• A historical summary of all the recorded transactions that affect the title to the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title.

• A loan provision giving the lender the power to declare all sums owing lender immediately due and payable upon the violation of a specific loan provision, such as the sale of the property, or the failure to make loan payments on time. Example : John sells his property to Mary who takes over John's mortgage payments. They do not notify the lender of this transaction. The lender finds out that the title to the property has transferred and calls the loan, since the loan documents state that the loan is due on the sale of the property. John is now liable to pay his lender in full.

• A written signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also known as contract of purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement.

• Formal declaration before a public official (typically a Notary Public) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust.

• Also known as a variable rate mortgage. The interest rate on these mortgages changes periodically.

• This is the length of time for which the interest rate is fixed on an adjustable. Therefore if the adjustment period is six months, then the interest rate will remain fixed for six months, after which time it will adjust.

• A gradual paying off of a debt by periodic installments which pay principal and interest.

• The effective rate of interest for a loan per year. This rate is typically higher than the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. Caution : the APR is sometimes computed differently by different lenders and can be misleading.

• An opinion or estimate of the value of a property at a given date.

• A transaction among parties each of who acts in his or her own best interest. Example : A transaction between a father and his son would NOT be an an Arm's length transaction

• A local tax levied against a property for a specific purpose such as street lights.

• A mortgage loan which allows a new home buyer to take over the obligation of making loan payments with no change in the terms of the loan. Assumable loans do not have a due-on-sale clause. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments.
  
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Balloon (payment) Mortgage

• Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract. Example : A balloon mortgage for $25,000 has interest only payments for 5 years at 12% ($250 per month), with the full principal of $25,000 due and payable after 5 years.

• The financial inability to pay one's debts when due. The debtor surrenders his assets to the bankruptcy court. An individual typically files for Chapter 7 (all debts wiped out) or Chapter 13 (establishes a payment plan to pay off debts). A bankruptcy stays on an individual's credit report for 7 years.

• Definition #1: A title insurance binder is the written commitment of a title insurance company to insure title to the property subject to the conditions and exclusions shown on the binder. Definition #2: Preliminary agreement, normally secured with earnest money, between a buyer and a seller as an offer to purchase real estate.

• A mortgage which requires 1/2 the normal monthly payment every two weeks. Over the course of the year, 26 half payments are made which is equivalent to 13 full mortgage payments. As a result of this extra payment the loan amortizes much faster than a loan with normal monthly payments.

• A mortgage covering more than one piece of property. Example : A developer subdivides a tract of land into lots and obtains a blanket mortgage on the whole tract.

• 1. A debt instrument in the capital markets. The U.S. government, corporations and municipalities use bonds to raise money. Bonds can also be backed by mortgages. The best known bond is the 30 yr. treasury bond issued by the U.S. government. 2. A sum of money given to a court to guarantee against a loss. For example if there is a lien on a property, the owner may remove the lien by posting a bond.

• One who applies for a loan secured by real estate and is responsible for repaying the loan (mortgage).

• An interim loan typically used when the buyer is unable to sell his/her house but needs money to close the transaction on the house he/she is buying. The bridge loan is made on the buyers current residence to finance the buyers new residence. The loan is paid off when the buyers current residence is sold.

• Obtaining a lower interest rate (buying down the rate) by paying additional points to the lender. The lower rate may apply for the full duration of the loan or for just the first few years. A buydown may be used to qualify a borrower who would otherwise not qualify . This is because a buydown results in lower payments which are easier to qualify for. Example : A very popular buydown is the 2-1 buydown. If the interest rate on the note is 9%, the buydown results in the rate being 7% (9%-2%) for the first year, 8% (9%-1%) for the second year, and 9% thereafter.
  
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• Profit earned from the sale of real estate. A seller may defer taxes on the capital gain of his/her primary residence by buying a higher priced residence within 2 years.

• Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

• Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

• The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).

• The document issued by the Veterans Administration to those that qualify for a VA loan which may be used to buy a house with 0 down. Certificates of eligibility may be obtained by sending the form DD-214 to the local VA office along with VA form 1880. Certificate of Reasonable Value (CRV) An appraisal performed by an VA approved appraiser which establishes the property's current market value. This value establishes the ceiling on the maximum VA mortgage loan principal.

• Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan.

