203(b) - FHA program which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount.
203(k) - this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan.
Abstract of title - a condensed history of a title to real estate consisting of a summary of the various links in the chain.
Access - the right to enter and leave a tract of land from a public way. (Often, the right to enter and leave over the land of others).
Accretion - the slow build up of lands by natural forces such as wind, wave, or water.
Acknowledgement - the act by which a party executing a legal document goes before an authorized officer or notary public and declares the same to be his voluntary act and deed.
Acre - a tract of land 208.71 feet square and containing 4,840 square yards, or 43,560 square feet.
Administrator - a person appointed by a probate court to settle the affairs of an individual dying without a will.
Adverse possession - a claim made against the lands of another by virtue of open and notorious possession of said lands by the claimant.
Affidavit - a sworn statement in writing.
Air rights - the right to ownership of everything above the physical surface of the land.
ALTA - American Land Title Association, a national association of title insurance companies, abstracters and attorneys specializing in real property law which speaks for the title insurance and abstracting industry, with headquarters in Washington, D.C.
Amenity - a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, Woods, water) or man-made (like a swimming pool or garden).
Amortization - repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years)
Annual percentage rate (APR) - calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.
Application - the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.
Appraisal - a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.
Appraiser - a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.
Appurtenance - anything so annexed to land or used with it that it will pass with the conveyance of the land.
ARM - Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap. See also Variable rate mortgage.
Appurtenance - anything so annexed to land or used with it that it will pass with the conveyance of the land.
Assessment - the imposition of a tax, charge or levy, usually according to established rates.
Assessor - a government official who is responsible for determining the value of a property for the purpose of taxation.
Assignee - one to whom a transfer of interest is made. For Example, the assignee of a mortgage or contract.
Assignor - one who makes an assignment. For example, the assignor of a mortgage or contract.
Assumable mortgage - a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; the new owner takes over its obligations. There may be a fee and/or a credit package involved in the transfer of an assumable mortgage.
Assumed mortgage - a loan in which the buyer assumes the obligations of an already existing mortgage on a property.
Attachment - legal seizure of property to force payment of a debt.
Attorney in fact - one who holds a power of attorney from another allowing him to execute legal documents such as deeds, mortgages, etc. on behalf of the grantor of the power.
Balloon mortgage - a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.
Balloon payment - the final payment (balance due) of a balloon note.
Baluster - the supporting posts of a handrail in a staircase.
Bankrupt - a person, who, through a court proceeding, is relieved from the payment of all his debts after surrender of all his assets to a court appointed trustee.
Bankruptcy - a federal proceeding whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.
Base property - private property owned by a cattle owner, required before a permit will be issued to allow the cattle to graze on public land.
Base title - the result of an examination of title for the internal use of a title insurance company; usually covers a large area and is done in anticipation of future sales or subdividing of the area.
Basis point - a finance term meaning a yield of 1/100th of 1% annually.
Batture land - the land between a river bank and the water's edge when the water level is lower than normal.
Beamed ceiling - a ceiling having one or more of its beams exposed.
Bearing wall - a wall which supports the weight of a part of a structure in addition to its own weight.
Berm - (1) a bench, ledge, or other resting place part way up a hill or slope. (2) a mound used to control drainage by diverting all or part of the flow.
Black Acre - fictitious named used by legal writers to describe a specific property without a more complete description.
Bona fide - alegal term which refers to any actions, situations, or persons that are honest, in good faith, and without fraud.
Borrower - a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.
Budget - a detailed record of all income earned and spent during a specific period of time.
Building code - based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.
Bureau of Land Management - the branch of government in charge of surveying and managing public lands.
CC&R's - Covenants, Conditions, and Restrictions. See Conditions and Restrictions.
Cap - a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.
Cash reserves - a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.
Certificate of title - a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.
Chain - a term of land measurement being 66 feet in length.
Chain of title - a term applied to the past series of transactions and documents affecting the title to a particular parcel of land.
Chattel - another name for personal property.
