interest rate, provided the loan closes within a set period of time.

Realtor - A real estate broker holding active membership in a real estate board affiliated with the National Association of Realtors.

Refinancing – The process of paying off one loan with the proceeds from a new loan using the same property as the security.

Rescission of Contract - The annulling, revocation or repealing of a contract by mutual consent of the parties to the contract or for cause by either party to the contract.

Residential Mortgage Credit Report (RMCR) – A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

Sales Contract - A contract by which buyer and seller agree to terms of a sale.

Simple Interest – Interest computed on principal alone, as opposed to compound interest.

Subordination Clause – Used in a first or senior lien permitting it to be subordinated to a subsequent lien, such as a construction loan. it converts a senior trust deed into a junior trust deed (second, third, etc.).

Subornation - The crime of getting another person to commit a crime. The procurement of the commission of an unlawful act.

Survey – A printed diagram made after the lot is measured and boundaries are indicated by markers. A survey shows the dimensions and boundaries of the real estate property, and indicates location of the house in its relation to all lot lines, including walks, and so forth. Prepared by a qualified engineer or surveyor. Taxes - A forced contribution of wealth to meet the public need for government.

Tenancy in Common – Ownership by two or more persons who hold undivided interests without right of survivorship.

Title – The rights of ownership.

Title Insurance – Insurance written by a title company to protect the property owner against loss if title is imperfect.

Title Search - A search of public records conducted by a title company to confirm a property’s owner and to find out what the claims are on the property.

Total Debt Ratio – Housing payments and monthly debt divided by gross monthly income. Also known as Obligations-to-Income Ratio ro Back-End Ratio.

Townhouse – A single family attached dwelling unit with party walls; usually an individual unit in a series of five to ten houses, with common walls between the units and side yards on the end units only; may have one to three stories and all necessary facilities and amenities. Can be a unit in a condominium project, a planned development or an ordinary subdivision. The townhouse is not legally defined in present California law.

Trust Deed – An instrument which transfers (conveys) the bare legal title of a property to a trustee to be held pending fulfillment of an obligation, usually the repayment of a loan to a beneficiary.

Trustee – One who holds bare legal title to a property in trust for another to secure the performance of an obligation.

Trustee`s Sale – A sale at auction by a trustee under a deed of trust, pursuant to foreclosure proceedings.

Trustor - The borrower of money secured by a trust deed. One who transfers his bare legal title to a trustee to be held as security until he has performed his obligation to a lender under terms of a note secured by a deed of trust.

Truth-in-Lending Act – A federal law requiring a disclosure of credit terms using a standard format. This is intended to assist in the comparisons between the lending terms of different financial institutions. Underwriting - A lender’s process to evaluate whether or not to give a borrower a loan. Valuation – Estimated worth or price. The act of valuing by appraisal.

Variable Interest Rate – An interest rate which fluctuates as the prevailing rate moves up or down. In mortgages there are usually maximums as to the frequency and the amount of fluctuation. Also called “flexible interest rate.“

Verification – Sworn statement before a duly qualified officer as to the correctness of the contents of an instrument.

Veterans Administration (VA) - A government agency guaranteeing mortgage loans with no downpayment to qualified veterans.

Warranty Deed – A deed used to convey real property which contains warranties of title and quiet possession and the grantor thus agrees to defend the premises against the lawful claims of third persons. It is used commonly in other states but not in California where it has been supplanted by the grant deed. The modern practice of securing title insurance has reduced the importance of express and implied warranty in deeds

Zoning – Act of city or county authorities specifying type of use to which property may be put in specific areas.