• An opinion rendered by an attorney as to the status of title to a property, according to the public records. This certificate does not the same level of protection as title insurance.

• The chronological order of conveyance of a parcel of land from the original owner to the present owner. Example: An abstractor can research title to property going back to the date that the property was granted to the United States.

• A marketable title, free of clouds and disputed interests. Most lenders require a clear title prior to closing.

• 1. The act of transferring ownership of a property from seller to buyer in accordance with a sales contract.
  2. The time when a closing takes place.

• Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs: recurring and non recurring. Non-recurring costs are one time transactional costs which include Discount and origination points, Lender fees - underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc ; Title insurance fees Escrow, attorney or closing agent fees, Recording fees, Inspection and appraisal fees ; Real estate brokerage commissions; Recurring fees are costs associated with owning the property and they recur month after month. These costs may include hazard insurance, interest, property taxes, mortgage insurance (PMI), and association fees. A pro-rated amount of these fees may have to be paid at closing including Pre-paid interest - interest charges from the date of closing to the end of the month Property taxes if due Hazard insurance, fire insurance or homeowners insurance has to be paid for one year Mortgage insurance (PMI) - may be required if the loan amount is more than 80% of the value of the property. In the past a whole year of PMI had to be paid up front, however in recent years many PMI companies only require 1-2 months up front. Mortgage insurance premiums are normally paid every month with the loan payment Impound account may need money to be set up for future payments.

• An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title.

• A written document provided by a lender to agreeing to make a loan on specific terms to a borrower or builder.

• A short term loan to pay for the construction of buildings or homes. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed a take-out or permanent loan is used to pay off the construction loan.

• Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.

• Conditions which must be satisfied before the buyer can close the purchase of a property. Contingencies are generally outlined in the purchase contract between the buyer and seller. Example: The buyer has 14 days to remove the property contingency under the sales contract. In this case the buyer has 14 days to inspect the property and request the seller to perform repairs. If the buyer is not satisfied with the condition of the property or if the buyer and the seller cannot agree on repairs, the buyer may back out of the contract with no penalty. After 14 days the buyer no longer has the right to back out with no penalty as a result of a problem with the condition of the property.

• An agreement between competent parties to do or not do certain things for consideration. Example: To have a valid contract for the sale of real estate there must be : 1.an offer 2.an acceptance 3.competent parties 4.consideration 5.legal purpose 6.written documentation 7.description of the property 8.signatures by principals or their attorney-in-fact Contract of Sale Same as the Agreement of Sale Contract sale or deed A real estate installment selling arrangement where the buyer may occupy the property but the seller retains the title until the agreed upon sales price has been paid. Also known as an installment land contract. Example : John sells Mary a house. Mary has to put $10,000 and pay $1,000 per month for 24 months, after which time she will receive title to the property.

• Any mortgage loan other than a VA or an FHA loan. A convention loan may be conforming or non-conforming.

• The transfer of title of real from one party to another.

• Some variable loans come with options to convert them to a fixed loan based on a pre-determined formula, during a given time period. For example the 1 yr. T-bill adjustable may be converted to a fixed during the first five years on the adjustment date. The means that you could convert during the 13th, 25th, 37th, 49th and 61th months of the loan.

• A report detailing a borrowers credit history including payment history on revolving accounts (e.g. credit cards) and installment accounts (e.g.. car loan). A credit report also includes information found from public records including tax liens and judgments.
  
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• A written document by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the buyer at closing.

• Used in many states in lieu of a mortgage to secure the payment of a note. In a deed of trust there are three parties - the borrower, the trustee, and the lender, (or beneficiary). In such a transaction, 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 or beneficiary. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, he/she defaults in the payment of the debt, the trustee may sell the property without a court proceeding.
  
   

• Failure to meet legal obligations in a contract - such as the failure to make the monthly mortgage payment.
  
   

• Any recorded instrument that would prevent a grantor/seller from giving a clear title. Example: The seller has a contractor lien on the property that was filed when he/she failed to pay the contractor for the kitchen remodel. The seller may obtain clear title by paying the contractor and removing the lien.
  
   

• Decline in the value of a house due to wear and tear, obsolescence, adverse changes in the neighborhood, or any other reason.
  
   

• Fees paid to a lender to reduce the interest rate.
  