Clear title - one which is not encumbered or burdened with defects.
Closing - also known as settlement; the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller. “Closing” has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents are recorded at the local recorder’s office. In others, the "closing" is a meeting where all of the documents are signed and money changes hands.
Closing costs - customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.
Clouded title - an encumbered title.
Collateral - an asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
Commission - the fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
Commitment to insure - a report issued by a title insurance company, or its agent, committing the title insurance company to issue the form of policy designated in the commitment upon compliance with and satisfaction of requirements set forth in the commitment.
Company loan - a loan by employer to facilitate relocation of employee; usually for a short term.
Condemnation - the taking of private property for the public use; also called the power of eminent domain.
Condition or conditions - a proviso in a deed or a will that upon the happening or failure to happen of a certain event, the title of the purchaser or devisee will be limited, enlarged, changed, or terminated.
Conditions and restrictions - a common term used to designate the uses to which land may not be put and providing penalties for failure to comply.
Commission - an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction.
Commitment - a title insurance commitment is a contract between the title insurance company and the proposed insured (purchaser or lender) to issue a title insurance policy.
Condominium - a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas of the structure and land.
Consolidate mortgage - in refinancing, the remaining balance from original mortgage is incorporated into new mortgage.
Contract for deed - agreement to sell and purchase under which title is with held from the purchase until such time as the required payments to the seller have been completed.
Construction lender - a party that makes loans to build improvement. See Permanent lender.
Construction loan - a loan that is made to finance the actual construction of improvements on land and the funds are usually dispersed in three payments as the construction progresses.
Contract - a written or oral agreement to do or not to do certain obligations which has four essential elements 1. Parties who have the capacity or legal ability to contract, 2. Consent of the parties, 3. Consideration and 4. A lawful object. A contract for the sale of real property must also be in writing and signed by the party or parties who have agreed to perform to be enforceable.
Conventional loan - a private sector loan, one that is not guaranteed or insured by the U.S. government.
Convey - the act of deeding or transferring title to another.
Conveyance - an instrument by which title to property is transferred - a deed.
Cooperative (Co-op) - residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.
Credit history - history of an individual's debt payment; lenders use this information to gauge a potential borrower's ability to repay a loan.
Credit report - a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history.
Credit bureau score - a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.
Cul de sac - a street or alley closed at one end, usually with a widened circular area at the end enabling a car to make a U-turn.
Dale - a valley between hills or other high ground.
Data plant - information on real property, filed and held by and appraiser, lender, etc.
Dead rent - a term used in mining to indicate the fixed annual rent, exclusive of royalties. In commercial percentage leases, usually called minimum rent or base rent.
Debenture - unsecured indebtedness, usually long-term. Most common debentures are in the form of bonds.
Debt - money owing from one person to another.
Debt-to-income ratio - a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.
Deck - any flat surface which resembles the deck of a ship, and is not enclosed; a flat area of a roof, roof of a porch, etc.
Decree - the judgment of a court of law.
Deed - the document that transfers ownership of a property.
Deed of trust - See Mortgage.
Deed-in-lieu - to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt. This process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.
Default - the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.
Defect of record - any encumbrance on a title which is made a part of the public record. Some recorded defects are judgments, mortgages, other liens, easements, etc.
Delinquency - failure of a borrower to make timely mortgage payments under a loan agreement.
Delivery - the final and absolute transfer of a deed from seller to buyer in such a manner that it cannot be recalled by the seller. A necessary requisite of the transfer of title.
Devise - the disposition of land by will.
Discount point - normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.
Down payment - the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan.
Due on sale clause - provision in a Mortgage or Deed of Trust which requires loan to be paid in full if property is sold or transferred.
Earnest money - money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.
EEM - Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase
Easement - a privilege or a right of use or enjoyment which one person may have in the lands of another; for example, a right-of-way for utility lines, a joint driveway, etc.
Egress - the right to leave a tract of land.
Eminent domain - the power of the state to take private property for public use upon payment of just compensation.
