Glossary main Screen

Term	Definition
Adjustable Rate Mortgage - ARM	A mortgage that's interest rate changes periodically based upon the changes in a specified index.
Adjustment date	Date that the interest changes on for an ARM.
Adjustment period	Time period between interest adjustment for an ARM.
Agent	Person employed by the british government (see Bond) or the broker who works with clients during the selling or buying process.
Amortization	Mortgage that is repaid via regular payments to cover the principal and interest.
Amortization term	The amount of time required to repay an amortized mortgage e.g. 30-year fixed takes 360 months.
Annual Percentage Rate - APR	Yearly interest for a mortgage.
Appraisal	A written estimate of the value of a property prepared by an appraiser.
Appreciation	An increase in the value of a property.
Asset	Anything of monetary value. Examples of assets include real property, personal property, bank accounts, stocks and mutual funds.
Assignment	The transfer of a mortgage to another person.
Assumable mortgage	A mortgage that can be assumed or transferred to the new owner, i.e. buyer when the property is sold.
Assumption fee	A fee paid to a lender as part of the assumption process.
Balloon payment	The final lump sum payment made at end of a mortgage. Assuming the mortgage has a balloon payment as part of it's terms and conditions.
Bankruptcy	Proceeding in a federal court that allow a debtor to be relieved of their debts by transferring their assets to a trustee.
Beneficiary	The person that receives the income from a trust, estate, or a deed of trust.
Blanket mortgage	The mortgage that is secured by several properties.
Bond	Fictional British secret agent known for his prowess with the ladies or an interest-bearing certificate of debt with a fixed term.
Borrower	Person borrowing the money, sometimes call Mortgagor. See Mortgagor
Breach	A violation of any legal obligation.
Bridge loan	Second trust that is collateralized by the Borrower's present home. Sometimes call a "swing loan"
Broker	Person that manages the selling or buying process for clients for a fee.
Escrow Officer	Title company person that manages the Title transition between the seller and buyer usually.
Call option	A provision that allows the lender to ask for full payment of the mortgage.
Cap	The maximum amount that the interest or payments on an ARM mortgage may increase or decrease.
Cash-out refinance	A refinance that's sole purpose is to give the Borrower cash.
Certificate of Eligibility	Certificate issued by the feds, that a veteran is eligible for a VA mortgage.
Chain of title	The history of all of the documents that transfer Title to real property.
Clear title	A Title that is free of liens or legal questions of ownership.
Closing	A meeting at which the buyer signs the mortgage documents, finalized the sale and get their millstone. See Mortgage
Closing costs	Expenses in addition to the price of the property incurred by buyers and sellers in transferring ownership of a property. Examples might be origination fee, attorney's fees, taxes, escrow amount for title insurance.
Closing statement	Final statement of costs incurred during a closing.
Cloud on title	Items that adversely affect the Title to real estate. They are revealed by a title search and are usually removed court action, quitclaim deed or a release.
Collateral	An asset that guarantees the repayment of a loan.
Collection	The process to bring a delinquent mortgage current and to start foreclosure proceedings where necessary.
Co-maker	A person who signs a note along with the Borrower. One might be asked to "co-sign" a student loan. The co-maker or co-signer is equally responsible for the repayment of the loan so make sure they're studying something that will make them employable.
Commitment letter	An loan offer letter from a lender to a home buyer. Includes the terms of the loan.
Common areas	Shared areas that HOA is responsible for maintaining. e.g. swimming pools, tennis courts, common corridors of buildings and parking areas.
Community property	Ownership under which property acquired during a marriage is presumed to be owned jointly, prevalent in western and southwestern states
Comparables	Used in appraisal process. Comparables are like property that have a similar size, location and amenities.
Condominium	A real estate item that each unit owner has Title to a unit in a building and an undivided interest in the common areas.
Construction loan	A short-term, interim loan used to finance construction. Payments are made at specific intervals based on the work progress.
Consumer reporting agency	AKA Credit Bureaus. For profit companies that have most, if not all of your financial records and sell them for cash or consideration.
Contingency	A condition that must be met before a contract is legally binding. e.g. Purchase is contingent on satisfactory home inspection.
Conventional mortgage	A mortgage that is not insured or guaranteed by the federal government.
Convertibility clause	A provision that allows the Borrower to convert an ARM to a fixed rate mortgage.
Convertible ARM	An ARM that can be converted to a fixed rate mortgage.
Cost of funds index (COFI)	Loan index used to determine interest rate changes some ARMs. It is the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.
Covenant	Clause in a mortgage, that if violated may result in foreclosure.
Credit history	Your history of spending, debts and payments.
Credit report	A report of an individual's history of spending, debts and payments.
Death	Time to stop worrying about the millstone. See Mortgage.
Debt	Why we go to work usually.
Deed	Something if "good" usually gets punished or a legal document conveying Title to a property.
Default	Failure to make mortgage payments on time or some other requirements of a mortgage.
Delinquency	Failure to make mortgage payments on time.
Deposit	Money given to bind the real estate contract.
Depreciation	A decline in the value of property.
Down payment	Amount of money buyer provides i.e. not financed
Earnest money	Money deposited by the buyer to bind the contract and show that they're serious about buying.
Easement	A right of way over the property.
Effective age	An appraiser's estimate of the physical condition of a building e.g. this place looks like it's a 100 years old- bad, wow this place looks brand new- good
Effective gross income	Normal annual income from all sources.