   

• Stamps affixed to a deed showing the amount of transfer tax.
  
   

• The amount paid for the purchase of a property in addition to the mortgage, but not including any closing costs. Example : John buys a house for $100,000 and obtains a loan for $80,000. His down payment is $20,000. Due on Sale Clause; A clause in the Deed of Trust or Mortgage that states that the entire loan is due upon the sale of the property.
  
   

• A provision in a mortgage that pledges several properties as collateral. A default in the mortgage could lead to foreclosure proceedings on any of the properties in the dragnet.
  
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• A deposit made by a buyer of real estate towards the down payment to evidence good faith. This money is typically held by the real estate brokers or the escrow company.
  
   

• A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive convenants. An encumbrance does not legally prevent transfer of the property to another. A title search 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.
  
   

• Is 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 = Property Value - Loans/Liens Against the property. Equity is typically expressed as a percentage of the property value.
  
   

• Joint ownership of a property between the owner/occupant and the owner/investor, that results in tax advantages for both parties. Upon sale of the property the joint owners split profits based on the percentage they own.
  
   

• 1. Neutral third party that handles all funds in a real estate transaction. The buyer puts his deposit into escrow, the lender funds the loan into escrow. Escrow pays the real estate brokers commission, pays off any loans/liens against the property, pays real estate taxes and any other fees associated with the transaction and sends the balance of the money to the seller.
  
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• Purchases loans from lenders, securitizes them and sells FNMA mortgage backed securities on wall street.
  
   

• Purchase loans from members of the Federal Reserve and the Federal Home Loan Bank Systems, securitizes them and sells FHLMC mortgage backed securities on wall street.
  
   

• An agency within the U.S. Department of Housing and Urban Development (HUD) that administers loan programs, issues loan guarantees to make more housing available.
  
   

• Requires a small fee (up to 3 percent of the loan amount) paid at closing or a portion of this fee added to each monthly payment of an FHA loan to insure the loan with FHA. On a 9.5 percent $75,000 30-year fixed-rate FHA loan, this fee would amount to either $2,250 at closing or an extra $31 a month for the life of the loan. In addition, FHA mortgage insurance requires an annual fee of 0.5 percent of the current loan amount, the more years the fee must be paid.
  
   

• An assurance, generally purchased by an employer, to cover employees who are entrusted with valuable property or funds. Example : A landlord employs a clerk who collects rents. To safeguard these funds during the collection process, the landlord purchases a fidelity bond the clerk.
  
   

• A person in a position of trust or responsibility with specific duties to act in the best interest of a client. A real estate broker is a fiduciary for his/her clients.
  
   

• Interest charged by a lender.
  
   

• A mortgage that has priority as a lien over all other mortgages. In the case of a foreclosure the first mortgage will be satisfied before other mortgages.
  
   

• Improvements or personal property attached to the land so as to become a part of the real estate. Fixtures are transferred to the buyer upon sale of the property. To determine whether an item is a fixture include : Intent (was it intended to be part of the property); How is it fixed ?; Is the fixture essential to the property ?; Relationship - was the fixture intended to be a part of the tenant's business ?; Example : John sells his house to Mary. John wants to take the chandelier because he states it is personal property. Mary wants the chandelier to stay because she believes it is a fixture.
  
   

• An insurance policy that covers property damage due to natural flooding. Flood insurance may be required on properties in a flood zone.
  
   

• A legal process by which the lender forces a sale of a property because the borrower has not met the terms of the mortgage.
  
   

• A property that has no liens.
  
   

• The fully indexed rate = value of the index + margin. See adjustable loans.
  
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• A deed in which the grantor (seller) agrees to the protect the grantee (buyer) against any other claim to title of the property.
  
   

• A government agency part of HUD that buys VA and FHA loans from lenders, securitizes them and sells Ginnie Mae securities to investors.
  
   

• That party in the deed who is the buyer or recipient.
  
   

• That party who is the seller or the giver.
  
   

• A mortgage that has lower payments initially (with potential negative amortization) which increase each year until the loan is fully amortized.
  
   

• The clause in a law permitting the continuation of a use, business, etc., which was permissible but because of a change in the law is now no longer permissible.
  
   

• The total amount the borrower earns per month, before any expenses are deducted.
  
