Adjustable Rate Mortgage (ARM): A mortgage where the rate changes at intervals.
Adjustment Period: The interval for adjusting an Adjustable Rate Mortgage.
ALTA: American Land Title Association.
Amortization: Equal installments of principal and interest on a loan.
Appraisal: A third-party analysis for finding a value of a property.
Appreciation: An increase over time of a the value of a property.
Assessed Value: The tax assessor will base the annual tax assessment on the value of a property.
Assessment: A special tax or levy based on the value of a property. Also a share of improvements in a condominium association.
Attorney-in-Fact: A power of attorney for a specific action.
Balloon Payment: The payment at the end of a loan.
Beneficiary: The person, bank, or entity that receives the benefit, as in a loan.
Bridge Loan: A temporary loan that is often used to leverage an existing home to purchase a new home. The bridge loan is paid off when the existing home sells.
Broker: A person holding a broker’s license who acts on behalf of someone in a transaction.
Buyer’s Agent: A real estate agent acting on behalf of a buyer in a transaction.
Cap: The highest rate of an adjustable loan.
CC & R’s: Covenants, Conditions and Restrictions that apply to a property when the property is developed and controls the property in subsequent sales.
Certificate of Title: A document by the title company that shows the legal owner of a property.
Closing: The procedure for finalizing the sale at the end of the escrow period.
Closing Costs: The costs at the end of escrow that are paid by the seller and the buyer, including title insurance, loan costs, title fees, etc.
Closing Statement: The document that shows all of the closing costs at the end of escrow.
Commission: The fee from agents and brokers for the real estate transaction.
Condominium: A type of ownership for property such as a single level flat, or a townhouse, or a rowhouse. The living space is owned, but the common space, such as hallways, driveways, and landscaping is shared equally with the other owners in the development. A Home Owners Association operates the common space and charges a monthly fee to each of the condominium owners.
Contingencies: An amount of cash set aside to cover unknown costs during a transaction or a construction project.
Conventional Loan: A regular mortgage loan by a bank.
Credit Report: A report showing a credit history compiled by a credit agency.
Credit Score: A standardized score by a credit agency. A score of 800 is very good. A score of 500 is not very good.
Debt To Income Ratio: The maximum ratio is 42% according to most banks. The amount of debt is defined as the amount of fixed costs associated with home related payments.
Deed: A document transferring ownership of property.
Deed of Trust: A document transferring ownership of property to a trustee, such as a bank, for securing debt.
Default: When a person holding a mortgage does not make payments to the bank.
Delinquency: The period of time when a person holding a mortgage does not make payments to the bank.
Deposit Receipt: A document showing acceptance of earnest money, deposits, or down payments.
Down Payment: The amount of money placed in escrow in order to qualify for a loan to pay for the property. Typically 10% to 30% of the total purchase price.
Earnest Money: An amount of money accompanying the purchase offer when attempting to purchase a property. Usually 1% to 3% of the total purchase price.
Easement: A right of access by grant or agreement for a person, company, or entity to enter someone else’s property; usually an exact legal description of a portion of property.
Equity: The amount of money a property owner would receive after the sale of a property and after the bank loans are paid.
Escrow: A process for the sale of a property where a third-party, such as a title company, controls the transaction and handles the money to ensure that all parties are held responsible for the details of the contract.
Exclusive Listing: A type of listing agreement for one agent to sell one property for a period of time.
Fannie Mae: The Federal National Mortgage Association that purchases and sells residential mortgages.
Fee Simple: A type of ownership where an owner has unrestricted legal ownership o a property.
FHA Loan: The Federal Housing Administration that provides mortgage insurance programs. Part of the Housing and Urban Development (HUD) program.
Finance Charges: The cost of obtaining a loan.
Fixed rate Mortgage: A loan that has one rate for the entire life of the loan.
Foreclosure: The process a bank uses to obtain ownership of a property when the homeowner defaults on the loan.
Grant: A type of property transfer.
Grantee: The person receiving the grant.
Grantor: The person making the grant.
Home Inspection: A process and report for inspecting a property by a third-party company or person; usually focusing on the physical aspects of a home such as electrical, plumbing, and heating systems.
Home Inspection Report: The report produced by a third-party company or person inspecting a property to assign a value.
Home Warranty Policy: An insurance policy, usually for one year, that covers appliances, plumbing, electrical, etc. after a sale of a property.
Homeowner’s Insurance: An insurance policy that covers replacement value of a property.
Joint Tenancy: A shared and equal ownership of a property by two or more people.
Lien: A legal claim against a property.
Loan Commitment: A letter by a bank offering a loan at a set rate and terms.
Loan to Value Ratio: The ratio of the loan amount to the appraised value of the property; used by banks to set a maximum loan amount.
Locked-in: A letter by the bank to set the loan rate for a period of time; often for the term of escrow.
Mortgage: A type of loan by a bank that holds the property as collateral.
Mortgage Broker: A person or entity that offers loans from numerous sources and charges a fee for this service.
Mortgage Insurance: An insurance policy that guarantees the loan payments to a bank.
Multiple Listing Service (MLS): A listing service for real estate agents.
Planned Unit Development (PUD): A type of development where all the properties are developed at the same time and often accompanied by a common area or shared areas.
Point: One percent of the loan.
Prime rate: The interest rate internal to the banks.
Principal: The amount still unpaid on a loan.
Probate sale: The sale of a home after the death of the owner. The proceeds are shared among the remaining heirs.
Property Tax: The annual tax levied by the tax assessor. Approximately 1.2% in the bay Area.
Prorated Costs: Costs shared by the buyer and seller at the close of escrow that are divided depending on the exact date of close of escrow.
Real Estate Agent: A real estate sales person working for a real estate broker.
Real Property: the actual land and buildings on the land. Not personal belongings.
Realtor: A real estate broker or agent associated with the National Association of Realtors.
Recorded or Recording: The actual title transfer at the county recorder.
Survey: To inspect and measure a property for exact boundaries and easements. Often used in transferring real estate ownership.
Title: A legal document describing the ownership of a property.
Title Insurance Policy: An insurance policy by a title company that protects those involved with a property transfer from unknown or fraudulent issues with a property.
Underwriting: The bank performs this internal service to analyze the risks in making a loan.
VA Loan: Veterans Administration guarantee of a loan.
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