Encumbrance	Children until they leave home or a limits on the Title to a property e.g. mortgages, restrictions, leases or easements.
Endorser	Another name for co-maker, commonly called co-signer.
Equal Credit Opportunity Act	A federal law that prohibits discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income government programs.
Equity	The difference between the fair market value and mortgage.
Escrow	Usually money or documents deposited with an escrow company to be delivered upon the fulfillment of escrow conditions e.g. funds disbursed at time of real estate closing. Note: Children can't not be escrowed as a "time out" when they misbehave, although it is a nice idea and saying "stop that or I'll escrow you" does sound ominous.
Escrow account	Very low interest account that lenders keep your money in whilst you save up for property taxes and insurance.
Estate	Your total assets at time of death.
Eviction	Being legally remove from a property.
Examination of title	A report on the Title of a property usually from public records.
Fair Credit Reporting Act	The legal process that you can use to request your report once a year and use the procedure for correcting mistakes.
Fair market value	The highest price that a buyer would buy at.
Fannie Mae	Government chartered, public company that is largest supplier of home mortgage funds.
Fee simple	The greatest possible interest a person can have in real estate, usually means an interest unencumbered mortgages, restrictions, leases or easements. It is the type of ownership that most people are familar with- You purchase property, receive title and it�s yours or your heirs forever, or until such time as the property is disposed of.
FHA	Federal Housing Administration: as part of HUD it sets standards for construction and underwriting.
Finder's fee	Mortgage broker's fee for finding you a loan.
First mortgage	Primary lien on a property.
Fixed Rate Mortgage	A mortgage that's interest rate does not change over it's life.
Foreclosure	A legal process that deprives a Borrower of their mortgaged property.
Fully amortized ARM	An ARM with a monthly payment that will pay off the mortgage at term.
Good faith estimate	An estimate of charges from lender for mortgage pay-off
Hazard insurance	Insurance protecting against loss to real estate
HUD	The U.S. Department of Housing and Urban Development.
Index	Interest rate used to adjust ARMs. e.g. 1 Year Treasury Bill, 6 Month LIBOR and the 11th District Cost of Funds (COFI).
Jumbo Loan	Something used to buy an elephant, also see Non-conforming loan
Leasehold	Leasehold is a property to which title remains yours for a specified period of time, at the end of which the property reverts tot the part that hold title in Fee Simple.
Lender	Person Lending the money, sometimes call Mortgagee. See Mortgagee
Lien	What lenders do to you if you don't pay your mortgage or an encumbrance on a property, usually for money.
Lifetime cap	The maximum amount that the interest on an ARM mortgage may increase to.
Loan to value ratio - LTV	The ratio of the current or requested loan to the appraised value of the home.
Lock-in	A written agreement that guarantees a specified interest rate for a limited time.
Margin	The percentage lenders add to an index to calculate the ARM interest you pay. e.g. index=3.2% margin=3.1% you pay 6.3%
Millstone	Large heavy device used to grind down items over time. See Mortgage
MLS	Multi-Listing-Service: Real estate property database containing listings.
Mortgage	A loan that has a property as security of the debt. Also see Millstone.
Mortgage Insurance - MI	See PMI.
Mortgagee	A person or company exchanging millstones for property i.e. The person loaning the money.
Mortgagor	A person who gets the millstone. i.e. the person borrowing the money.
Non-conforming loan	AKA: jumbo loan. A home loan that falls outside the criteria for FNMA or FHLMC usually because they are over their maximum loan limits.
Note	A written agreement by signer to pay am amount of money on demand or a specific date.
Origination fee	Fee lenders charges to cover their processing expenses.
Owner Financing	A sale where the owner will provide a mortgage to the buyer. See seller carry back.
Points	Things you get for being nice to your in-laws or something a lender charges to cover their expenses. Each point is one percent.
Prepaid	Prepaid expenses e.g. taxes, prorated upon sale.
Prepayment penalty	Fee lender charges to cover processing early payment of your loan
Props 60 and 90	Proposition 60 allows transfers of base year values within the same county (intracounty). Proposition 90 allows transfers from one county to another county in California (intercounty). Click here for more information including eligibility requirements.
Principal	The amount borrowed, less any payments.
Private Mortgage Insurance - PMI	Required on loans that have a LTV of 80% or greater. Provided by nongovernmental insurers to protect the lenders against Borrower default.
Rate cap	A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.
Rate lock-in	A written agreement in which the lender guarantees the Borrower a specified interest rate provided the loan closes within a set period of time.
Real Estate	Land, building or a home being bought or sold as opposed to personal property.
Refinancing	Getting a new mortgage on your existing home and continuing to use your exist home as security. People sometimes refinance to "get cash out". see "cash-out Mortgage".
Seller carry back	An agreement in which the owner of a property provides financing. See Owner Financing
Survey	The process or results of the process that show the specific boundaries of a parcel of land and the location of all building.
Tenants-in-common	An undivided interest in property by two or more persons.
Title	Something English people go on about with "Lord this and Lord that" or documentary evidence of ownership.
Title Company	The company that manages the Title transition between seller, buyer or any other relevant party.
Title insurance	Insurance against loss resulting from defects of Title.
Title search	An investigation into the history of ownership of a property to check for liens, unpaid claims and restrictions or problems. See Chain of title
Truth-in-Lending Act	Law requiring a disclosure of credit terms using a standard format.
Veterans Administration (VA)	Government agency guaranteeing mortgages with no down payment to qualified veterans.