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• Insurance on a property against fire and other risks. A homeowners policy may have additional coverage for theft, liability, etc that a fire insurance policy may not cover.
  
   

• An association of homeowners in a particular subdivision, planned unit development (PUD), or condominium organized to manage the common area of the development and to enforce the association rules and regulations.
  
   

• Insurance that covers appliances, heating systems, etc. Typically purchased at the time of closing.
  
   

• A U.S. government agency established to implement certain federal housing and community development programs.
  
   

• A local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings.
  
   

• The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her effective income (FHA/VA loans) or gross monthly income (Conventional loans).
  
   

• A closing document required by HUD that outlines the settlement cost of a loan. The closing agent prepares this document and sends it to the buyer upon closing.
  
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• That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.
  
   

• A method used by an appraiser to estimate the value of a property based on the income it generates.
  
   

• Real estate that generates rental income. Examples : apartment buildings, office buildings and shopping centers.
  
   

• A statistic that indicates some current economic of financial condition. Indexes are used to make adjustments in variable rate loans.
  
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• A creditor can demand full repayment from any and all of those who have borrowed. Each borrower is liable for the full debt, not just the prorated share.
  
   

• Ownership of a property by 2 or more people, each of whom has an undivided interest with the right of survivorship. Example : John and Mary own a house in joint tenancy. Each owns half of the entire (undivided) property. If John dies, Mary will own the entire property and vice versa.
  
   

• The decision of a court of law stating that one individual is indebted to another and fixing the amount of indebtedness. Judgements, when recorded, become a lien on real property owned by the defendant.
  
   

• The claim on the property of a debtor resulting from a judgement.
  
   

• Loan size that is larger than the limit established by Fannie Mae or Freddie Mac.
  
   

• A mortgage subordinate to another mortgage. In the case of a foreclosure a senior mortgage will be paid prior to a junior mortgage.
  
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• A payment required by a mortgage in addition to normal principal and interest. Sometimes known as a participation loan.
  
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• A person to whom property is rented under a lease. (Tenant)
  
   

• A person who rents property to another under a lease. (Landlord)
  
   

• A claim against the property for the payment of a debt, judgement, mortgage or taxes. Example: Unpaid contractors may file a mechanic's lien.
  
   

• An estate in real property for the life of a living person. The estate then reverts back to the grantor or to a third party.
  
   

• A limit on how much the interest rate can fluctuate during the life of the loan. An ARM that starts at 6 percent with a lifetime cap of 6 percent cannot rise above 12 percent.
  
   

• Latin for "lawsuit pending." Recorded notice that litigation is pending on a property. Most lenders will require the clearance of the Lis Pendens prior to closing.
  
   

• A document required by a lender prior to loan approval. The application includes detailed information about the borrower and the property.
  
   

• Charge by a lender or broker connected with originating a loan. This is different from discount points which are used to buy down the rate of interest.
  
   

• The loan amount divided by the value of the property.
  
   

• The act of collecting loan payments, handling property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investors.
  
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• The amount a lender adds to the index to determine the total interest rate that borrowers pay.
  
   

• Title that is free of liens, clouds and other legal defects and hence is readily acceptable by a buyer.
  
   

• The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.
  
   

• A written instrument that creates a lien upon real estate as security for the payment of a specified debt.
  
   

• A bond or other financial obligation secured by a pool of mortgage loans.
  
   

• Specializes in originating and servicing loans. They generally sell their loans to investors, but may continue to service them.
  
   

• Arranges financing for a borrower by placing loans with lenders. Mortgage brokers are paid a fee by the borrower or the lender when a loan closes.
  
   

• The lender.
  
   

• The borrower.
  
   

• See Private Mortgage Insurance (PMI).
  
   

• A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
  
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• An increase in principal balance which occurs when the monthly payments do not cover all of the interest cost. The interest cost which is not covered by the payment is added to the unpaid principal balance.
  
   

• The borrowers gross income minus federal income tax.
  
   

• Loans that do not comply with Fannie Mae or Freddie Mac guidelines.
  
   

• A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.
  
   

• A written instrument that acknowledges a debt and promises to pay.
  
   

• One authorized to take acknowledgments of certain types of documents, such as deeds, contracts, and mortgages.
  
   

• A letter sent to the defaulting party as a reminder of the default.
  
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• An expression of willingness to purchase a property at a specified price.
  
