Real Estate Glossary
A
Abstract Of Title
Summarizes the history of the legal title to the property; shows changes of title, records of liens and encumbrances.
Assumable Mortgage
A loan in which the remaining payments on an existing mortgage can be transferred to a new buyer.
C
Closing Costs
Charges paid at settlement to obtain a mortgage loan and transfer real estate title, usually in addition to the price of the home. Be sure your sales contract clearly states who - buyer or seller - will pay closing costs and what they will be.
Closing Day
The date on which the title property passes from the seller to the buyer and/or the date on which the borrower signs the mortgage loan agreement.
E
Earnest Money
A sum paid to the seller by a potential buyer to demonstrate that the buyer is serious about buying. If a contract is executed, the earnest money is returned in whole with deductions for processing charges, paperwork, etc. Make sure you know the terms of your contract.
Easements
Rights of way granted to persons or companies authorizing access to or over the owner's land. For example, utility companies may have easement rights to install pipes or wire on or over your land.
Equity
The difference between the value of the assets/interest and the cost of the liabilities of something owned.
Escrow
A system or document transfer in which a deed, bond or fund is delivered to a third party to hold until all conditions in a contract are fulfilled.
F
FHA (Federal Housing Administration)
This federal agency established by Congress in 1934, insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders.
I
Interest
The cost paid by the borrower for the use of money borrowed to purchase a home.
M
Mortage
Pledge of property as security for the payment of a debt.
Mortgage Commitment
A formal written communication by a lender, agreeing to make a mortgage on a specific property, specifying the loan's amount, the length of time and the conditions.
Mortgagee
The lender who has agreed to lend money to the mortgagor.
Mortgagor
The homeowner (borrower) who has agreed to repay the mortgage loan to the mortgagee.
P
Points
A point is a charge of one percent of the mortgage value. Points are a one-time charge assessment by the lender to increase the interest yield from the mortgage loan to position it competitively with the interest yield from other types of investment. Points are usually paid by the buyer or seller or split between them. Points may be required by the lender but these system arrangements vary from state to state, so check into practices in your area.
Principal
The amount of money borrowed in a mortgage loan, excluding interest and other charges.
S
Sales Contract
The contract between the buyer and seller. The contract should explain, in detail, exactly what you purchase includes, who is responsible for providing it, what guarantees are there, when you can move in, what the "closing costs" are, and what "outs" parties have in case the contract is not fulfilled or if you cannot get a mortgage commitment at the agreed-upon terms.
Settlement Expense
This is different from closing costs but also involves charges that a buyer or seller must pay in closing a deal on a house. Settlement costs include insurance and tax payments, special assessments for improvements to municipal facilities and sales commissions.
Survey
On-site measurement of lot lines, dimensions and position of the house on the lot, including determination of possible encroachments or existing easements. A survey is often required by the lender to assure him that a house is actually on the land according to its legal description.
T
Title
Evidence (usually in the form of a certificate or "deed") of a person's legal right to ownership property.
Title Insurance
A contract to make good a property owner's loss resulting from defects in a title. Title insurance usually calls for the insurer to defend the property owner's title at no cost if the title is challenged in court.
Title Search or Title Guaranty
A detailed review of title records, generally at the local courthouse, to assure that the property is bought from the legal owner and determine if any liens, special assessments, other claims or outstanding restrictive covenants are on record.
V
VA (Veterans' Administration)
A federal agency which is 1944 established a loan guaranteed program to encourage private lending agencies to give liberal mortgages to honorably-discharged veterans or their widows. Check you local Veterans' Administration office for information.
Z
Zoning
Classification of real property for varying uses. A municipality has a right to determine and regulate the use of property.