A compilation of the recorded documents relating to a parcel of land, from which an
attorney may give an option as to the condition of title. Still in use in some states, but
giving way to the use of title insurance.
A court action to establish ownership to real property. Although technically not an
action to remove a cloud on a title, the two actions are usually referred to as
"Quiet Title" actions.
A mortgage where the interest rate is not fixed, but changes during the life of the loan
in line with movements in an index rate. You may also see ARM's referred to as AML's or
VRM's.
An Agency relationship is one in which one person is empowered to act on behalf of
another, subject to the control and consent of the person being represented.
In some states it is synonymous with a purchase agreement (Purchase Agreement). In other
states, it is synonymous with a land contract (Land Contract).
A measure of the cost of credit, expressed as a yearly rate. It includes interest as
well as other charges. Because all lenders follow the same rules to ensure the accuracy of
the annual percentage rate, it provides consumers with a good basis for comparing the cost
of loans, including mortgage plans.
When a home is sold, the seller may be able to transfer the mortgage to the new buyer.
This means the mortgage is assumable. Lenders generally require credit review of the new
borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale
clause, which means that the mortgage may not be transferable to the new buyer. Instead,
the lender may make you pay the entire balance that is due when you sell the home.
Assumability can help you attract buyers if you sell your home.
A note calling for periodic payments which are insufficient to fully amortize the face
amount of the note prior to maturity, so that a principal sum known as a
"Balloon" is due at maturity.
A report issued by a title insurance company setting forth the condition of title and
setting forth conditions, which, if satisfied, will cause a policy of title insurance to
be issued.
A form of interim loan, generally made between a short term loan and a long term loan,
when the borrower needs to have more time before taking on long term financing.
With a buydown, the seller pays an amount to the lender so that the lender can give you
a lower rate and lower payments, usually for an early period of a loan. The seller may
increase the sales price to cover the cost of the buydown.
A limit on how much the interest rate or monthly payment of an ARM
can change, either at each adjustment or during the life of the mortgage. Payment CAPs
don't limit the amount of interest the lender is earning so the may cause negative amortization.
The statement which lists the financial settlement between buyer and seller, and also
the costs each must pay. A separate statement for buyer and seller is sometimes prepared.
Short term financing of real estate construction. Generally followed by the long term
financing called a "take out" loan, issued upon completion of improvements.
A provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term.
Usually the conversion is allowed at the end of the first adjustment period. At the time
of the conversion, the new fixed rate is generally set at one of the rate then prevailing
for fixed-rate mortgages. The conversion feature may be available at extra cost.
Is an ARMwith an initial discount, the lender gives up
a number of percentage points of interest to give you a lower rate and lower payments for
part of the mortgage term. After the discount period, the ARM rate will probably go up
depending on the index rate.
That portion of a mortgagor's monthly payment held in trust by the lender to pay for
taxes mortgage insurance, hazard insurance, lease
payments, and other items as they become due, also known as "impounds" in some
states.
Federal Home Loan Mortgage Corporation. A federal Agency purchasing first mortgages,
both conventional and federally insured, from members of the Federal Reserve System, and
the Federal Home Loan Bank System.
A proceeding in or out of court, to extinguish all rights, title, and interest, of the
owner(s) of property in order to sell the property to satisfy a lien against it.
A lien such as a tax lien or judgment lien which attaches to all property of the debtor
rather than the lien of, for example, a trust deed, which attaches only to a specific
property.
Government National Mortgage Association. A federal association working with FHA which
offers special assistance in obtaining mortgages, and purchases mortgages in a secondary
capacity.
The clause in a law permitting the continuation of a use, business, etc., which, when
was permissible but, because of a change in the law is now not permissible.
The index of the measure of interest rate changes that the lender uses to decide how
much the interest rate on an ARM will change over time.
You should ask your lender how the index for any ARM you are considering has changed in
recent years, and where it is reported.
The term is most important as used to describe the relationship of broker and
salesperson, employee or independent contractor. If employee, the broker must withhold
income tax and pay social security, provide workmen's compensation, and may be liable for
some negligent acts of the salesperson while on the job. All of this is avoided by the
broker if salesperson is an indepent contractor.
A mortgage insured against loss to the mortgagee in the event of default and failure of
the mortgaged property to satisfy the balance owing plus costs of foreclosure.
An undivided interest in property, taken by two or more joint tenants. The interests
must equal, accruing under the same conveyance, and beginning at the same time. Upon death
of a joint tenant the interest passes to the surviving joint tenants, rather than to the
heirs of the deceased.
A lease under which the lessee has the right to purchase the property. The option may
run for the length of the lease or only for a portion of the lease period.
A partnership consisting of one or more general partners who conduct the business and
are responsible for losses, and one or more special partners, contributing capital and
liable only to the amount contributed.
A legal notice recorded to show pending litigation relating to real property and giving
notice that anyone acquiring an interest in said property subsequent to the date of the
notice may be bound by the outcome of the litigation.
A lien created by statue for the purpose of securing priority of payment for the price
of value of work performed and materials furnished in construction of repair of
improvements to land, and which attached to the land as well as the improvements.
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 known as a loan broker.
A private corporation which, for a fee, insures mortgage loans similar to FHA and VA
insurance, although not insuring as great a percentage of the loan.
A system whereby a mortgage company will hold loans which would ordinarily be sold, in
order to sell later at a lower discount. These are used as collateral security with a bank
to borrow new money to loan.
Amortization means that monthly payments are large enough to pay the interest and reduce
the principal on your mortgage. Negative amortization 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. This means that even after making many payments,
you could owe more than you did at the beginning of the loan. Negative amortization can
occur when an ARMhas a payment cap that results if
monthly payments not high enough to cover the interest due.
A mortgage permitting the mortgagor to borrow additional money under the same mortgage,
with certain conditions, usually, as to the assets of the mortgage.
Insurance similar to FHA or VA insurance, insuring part of the first mortgage or deed of
trust, enabling a lender to make a conventional loan of a higher percentage of the
property value.
A point is equal to one percent of the principal amount of your mortgage. For example,
if you get a mortgage for $100,000, one point is means you pay $1000 to the lender.
Lenders frequently charge points in both fixed-rate and adjustable-ratemortgages
in order to increase the yield of the mortgage and to cover loan closing costs. These
points are usually collected at closingand may be
paid by the borrower or the home seller, or may be split between them.
A charge for a title insurance policy if a previous policy on the same property was
issued within a specified period. Reissue is less than the original charge.
A federal statute requiring disclosure of certain costs in the sale of residential
improved property which is to be financed by a federally insured lender.
A form of ownership by husband and wife whereby each owns the entire property. In event
of death of one, the survivor owns the property without probate.