   

• One who receives the offer. When the buyer makes an offer to the seller the seller is an offeree.
  
   

• One who makes the offer. When the buyer makes an offer to the seller the buyer is an offeror.
  
   

• A method of showing a home for sale to prospective buyers where the home is left open for inspection by those who may be interested in making a purchase.
  
   

• A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions.
  
   

• See "Loan origination fee or points".
  
   

• One who receives or purchases an option.
  
   

• One who gives or sells an option.
  
   

• A tenant of a residence who also owns the property.
  
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• Mortgage covering both real and personal property.
  
   

• A mortgage, deed of trust or land contract provided in lieu of cash.
  
   

• A provision in a mortgage that allows some of the property secured to be freed from serving as collateral.
  
   

• A mortgage that allows the lender to share in part of the income or resale proceeds.
  
   

• Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.
  
   

• A limit on how much the monthly payment may fluctuate from one adjustment period to another.
  
   

• A limit on how much the interest rate may fluctuate from one adjustment period to another, typically 1 percent for every six months or 2 percent a year.
  
   

• A mortgage for a long period of time. Often referred to as the mortgage that pays off a construction loan on a completed property.
  
   

• Abbreviation for principal, interest, taxes and insurance, which may be combined in a single monthly mortgage payment.
  
   

• A zoning classification that allows flexibility in the design of a subdivision. PUD's include individually owned units as well as some common space that is jointly owned.
  
   

• Fees paid to lenders. 1 point = 1% of the loan amount. On a $100,000 loan 1 point is $1000. Points may be further classified into origination points or discount points.
  
   

• A loan that is held as an investment by a bank or savings and loan, and NOT sold on the secondary market to investors.
  
   

• Prepaid interest is the interest charged to borrowers at closing to pay for the cost of borrowing for a balance of the month. For example, if a loan closes on the 19th of the month and the first payment is due on the 1st of the following month, the lender will charge 12 days of prepaid interest.
  
   

• Full or partial payment of the principal before the due date. This might occur if the borrower makes extra payments, sells the property, or refinances the existing loan.
  
   

• Fees paid by the borrower if they pay the loan before its due date.
  
   

• The lowest commercial interest rate charge by a bank on short term loans to their most credit worthy customers. View current prime rate.
  
   

• The outstanding balance on a loan.
  
   

• In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 2 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance payments are normally made annual or monthly. An impound account may be required.
  
   

• A mortgage used to finance the purchase of a property.
  
   

• A government levy based on the market value (as assessed by the county assessor's office) of the property.
  
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• A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has.
  
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• A law that states how mortgage lenders must treat those who apply for real estate loans on property with 1-4 units. Example : A lender is required to provide a good faith estimate of closing costs within 3 days of an application being filed.
  
   

• Repaying an existing loan from the proceeds of a new loan on the same property.
  
   

• When a mortgage is paid off in full, the lender conveys the property back to the owner.
  
   

• The cancellation of a contract. When refinancing a mortgage on a principal residence the law gives the homeowner three days to cancel the contract.
  
   

• The right of the holder of a note secured by a mortgage or deed of trust to claim money from the borrower in default in addition to the property pledged as a collateral.
  
   

• A federal regulation requiring creditors to provide full disclosure of the terms of a loan including the terms of the loan and the annual percentage rate (APR).
  
   

• A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as security.
  
   

• A mortgage used by the elderly that provides income as long as they live in exchange. Payments made cause the loan principal to increase.
  
   

• A loan that is amortized over a long period of time (e.g. 30 yrs) but the interest rate is fixed for a short period (e.g. 5 yrs). The loan may be extended or rolled over, at the end of the shorter term, based on the terms of the loan.
  
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• Depository institutions that specialize in originating, servicing and holding mortgage loans primarily on owner occupied residential property.
  
   

• The market where banks, savings & loans and mortgage bankers can sell mortgages to investors like Fannie Mae or Freddie Mac.
  
   

• A subordinated lien, created by a mortgage loan, over the amount of a first mortgage. Second mortgages generally carry a higher rate than a first mortgage since they represent a higher risk for an investor.
  
   

• The section of the IRS that deals with tax free exchanges of certain property.
  
   

• Property that serves as collateral for a debt.
  