Encroachment/Protrusion - a trespass; the building of any improvements partly or entirely intruding upon the property of another.
Encumbrance - any right to or interest in land which may be held by third parties to the lessening of the value of the title to real estate, such as a judgment, unpaid taxes, other liens, easements, etc.
Equity - an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loan(s) from the fair market value of the property.
Escheat - a reversion of property to the state in those cases where an individual dies without heirs or devisees and without a will.
Escrow - a procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer.
Escrow account - a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.
Estate - a person's possessions.
Examination of title - the interpretation of the record title to real property based on the title search or abstract.
Exception - in legal descriptions that portion of lands to be deleted or excluded.
Executor - a person appointed by the probate court to carry out the terms of a will.
Extended mortgage - mortgage in which due date of mortgage is extended for longer period.
Fair Housing Act - a law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.
Fair market value - the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
Fannie Mae - Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.
Fee simple estate - the greatest interest in a parcel of land that it is possible to own.
FHA - Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.
Financing statement - a document prepared for filing with the Register of Deeds or Secretary of Stat indicating that personal property or fixtures are encumbered with a debt.
Fixed-rate mortgage - a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.
Fixtures - any item of property so attached to real property that it becomes a part of the real property
Flood insurance - insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.
Foreclosure - a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Forfeiture of title - provision in a Deed creating a condition, which will cause title to be passed to another, in the event of certain circumstances occur.
Freddie Mac - Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers.
General warranty deed - a deed containing a covenant whereby the grantor agrees to protect the grantee against any claimant.
Ginnie Mae - Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.
Good faith estimate - an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.
Graduated payment mortgage - a loan in which monthly payments are relatively small in the beginning years and gradually increase in dollar amount over the life of the mortgage.
Grantee - normally, the buyer in a real estate transaction.
Grantor - normally, the seller in a real estate transaction.
Guardian - one appointed by the court to administer the affairs of an individual not capable of administering his own affairs.
Harbor line - an arbitrary line set by authorities on navigable rivers, beyond which wharves and other structures may not be built, also designated as line of navigation.
Hazard insurance - insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.
Heir - one who might inherit or succeed to an interest in land under the rules of law applicable where an individual dies without leaving a will.
Heirship affidavit - a written declaration, under oath, setting out the intestate succession of a decedent. Appropriate when the decedent died without a probated will.
HELP - Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the homebuying process; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price.
Hiatus - a gap or space unintentionally left between, when attempting to describe adjacent parcels of land.
Hidden defect - any encumbrance on a title that is not apparent in the public records; for example, unknown heirs, secret marriages, forged instruments, mental incompetence, infancy of a grantor, etc.
Home equity line of credit - a mortgage loan, which is usually in a subordinate position that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.
Home inspection - an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed.
Home repair loan - loan used for repairs and additions to existing structures without affecting existing mortgage.
Home warranty - offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; coverage extends over a specific time period and does not cover the home's structure.
Homeowner's insurance - an insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence or inappropriate action that result in someone's injury or property damage.
Homeowners' association - a nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
Housing counseling agency - provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.
HUD - the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans. It does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.
HUD-1 Statement - a document that provides an itemized listing of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The blank form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."
HVAC - Heating, Ventilation and Air Conditioning; a home's heating and cooling system.
Improvements - those additions to raw lands tending to increase value such as buildings, streets, sewer, etc.
Inchoate dower - a wife's interest in her husband's real estate during his life which may become a right of dower upon his death.
Inchoate courtesy - the imperfected interest which the law gives a husband in the lands of his wife.
Indemnify - the taking on of liability by one party by agreeing to compensate another party for any hurt, loss or damage suffered by them.
Index - a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.
Inflation - the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar's value.
Ingress - the right to enter a tract of land.
Installment contract - a contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser who is in possession of the property even though the seller retains title until a future date which typically is not until final payment. Also known as a Contract for deed or Warranty deed.
Interest - a fee charged for the use of money.
Interest rate - the amount of interest charged on a monthly loan payment; usually expressed as a percentage.
