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lossary

A, B, C, D, E, F, G, H, I, J, l, M, N, P, Q, R, S, T, U, V, W, Z

Abstract of Title - A historical summary of the proceedings and recorded documents affecting the title to a property

Acceleration Clause - A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed

Addendum - An attachment to a purchase contract used to make changes or additions

Adjustable Rate Mortgage (ARM) - A mortgage that permits the lender to adjust or change its interest rate at specified times, within specified limits based on a specified index

Agency - The legal relationship between a buyer or seller and his or her agent

Agency Disclosure - A disclosure made by real estate agents to the buyers or seller describing the agent's duties and responsibilities as well as the type of agency in regards to the real estate transaction. This disclosure is required in most states

Amortization - The gradual repayment of a mortgage loan by making periodic payments of both principal and interest

Annual Percentage Rate (APR) - The finance charge calculated over one year taking into consideration all costs of the loan as required by the Truth in Lending Act

Appraisal - A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection

Appreciation - An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation

APR - Annual Percentage Rate - The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points)

Assumption - The transfer of the seller's existing mortgage to the buyer

Attorney-in-fact - One who holds a power of attorney from another to execute documents on behalf of the grantor of the power

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Balloon Payment - The final payment, usually a lump sum, that is made at the maturity date of a balloon mortgage

Beneficiary - The person designated to receive the income from a trust, estate, or a deed of trust

Binder - A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate

Blanket Mortgage - One mortgage which covers more than one property

Bridge Loan - A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan"

Buy Down Mortgage - A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage

Buyer's Agent - An agent who represents the buyer in a real estate transaction

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Capital Gain - Usually the difference between the original cost and selling price of a capital asset, such as real property, after deductible expenses have been taken. Capital gain is subject to taxation

CC&Rs - Coventants, Conditions and Restrictions - Descriptions of restrictive limitations that apply to properties such as condominiums. These are found in the Master Deed

Certificate of Title - A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner

Closing - A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement

Closing Costs - Expenses incurred in buying a home including but not limited to attorney's fees, title insurance premium, land survey, title search, recording fees, appraisal cost and mortgage application fees

CMA - Comparative Market Analysis - A written report on the property that examines comparable homes in the area that have recently been sold, are currently on the market, or are currently under contract. A CMA will help you decide whether the asking price of the property is in line with other comparable houses in the neighborhood

Collateral - The property used as security for a loan and is subject to seizure if the borrower defaults

Condominium - A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas

Conforming Loan - A loan that does not exceed the Fannie Mae/Freddie Mac limit

Contingency - A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector

Contingent Sale Offer - An offer to purchase real estate that is contingent upon the sale of another property

Conveyance - The transfer of ownership of real property from one person to another

Cooperative - A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit

Cosigner - A second person who signs a note with the primary borrower. This cosigner is equally responsible for repaying the loan

Counter Offer - An offer in response to an offer

Credit Report - A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness

Credit Scoring - Your credit score is based on all the information in your credit report. This information is converted into a number -- a credit score -- that the lender uses to determine whether you are likely to repay your loan in a timely manner. The scores used in mortgage lending are typically in the 300 to 900 range. A general guide is that the higher your score the better. But you should keep in mind that your credit score is just one of several factors that will be used to evaluate your mortgage loan application

CRB -Certified Residential Broker

CRS - Certified Residential Specialist

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Deed - The legal document conveying title to a property

    The deed is the document that transfers ownership from the seller to you. Only the seller signs the deed at closing, and you'll receive a copy of it

    The closing agent will record the deed with you listed as the new property owner. Your name and the names of any other buyers appear on the deed, and it will be sent to you after it is recorded

Deed of Trust - The document used in some states instead of a mortgage; title is conveyed to a trustee

In some states, a "deed of trust" is used instead of a mortgage. When homeowners sign a deed of trust, they receive title to the property but convey title to a neutral third party -- called a trustee -- until the loan balance is paid in full

Default - Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage

Depreciation - A decline in the value of property; the opposite of appreciation

Discount Points - Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage

    A point equals 1 percent of the loan amount. So, if you and your lender agree to a mortgage of $100,000, one point would equal $1,000

    Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point. If the current interest rate on a 30-year mortgage is 7.75 percent, paying one point would lower the interest rate to 7.625

    Ask your lender if you have the option of paying 1, 2, or 3 discount points -- or you can choose not to pay any discount points. It often makes more sense to pay discount points if you plan to stay in your home for a long time

Down Payment - The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage. Also known as earnest money

    Saving for a down payment is usually one of the most difficult parts of preparing to buy a home. If you believe you have the needed funds, you are in a better position to seek pre-qualification from a lender to get the mortgage that is right for you

    Most homeowners rely on a mortgage from a financial institution, and most mortgage products require buyers to include a portion of their own funds towards the purchase of the home. This is called the down payment. Lenders feel more secure when buyers include a down payment, indicating they are less likely to walk away from their investment if their finances take a downturn

    Historically, buyers usually made a down payment that totaled 20 percent of the home's purchase price. Under this scenario, a down payment for a $100,000 home is $20,000. But today, new mortgage products allow buyers to put down as little as 3 percent to 5 percent, provided private mortgage insurance is obtained. The down payment for a $100,000 home with 5 percent down payment is just $5,000

    Sources for down payments may come from buyers' savings accounts, checking accounts, stocks and bonds, life insurance policies, and gifts

Dual Agency - One broker represents both the buyer and seller in a real estate transaction. Dual agency can also exist if two agents working for the same broker represent both the buyer and seller in the transaction. Dual agency must be disclosed to both the seller and the buyer and they both must agree to this representation. A dual agent must be loyal to both the buyer and the seller

Due-on-Sale Clause - A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage

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Earnest Money - The down payment deposited by the Buyer under the terms of the contract

Easement - A right of way giving persons other than the owner access to or over a property

Eminent Domain - The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings

Encroachment - An improvement that intrudes illegally on another's property

Encumbrance - Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions

EPA - Environmental Protection Agency

E-PRO - Internet savvy real estate agent

Equity - A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage

    A lender determines how much equity you have in your home by taking the appraised value of the home and subtracting any mortgage debt

    For example, if your house is valued at $150,000 and your mortgage balance is $80,000, you have $70,000 equity in the house

Escape Clause - A clause in a purchase contract that allows one party to withdraw from the contract under certain terms and conditions

Escrow - An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate

Escrow Account - The account in which a mortgage servicer holds the borrower's escrow payments prior to paying property expenses

    An escrow account is money that is deposited with a third party -- outside the buyer and the seller -- to be used to pay     various fees. A borrower typically provides funds that will pay taxes, mortgage insurance, lease payments, hazard insurance premiums, and other payments when they are due

    An escrow payment by the holder of a mortgage is also known as "impounds" or "reserves" in some states

    When escrow funds are used to pay taxes, hazard insurance, and other fees, it is called an escrow disbursement. Periodically, an escrow analysis will be performed to determine if current monthly deposits provide sufficient funds to pay bills when they are due

Escrow Payment - The portion of the monthly mortgage payment held by the lender to be applied to real estate taxes, hazard insurance and/or mortgage insurance

1031 Exchange - A 1031 tax deferred exchange allows you to defer capital gains by rolling-over all of the proceeds received from the sale of an investment property into the purchase of one or more other like-kind investment properties. At closing, proceeds are transferred to a third party, called a facilitator or qualified intermediary who holds them until they are used acquire the new property

A 1031 exchange is often referred to as a Starker exchange

Exclusion - An item of real property that is excluded in the sale such as an attached light fixture

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Fair Market Value - The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept

Fannie Mae - FNMA (Federal National Mortgage Association)- A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages

    Over the past 31 years, Fannie Mae has provided nearly $2.8 trillion of mortgage financing for over 34 million families

Fee Simple - The greatest possible interest a person can have in real estate

    Fee simple ownership provides the owner with unrestricted powers to dispose of the owned property as the owner sees fit. Of all types of ownership a person can have in real estate, fee simple provides the greatest amount of personal control

FEMA - Federal Emergency Management Agency

FHA - Federal Housing Administration - An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing

FHA Mortgage - A mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage

    With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower

    FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a mortgage through a lender