   

• The act of billing, collecting payment, filing reports, managing impound accounts and handling defaults on a mortgage.
  
   

• A booklet that provides an overview of the lending process and is required to be given to consumers after the loan application is completed.
  
   

• A mortgage in which a borrower receives a below-market interest rate in return for which a lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgages where the borrower shares the monthly principal and interest payments with another party in exchange for a part of the appreciation.
  
   

• A special tax imposed on property, individual lots or all property in the neighborhood to pay for improvements - street lights, sidewalks, etc.
  
   

• The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property. The seller warrants that he/she has done nothing to impair title.
  
   

• A residential loan with a fixed interest rate that is below market, with the lender entitled to a specified share of appreciation of the property over an agreed upon time interval.
  
   

• A type of residential structure designed to include one dwelling. Example : Town houses, detached units.
  
   

• A single family dwelling constructed by a builder in anticipation of finding a buyer.
  
   

• A standard loan application widely used in the mortgage industry. Also known as the Uniform Residential Loan Application.
  
   

• l so discount rate or teaser rate. Most ARMs offer a lower interest rate during the first few months or year as an incentive. Caps may not apply to a starter rate.
  
   

• A loan in a lower priority, for example a second mortgage is subordinate to a first.
  
   

• The buyer agrees to make payments on the existing mortgage, without notifying the lender. The seller remains liable for making payments on the loan if the buyer does not make the mortgage payment. The buyer is not personally liable for mortgage payments, but must make payments to keep the property. See also Assumable Mortgage.
  
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• A low initial interest rate on a mortgage.
  
   

• Evidence that the owner of the property is in lawful possession. Evidence of ownership.
  
   

• An insurance policy which protects the insured against loss arising from defects in title. Title insurance policies are typically obtained for the buyer and the lender.
  
   

• A document indicating the current state of title. The report includes information on the current ownership, outstanding deeds of trust or mortgages, liens, easements, convenants., restrictions, and any defects.
  
   

• Tax paid to the city, county, state or other government entity upon sale of a property.
  
   

• A separate bank account maintained by a broker or escrow company to handle all money collected for clients. A broker may not commingle these funds with his/her own funds.
  
   

• A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.
  
   

• A mortgage in which the borrower receives a fixed rate for a specified number of years (most often 5 or 7), and then receives a new interest rate based on the terms in the note.
  
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• The decision whether to make a loan to a potential home buyer based on credit, income, employment history, assets, etc.
  
   

• An ownership right to use and possess a property that is shared among co-owners, with no one co-owner having exclusive rights to any portion of the property.
  
   

• Real estate with free and clear title.
  
   

• A document that transfers title from the grantor to the grantee without recording (i.e. providing public notice).
  
   

• Charging a rate of interest greater than that permitted by law.
  
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• Home loan guaranteed by the U.S. Veterans Administration, enabling a veteran to buy a home with no money down.
  
   

• A premium of up to 2 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 30-year fixed-rate mortgage with no down payment, this would amount to $1,046 either paid at closing or added to the amount financed.
  
   

• A document signed by the borrower's bank or other financial institution verifying the account balance and history.
  
   

• A document signed by the borrower's employer verifying his/her starting date, job title, salary and probability of continued employment.
  
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• The voluntary renunciation, abandonment, or surrender of some claim, right, or privilege.
  
   

• Mortgage bankers and other financial institutions make loans that are then periodically sold on the secondary market. After the loan is made but before it is sold - the loan is said to be in the lenders warehouse.
  
   

• A deed conveying the title to a property with a warranty of a clear marketable title.
  
   

• A loan arrangement whereby the existing loan is retained an a new loan is added to the property. Example: The seller sells his/her property for $200,000. The buyer puts $80,000 down. The seller has an existing loan balance of $100,000 for a remaining period of 25 years at an interest rate of 6%. The seller then makes a wraparound mortgage to the buyer, (where the seller acts as a lender) for $120,000 at 8%. The seller has to continue making payments on his old loan. They buyer has to pay the seller on the new loan. The buyer may at a later date refinance the property and close both loans.
  
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• A form of housing where individual units are on separate lots, but are attached to one another. Example: PUD, townhouse.
  
   

• Areas may be zoned to specify use of a property i.e. residential, commercial, agricultural. These zoning ordinances are normally enforced by the city or the county.
  
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