Insurance - protection against a specific loss over a period of time that is secured by the payment of a premium.
Insurance loan - when cash value of life insurance policy is borrowed by insured.
Interim financing - temporary or short term loans; often used with new construction; usually replaced with a permanent, long-term mortgage.
Intestate - designates the estate or condition of failing to leave a will at death.
Joint tenancy - where two or more persons hold real estate jointly for life, the survivors to take the interest of the one who dies.
Judgment - a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source.
Judgment docket - the record book of a County Clerk where a judgment is entered in order that it may become a lien upon the property of the debtor.
Judgment lien - the charge upon the lands of a debtor resulting from the decree of a court properly entered in the judgment docket.
Keene's Cement - an unusually tough and durable gypsum plaster to which alum has been added.
Keeper - the custodian of a building or grounds.
Key lot - a strategically located parcel of land where the location adds value.
Keystone - the piece, usually wedge shaped, at the top of an arch.
Kick plate - metal or plastic strip, placed at the lower edge of a door or on a riser of a step to protect it from damage by accidental kicking.
Kite winder - the steps at the curvature of a circular stairway, which are triangular, or kite-shaped.
Knock down - any parts of a building which can be easily assembled, installed, or removed, such as certain types of window frames, partitions, etc.
Knoll - a small rounded hill.
Land contract - see Contract for Deed.
Landlocked - the condition of a lot that has no access to a public thoroughfare except through an adjacent lot. See Egress. Compare with Easement and Right-of-way.
Landmark - any conspicuous object that helps establish land boundaries.
Lease - a grant of the use of lands for a term of years in consideration of the payment of a monthly or annual rental.
Leasehold - right to the possession of and use of real property for a fixed period time.
Lease purchase - assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.
Lender's policy - see Mortgagee's Policy.
Lessee - one who takes lands upon a lease
Lessor - one who grants lands under a lease
Lien - a legal claim against property for payment of a debt, obligation or duty that must be satisfied when the property is sold. The Internal Revenue Service has the right to place a lien on the property of delinquent taxpayer.
Life estate - a grant or reservation of the right of use, occupancy and ownership of real property for the life of an individual.
Link - a term of land measurement being 1/100th of a chain or 66/110th of a foot.
Lis pendens - a notice recorded in the official records of a county to indicate that a suit is pending affecting the lands where the notice is recorded.
Loan - money borrowed that is usually repaid with interest.
Loan fraud - purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
Loan-to-value (LTV) ratio - a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.
Lock-in - since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.
Loss mitigation - a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.
Loss payable clause - provision added to a Fire and Casualty Policy which says any loss will be paid to two or more partied as their interest may appear, usually the owner and the mortgage lender.
Lot - a measured parcel of land having fixed boundaries.
Majority - the age at which a person is entitled to handle their own affairs.
Margin - an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.
Marketable title - a good title about which there is no fair or reasonable doubt.
Mechanic's lien - a lien allowed by stature to contractors, laborers and material-men on buildings, or other structures upon which work has been performed or materials supplied.
Metes and bounds - a description of land by courses and distances.
Minor - one who because of insufficient age or status is legally incapable of making contracts.
Monument of survey - visible marks or indications left on natural or other objects indicating the liens and boundaries or a survey. May be posts, pillars, stones, cairns, and other such objects, but may also be fixed natural objects, blazed trees, roads, and even a watercourse.
Mortgage - a lien on the property that secures the Promise to repay a loan.
Mortgage banker - a company that originates loans and resells them to secondary mortgage lenders like Fannie Mae or Freddie Mac.
Mortgage broker - a firm that originates and processes loans for a number of lenders.
Mortgage insurance - a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price.
Mortgage insurance premium (MIP) - a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance.
Mortgage modification - a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.
Mortgage revenue bonds - issued by communities as a means of providing lower cost mortgage funds to certain qualified borrowers.
Mortgagee - a designation for the mortgage lender on lands.