FICO - Name given to credit score used to qualify for mortgages

Fiduciary - A person acting in a relationship of trust and confidence

First Deed of Trust or First Mortgage - A deed of trust or mortgage that has priority over all other voluntary liens secured against a property

Fixed Rate Mortgage - A mortgage in which the interest rate does not change during the entire term of the loan

    Fixed-rate mortgages, the most popular type of mortgage, offer the peace of mind that your interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your key concern. If you decide that you like the stable, predictable payments of a fixed-rate loan, you have the option of choosing from a variety of repayment terms: 15, 20, and 30 years are the most common. Typically, the longer the term of the mortgage, the more interest you pay over the life of your loan. However, stretching out your repayment term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage. Lenders offer a wide array of fixed-rate mortgages:

    * Balloon Mortgages

    * Biweekly Mortgages

Fixture - Personal property that becomes real property when attached in a permanent manner to real estate

Fizzbo (FSBO) - For Sale by Owner

Freddie Mac - Federal Home Loan Mortgage Corporation - An organization that purchases loans from banks and other loan originators

FSBO - For Sale by Owner - Property offered for sale without the assistance of a real estate broker

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Gift Letter - A letter from parents who give all or part of the down payment monies to their children. Most lenders require that this letter states that this money does not have to be repaid

Graduated Payment Mortgage - A mortgage that has lower monthly payments in the early years. Payments increase over the term of the loan at predetermined intervals

GRI - Graduate of Real Estate Institute

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Homeowner's Association - HOA - An organization of homeowners in a condominium complex or planned unit development which manages the common areas

Homeowner's Policy - An insurance policy that provides coverage for the home and its contents in the case of damage or loss due to common disasters such as fire. Coverage also usually includes theft, vandalism, loss of use and liability

HOW - Homeowner's Warranty - A type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale. It insures buyers and sellers against defect in a home they are buying or selling (usually in heating, electrical and plumbing systems)

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"

    The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. The (blank) form is published by the U.S. Department of Housing and Urban Development (HUD)

    Items on the statement include:

    -- real estate commissions
    -- loan fees
    -- points
    -- escrow amounts

    The form is filled out by your closing agent and must be signed by the buyer and the seller. The buyer should be allowed to review the HUD-1 Settlement Statement on the business day before the closing meeting to know the closing costs in advance

    The HUD-1 Settlement Statement is also known as the "closing statement" or "settlement sheet"

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Installment - The regular periodic payment that a borrower agrees to make to a lender

    The regular periodic payment that a borrower agrees to make to a lender. The installment is more often referred to as your monthly mortgage payment

    Installments, or monthly payments, can be made either monthly or biweekly, depending on your mortgage type. Your approved lender may also offer additional payment plans tailored to fit your needs

Interim Loan - Also called a swing or bridge loan. A temporary, short-term loan that enables a homebuyer to liquidate the equity in one home before it is sold to make a cash down payment on another home.

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Jumbo Loan - A loan that exceeds mortgage amount limits. Also called a nonconforming loan

Junior Loan or Lien - Any mortgage, deed of trust or other lien against a property that is of lesser priority than the first mortgage or deed of trust

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Lease Option - Nonprofit organizations may use the lease-purchase option to purchase a home that they then rent to a consumer, or "leaseholder." The leaseholder has the option to buy the home after a designated period of time (usually three or five years). Part of each rent payment is put aside toward savings for the purpose of accumulating the down payment and closing costs

Lessee (tenant) - One who contracts to rent property

Lessor (landlord) - An owner who enters into an agreement to rent to a tenant

Leverage - leverage is using someone else's money to purchase property

Lien - A legal claim against a property that must be paid off when the property is sold

Liquidated Damages - A predetermined sum, agreed to by the parties in a contract, to be considered as full damages if certain events occur

Listing Agreement - A contract between a property owner and an agent authorizing the agent to perform certain services involving the property

Loan-to value Ratio - LTV - The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent

Lock-in - A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing

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Market Value - The highest price a willing buyer would pay and a willing seller would accept for a property that is exposed on the open market for a reasonable period of time, assuming that both buyer and seller are well-informed and neither party is acting under undue pressure. You can get a good feel for the market value of a home by asking whether the listing agent compiled a "comparative market analysis" (CMA).

