·
Acknowledgment: A formal
declaration made before an authorized official (usually
a notary public), by the person who has executed
(signed) a document, that such execution is his/her own
act and deed.
In most instances documents must be acknowledged
(notarized before it can be accepted for recording).
·
Adjustable
Rate Mortgage (ARM): A
mortgage with an interest rate that changes over time in
line with movements in the index. Also called AMLs
(adjustable mortgage loans) or VRMs (variable rate
mortgages).
·
Adjustable
Period: The length of
time between interest rate changes on an ARM. For example, a
loan with adjustment period of one year is called a
one-year ARM, which means that the interest rate can
change once a year.
·
Affidavit: A sworn
statement in writing, made before an authorized
official.
·
A.L.T.A.: Abbreviation for
the American
Land
Title Association.
·
Amortization: Repayment of a
loan in equal installments of principal and interest,
rather than interest-only
payments.
·
Annual
Percentage Rate (APR): The
total finance charges (interest, loan fees, points)
expressed as a percentage of the loan
amount.
·
Assessments:
Specific and special taxes (in addition to normal taxes)
imposed on real property to pay for public improvements
within a specific geographic
area.
·
Assumption
of Mortgage: A buyer’s
agreement to assume the liability under an existing note
that is secured by a mortgage or deed of trust. The lender must
approve the buyer in order to release the original
borrower (usually the seller) from
liability.
·
Attorney-In-Fact: An agent
authorized to act for another under a power of
attorney.
·
Balloon
Payment: A lump sum
principal payment due at the end of some mortgages or
other long-term loans.
·
Beneficiary: As used in a
trust deed, the Lender is designated as the Beneficiary,
i.e. obtains the benefit of the
security.
·
Cap: The limit on how
much an interest rate or monthly payment can change,
either at each adjustment or over the life of the
mortgage.
·
CC&Rs: Covenants,
Conditions and Restrictions. A document that
controls the use, requirements and restrictions of a
property.
·
Conventional
Loan: A mortgage loan
which is not insured or guaranteed by a governmental
agency.
·
Closing
Statement: The financial
disclosure statement that accounts for all of the funds
received and accepted at the closing, including deposits
for taxes, hazard insurance, and mortgage
insurance.
·
Condominium: A form of real
estate ownership.
The owner receives title to a particular unit and
has a proportionate interest in certain common
areas. The
unit itself is generally a separately owned space whose
interior surfaces (walls, floors, and ceilings) serve as
its boundaries.
·
Contingency: A condition that
must be satisfied before a contract is binding. For instance, a
sales agreement may be contingent upon the buyer
obtaining financing.
·
Conversion
Clause: A provision in
some ARMs that enables you change an ARM to a fixed-rate
loan, usually after the first adjustment period. The new fixed
rate is generally set at the prevailing interest rate
for fixed-rate mortgages.
·
Cooperative: A form of
multiple ownership in which a corporation or business
trust entity holds title to a property and grants
occupancy rights to shareholders by proprietary leases
or similar arrangements.
·
Deed: Written
instrument by which the ownership of land is transferred
from one person to another.
·
Deed
of Trust: Written
instrument by which title to land is transferred to a
trustee as security for a debt or other obligation. Also called
Trust Deed.
Used in place of mortgages in many
states.
·
Deposit
Receipt: Used when
accepting “Earnest Money” to bind an offer for property
by a prospective purchaser; also includes terms of a
contract.
·
Due-On-Sale
Clause: An acceleration
clause that requires full payment of a mortgage or deed
of trust when the secured property changes
ownership.
·
Earnest
Money: The portion of
the down payment delivered to the seller or escrow agent
by the purchaser with written offer as evidence of good
faith.
·
Easement:
A right or
power of the government to take property for a public
purpose upon payment of just
compensation.
·
Escrow: A procedure in
which a third party acts as a stakeholder for both the
buyer and the seller, carrying out both parties’
instructions and assuming responsibility for handling
all of the paperwork and distribution of
funds.
·
FHA
Loan (Federal Housing Administration): a
federal agency, created by the national housing act of
1934, for the purpose of expanding an Strengthening home
ownership by making private mortgage financing possible
on a long-term, low-down payment basis. The vehicle is a
mortgage insurance program, with premiums paid by the
homeowner, to protect lenders against loss on these
higher-risk loans.
Since 1965, FHA has been part of the
newly-created department of housing an urban development
(HUD).
·
Federal
National Mortgage Association (FNMA):
Popularly known as Fannie Mae. A privately
owned corporation created by Congress to support the
secondary mortgage market. It purchases and
sells residential mortgages insured by FHA or guaranteed
by the VA, as well as conventional home
mortgages.
·
Fee
Simple: An estate in
which the owner has unrestricted power to dispose of the
property as he wishes, including leaving by will or
inheritance.
·
Finance
Charge: The total cost a
borrower must pay, directly or indirectly, to obtain
credit according to Regulation
Z.