Mortgagee's policy - a form of title insurance policy which insures the validity, enforceability and priority. This form does not provide protection for the owner of the real property.
Mortgagor - a designation for the mortgage borrower on lands.
Offer - indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.
Origination - the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.
Origination fee - the charge for originating a loan; is usually calculated in the form of points and paid at closing.
Owner’s policy - a policy of title insurance which insures a named owner against loss by reason of defects, liens and encumbrances or lack of marketability of the title. The company also agrees to defend covered claims make against the title.
Ownership - the right to possess and use property to the exclusion of others.
Partial Claim - a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date.
Patent - a document or grant by which the Federal or State government originally transferred title to public lands to an individual. The first in the series of transfers by which title comes down to present owners.
PITI - Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.
Plat or Plot - a map representing a piece of land subdivided into lots with streets shown thereon.
PMI - Private Mortgage Insurance; an insurance contract offered by privately-owned companies which insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on loans with down payments of less than 20% of a purchase price.
Points - a one-time special fee or extra charge paid to a lender in order to secure a loan; expressed as a percentage of face amount of mortgage.
Policy - a written contract of insurance.
Policy owner - one who purchased an insurance policy.
Power of attorney - an instrument authorizing another to act on one's behalf as his agent or attorney.
Power of sale - a clause inserted in a will, deed of trust or trust agreement authorizing the sale or transfer of land in accordance with the terms of the clause.
Pre-approve - lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.
Pre-foreclosure sale - allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure.
Pre-qualify - a lender informally determines the maximum amount an individual is eligible to borrow.
Premium - an amount paid on a regular schedule by a policyholder that maintains insurance coverage.
Prepayment - payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty.
Principal - the amount borrowed from a lender; doesn't include interest or additional fees.
Pro-rate - to allocate between seller and buyer their proportionate share of an obligation paid or due.
PUD - Planned Unit Development - a project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.
Purchase and sale agreement - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Purchase money transaction - the acquisition of property through the payment of money or its equivalent.
Quiet title - an action in a proper Court to remove record defects or possible claims of other parties named in the action. Range - A part of the government survey, being a strip of land 6 miles in width, and numbered east or west of the principal meridian.
Radon - a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.
Range - a part of the government survey, being a strip of land six miles in width, and numbered east or west of the principal meridian.
Real Property - land and that which is affixed to it.
Real estate agent - an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
REALTOR® - a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.
Realty - a brief term for real property.
Redeem - literally "to buy back;" the act of buying back lands after a mortgage foreclosure, tax foreclosure, or other execution sale.
Refinancing - paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).
Registered Land - see Torrens Title.
Rehabilitation mortgage - a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.
RESPA - Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships
Reinsurance - to insure again by transferring to another insurance company all or part of an assumed liability, thus spreading the loss risk any one company has to carry.
Right-of-way - the right which one has to pass across the land of another; an easement.
Riparian - rights to use of water and waterways in adjoining bodies of water, lakes, rivers.
Sale-leaseback - a technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
Second mortgage - a second loan on real estate that already has a mortgage. It is subordinate to the first mortgage. Usually of shorter term and often at higher interest rate.
Secondary mortgage market - the buying and selling of existing mortgages.
Section or section of land - parcel of land comprising one square mile or 640 acres.
Set back lines - those lines which delineate the required distance for the location of structures in relation to the perimeter of the property.
Settlement - the process at the closing of a sale of real estate negotiated by a real estate broker whereby the broker accounts to his or her principal for the earnest money deposit and deducts commission and advances by use of a form of settlement statement. See Closing.
Settlement sheet - see HUD-1 statement.
Special forbearance - a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.
Subdivision - a housing development that is created by dividing a tract of land into individual lots for sale or lease.
Subordinate - to place in a rank of lesser importance or to make one claim secondary to another.
Subsurface rights - the ownership rights a parcel of real estate has to the water, minerals, gas, oil that is beneath the surface.