Material Fact - A fact that is not known to or readily observable by the buyer which materially affects the value or desirability of a property

Maturity - The date on which a mortgage or note becomes due

Mechanic's Lien - A lien against real property in favor of persons who have performed work or provided materials for the purpose of improving that property

MLS - Multiple Listing Service -

Mortgage - A legal document that pledges a property to the lender as security for payment of a debt

    Simply put, the mortgage is the legal document that gives the lender a legal claim against your house should you default on your loan payments. The mortgage indicates that a specific amount of money will be loaned at a specific interest rate so that you can buy your home. Another way of thinking of the mortgage is that you have possession of the property but the lender has ownership until you have repaid your loan

    The items stated in the mortgage include the homeowner's responsibility to:

    -- pay principal
    -- pay interest
    -- pay taxes,
    -- pay insurance on time,
    -- pay to maintain hazard insurance on the property, and
    -- adequately maintain the property.

    The mortgage also includes the basic information found in the note

    Should you consistently fail to meet these requirements, your lender can seek full repayment of the balance of the loan, foreclose on the property, or sell the property and use the proceeds to pay off the loan balance and foreclosure costs

    A deed of trust is used instead of a mortgage in some states

Mortgage - The conveyance or pledge of property as security of a loan

Mortgagee - The lender in a loan transaction

Mortgagor - The borrower who pledges or conveys his property to the mortgagee as security for the loan

Mortgage Insurance - A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan

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NAR - National Association of Realtors

Negative Amortization - A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization - The borrower ends up owning more than the original principal

Nonrecurring Closing Costs - Closing costs that are paid on a one-time-only basis such as title insurance or points

Notary Public - One who has the authority to take the acknowledgments of persons signing documents

Note - A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time

    One way to think of the mortgage note is that it is a legal "IOU." Often called the promissory note, it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your paymen.

    The note lists any penalties that will be assessed if you don't make your monthly mortgage payments. It also warns you that the lender can "call" the loan -- demand repayment of the entire loan before the end of the term -- if you violate the terms of your mortgage

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Payoff Demand - A written request for a lender to provide exact figures of the amount owed by the borrower to pay the loan off in full

Personal Property - Any property that is not real property - Also known as chattel

PITI - Principle, interests, taxes and insurance (PITI) are the four components of a monthly mortgage payment

    The components of a monthly mortgage payment

  1. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage    
  2. Interest is the fee charged for borrowing money
  3. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and hazard insurance

PMI - Private Mortgage Insurance - Also known as Mortgage Insurance, PMI is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent

Point - A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage

Power of Attorney - A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time

Pre-Approval - When you work with your lender to get pre-approved, you are getting an indication of how much money you will be eligible to borrow when you apply for a mortgage. This process occurs before you complete an application for a loan

    Pre-approval includes a screening of a borrower's credit history, and all information you give to your lender will be verified when you apply for your mortgage

Pre-Qualification - The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan

Preliminary Title Report - Report issued by the title company before the completion of a real estate sale. It indicates the condition of the title

Prepayment Penalty - A fee that may be charged to a borrower who pays off a loan before it is due

    If you pay off your mortgage before it is due, you may be charged a fee -- this is referred to as a prepayment penalty

    Any amount that is paid to reduce the principal balance of a loan before the due date -- such as the sale of the property, the owner's decision to pay the loan in full, the owner's decision to pay additional money every month to lower the principle or interest -- is considered prepayment

    You may want to consider discussing the specifics of this fee as you negotiate the terms of your loan with your lender

Principal - The dollar amount borrowed when a mortgage is obtained

Principal Balance - The remaining balance due on a loan

Private Mortgage Insurance (PMI) - Insurance written by a private insurance company that protects the lender in the event the borrower defaults on a loan. The borrower pays premiums

Proration -  To allocate between buyer and seller their proportionate share of obligations that have been paid or that are due such as taxes, insurance premiums, interest, rental amounts. Prorations are usually made to the closing date

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

    The Purchase and Sale Agreement is a written contract that is signed by the buyer and seller. It states the terms and conditions under which a property will be sold. It includes:

    -- description of property
    -- price offered
    -- down payment
    -- earnest money deposit
    -- financing
    -- personal items to be included
    -- closing date
    -- occupancy date
    -- length of time the offer is valid
    -- special contingencies
    -- inspection

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Qualified Intermediary - see 1031 Exchange or Starker Exchange

Quitclaim Deed - A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made

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Real Property - Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof

Reconveyance - The legal document used when a debt is paid in full or satisfied. This document conveys the property back to the equity owner free of debt

Recording - The filing in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record

Refinance - Paying off an existing loan on a property and replacing it with another loan

Rescission - The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent. Borrowers usually have the option to cancel a refinance transaction within three business days after it has closed

RESPA - Real Estate Settlement Procedures Act - A consumer protection law that requires lenders to give borrowers advance notice of closing costs

RMCR - Residential Mortgage Credit Report

RSPS - Resort and Second Home Property Specialist

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Second Mortgage - A mortgage that has a lien position subordinate to the first mortgage

Seller Disclosure - Seller must disclose all property defects to the buyer before closing

Settlement - The final step before you get the keys to your home is a formal meeting called the closing. It is at this meeting in which ownership of the home is transferred from the seller to the buyer

    Also called a settlement in some parts of the country, the meeting is typically attended by the buyer(s), the seller(s), their attorneys if they have them, both real estate sales professionals, a representative of the lender, and the closing agent. The purpose is to make sure the property is physically and legally ready to be transferred to you

    Several closing costs will be paid at this meeting. These expenses are over and above the price of the property and are incurred when ownership of a property is transferred. Closing costs generally include a loan origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance, and a survey. Closing costs vary according to the area of the country

Single Agency - One real estate broker represents either the buyer or the seller in a real estate transaction but NOT both

Specific Performance - A legal action to force the performance of a contract requirement

Starker Exchange  or 1031 Exchange - A tax deferred exchange allows you to defer capital gains by rolling-over all of the proceeds received from the sale of an investment property into the purchase of one or more other like-kind investment properties. At closing, proceeds are transferred to a third party, called a facilitator or qualified intermediary who holds them until they are used acquire the new property

Statute of Limitation - A legal limit on the time period in which to initiate court action

Sweat Equity - Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash

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Tax Lien - A lien that attaches to real property if the property owner fails to pay real estate taxes or income taxes when due

Term - The length of time over which the loan will be repaid

Termite Inspection - Homes in many parts of the country must be inspected for termites before they can be sold. You should receive a certificate from a termite inspection firm stating that the property is free of both visible termite infestation and termite damage

    The cost of the termite inspection is usually paid by the seller, and the seller's real estate sales professional orders the inspection. You need to make sure that the original certificate is delivered to your lender at least three days before closing

    This allows the lender to review the certificate and address any potential problems

Title - A legal document evidencing a person's right to or ownership of a property

Title Cloud or Defect - Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action

Title Insurance - Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property

    Your lender will require that you buy title insurance to ensure that you are receiving a "marketable title." There are two types of title insurance policies:

    -- Lender's policy (mandatory): This protects the lender should a flaw in the title be detected after the property has been purchased
    -- Owner's policy (optional, but recommended): This protects you should a flaw in the title be detected after the property has been purchased
   
Generally, the buyer pays the cost of both policies. Check with your insurer, because you may receive a price break if you seek a combined lender/owner policy or if you purchase a "reissue" policy from the company that previously insured the title

Transfer Tax - State or local tax payable when title passes from one owner to another

Truth-In-Lending - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges

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Underwriting - The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself

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VA - Veterans Administration - The Veterans Administration is a federal government agency authorized to guarantee loans made to eligible veterans under certain conditions. To obtain more information, you can contact the U.S. Department of Veterans Affairs

    The VA guarantee allows qualified veterans to buy a house costing up to $203,000 with no down payment. Moreover, the qualification guidelines for VA loans are more flexible than those for either the Federal Housing Administration (FHA) or conventional loans

    If you are a qualified veteran, this can be an attractive mortgage program. To determine whether you are eligible, check with your nearest VA regional office

Vested - Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds that are actually withdrawn

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Waiver - To release a right to require something such as waiving a contingency in a real estate contract

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Zoning - Specifies how property in certain areas can be used


 

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