Survey - the process of measuring land to determine its size, location and physical description; or the resulting property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. or
Sweat equity - using labor to build or improve a property as part of the down payment
Tenancy in common - an estate or interest in land held by two or more persons each having equal rights of possession and enjoyment but without any right of survivorship between the owners.
Tenant - any person in possession of real property with the owner's permission.
Testament - another term for a will.
Testate - the estate or condition of leaving a will at death.
Testator - a man who makes or has made a testament or will.
Testatrix - a woman who makes or has made a testament or will.
Title - the evidence or right which a person has to the ownership and possession of land.
Title 1 - an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don't require a property lien.
Title defect - any legal right held by others to claim property or to make demands upon the owner
Title insurance - insurance against loss or damage resulting from defects or failure of title to a particular parcel of real property.
Title plant - the total facilities - records, equipment, fixtures and personnel - required to function as a title insurance operation. Technically, the organization of official record affecting real property into a system which allows quick and efficient recovery of title information.
Title search - an examination of public records, laws and court decisions to disclose the current facts regarding ownership of real estate, to be sure that the seller is the recognized owner of the real estate, and that there are no unsettled liens or other claims against the property.
Torrens Title - a system whereby, after court proceedings, a certificate is issued setting forth the extent of the applicant's estate in land subject to the exceptions shown. Most popular in the early 1900's, the system was adopted in 19 states. It is presently used only in parts of six states.
Township - a division of territory six miles square, containing 36 sections or 36 square miles.
Tract - a particular parcel of land.
Trust - a property right held by one for the benefit of another.
Trustee - a person holding property in trust.
Truth-in-Lending - a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.
Unbalanced improvement - an appraisal term describing an improvement not in conformity with the surrounding area, and so, not suited to its location.
Underwriter - one who insures another.
Underwriting - the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.
Underwritten company - a title firm which conducts title searches but is not qualified to insure, and therefore issues policies of a qualified title insurer - underwriter - in return for a portion of the premium.
Unearned increment - an increase in value to real property due to some change in the area rather than an improvement in the property itself.i
Unencumbered - free of liens and other encumbrances; free and clear.
VA - Department of Veterans Affairs - a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.
Variable rate mortgage - a loan in which the interest rate fluctuates with the cost of funds or some other index.
Vendee - a purchaser of real property under land contract.
Vendor - a seller of real property under land contract.
Vest - to pass to a person an immediate right or interest. Title may be said to vest in John Brown.
Vestee - a non-legal term used by title insurers to indicate the owner of real property in a policy or report.
Waive - to knowingly abandon, relinquish, or surrender a right, benefit, or claim.
Warehousing - the process of assembling a number of similar mortgage loans into one package prior to offering them to investors.
Warranty - an agreement and assurance by the grantor of real property for himself and his heirs, to the effect that he is the owner and will be responsible.
Warranty deed - a deed used to convey real property and contains warranties of title and quiet possession and by which the grantor agrees to defend the property against the lawful claims of third persons. It is commonly used in many states but in others the grant deed has replaced it due to the modern practice of securing title insurance policies which have reduced the importance of express and implied warranty in deeds.
Wasting assets - assets which, by use or lapse of time, are consumed or reduced in book value, irrespective of market fluctuation.
Water rights - the collective rights to a water supply or a guarantee of access to nearby body of water.
Western framing - a type of framing in which the studding for each floor rests on a separate sill rather than ground to roof as in balloon framing.
Wild document - a document either created by a stranger to the title such as a forger or made outside the chain of title such as a conveyance granted by someone who previously failed to record and thereby left a link missing in the chain of title.
Will - a written document properly witnessed, providing for the distribution of property owned by the deceased.
X Bracing - cross-bracing forming the letter X. Used in floors and partitions.
Yard - the area between the building and property line of a residential property.
Yield - ratio of income from an investment to the total cost of the investment over a given building purpose.
Zone - the area set off by the proper authorities for a specific use or in an area subject to certain restrictions or restraints.
Zoning - the regulation of land by local government under its police powers in controlling things such as height, size and use of buildings and the use of land.