A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustable-Rate Mortgage (ARM)
A mortgage whose interest rate changes periodically based on the changes in a specified index.

Adjustment Period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

Amortization
The repayment of a mortgage loan by installments with regular payments to cover the principal and interest.

Amortization Term
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

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

Application
A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.

Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property.

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

Asset
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

Assignment
The transfer of a mortgage from one person to another.

Assumable Mortgage
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

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

Assumption Clause
A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.

Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

Balance Sheet
A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon Mortgage
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

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

Bankrupt
A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.

Bankruptcy
A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

Basis Point
A basis point is 1/100th of a percentage point. For example, a fee calculated as 50 basis points of a loan amount of $100,000 would be 0.50% or $500.

Before-tax Income
Income before taxes are deducted.

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.

Biweekly Payment Mortgage
A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.

Blanket Mortgage
The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

Bond
An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

Breach
A violation of any legal obligation.

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."

Broker
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Buydown 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.

Call Option
A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.

Cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease.

Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Cash-out Refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

Certificate of Eligibility
A document issued by the federal government certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.

Certificate of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage.

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.

Chain of Title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage (ARM).

Clear Title
A title that is free of liens or legal questions as to ownership of the property.

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 Cost Item
A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement.

Closing Statement
Also referred to as the HUD-1. The final statement of costs incurred to close on a loan or to purchase a home.

Cloud on Title
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.

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.

Collection
The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.

Combination Loan
With this type of loan, you receive a first mortgage for 80 percent of the loan amount, and a second mortgage at the same time for the remainder of the balance. If avoiding PMI (mortgage insurance) is important to you, consider combination loans--known as 80/10/10 loans or 80/20's.

Combined Loan-to-value (CLTV)
The relationship between the unpaid principal balances of all the mortgages on a property (first and second usually) and the property's appraised value (or sales price, if it is lower.)

Dedication
The donation of land for public use by its owner.

Deed
A written document transferring ownership of land from one to another.

Deed of Trust
A three party security document conveying title to land, secured by the performance of an obligation, such as the repaying of a loan. It is also called a trust deed.

Default
Omission or failure to fulfill a duty or promise, discharge an obligation or perform an agreement.
Back to the Top

Documentary Transfer Tax
A tax on recorded transfers of title to real property.

Down Payment
The amount or percentage of the purchase price paid by the buyer in cash, not borrowed from the lender.

Due on Sale Clause
A clause in a promissory note or deed of trust calling for automatic maturity and payoff of the loan in the event of a sale or transfer of title to real property.

Earnest Money
Something given as a part of the purchase price to bind a bargain, such as a deposit.

Easement
A limited right or interest in the land of another entitling the easement holder to some use, privilege or benefit.

Encroachment
The extension of an improvement onto the land of another.

Equity
The value of the property actually owned by the property owner, often calculated by adding together the purchase price, appreciation and value of improvements and then subtracting the amount of all mortgages and liens on the property.

Escrow
A transaction in which an impartial third party acts as an agent for both the seller and buyer, or both the borrower and lender, in carrying out instructions, delivering papers and documents and disbursing funds.

Fee Simple
Absolute ownership of real property.

Fixture
Personal property that is considered a part of the real property because it has been affixed in a manner that to remove it would cause damage to the property.
Back to the Top

Foreclosure Sale
The sale of real property given to secure performance of an obligation after the obligation has been breached.

Grant Deed
A written instrument transferring title to real property.

Grantee
The person/entity acquiring title to real property by a deed.

Grantor
The person/entity transferring title to real property by a deed.

Interest
The cost of borrowing money, usually expressed as a percentage over time.

Lien
A charge on real property in order to secure payment or satisfaction of a debt or other obligation.
Back to the Top

Legal Description
A description of real property sufficient to locate it on the ground by reference to surveys or approved recorded maps.

Lis Pendens
A recorded notice of the pendency of a lawsuit.

Notice of Default
A recorded notice of a borrower's failure to perform the obligations in a deed of trust.

Ordinance
A legislative enactment of a city or county.

Party Wall
A wall located on a boundary line of real property and used by the owners of the property on each side.

PITI
The amount of principal, interest, taxes and insurance which are the bases for monthly mortgage payments.

Point
One percent of the loan principal, charged in part or in multiples to obtain a loan, in addition to interest and other fees.
Back to the Top

Pre-Payment Clause
A charge imposed by a lender for payment of a debt before its due date.

Principal
A party to a contract; also, the amount of money borrowed upon which interest is charged.

Promissory Note
A written promise, signed by the borrower, to repay a loan.

Probate
To divide or assess proportionately.

Public Report
A report issued by the California Department of Real Estate containing a wide variety of information of interest to a prospective buyer of subdivided property.

Real Property
Immovable property such as land and improvements on it, such as buildings.

Reconveyance
A document, executed when obligations in a deed of trust have been met, that removes the lien on title to property created by a deed of trust.

Recording
The act of filing documents in the office of the County Recorder.

Request for Reconveyance
A written instruction by a beneficiary under a deed of trust acknowledging that the obligations in the deed of trust have been met, and directing that the lien on title to the property created by the deed of trust be removed.

Rescission
The act of canceling the effect of a document.
Back to the Top

Rider
A supplement, addition, or endorsement to a document.

Statute of Frauds
A law requiring certain agreements to be in writing in order to be enforceable, including an agreement for the sale of real property.

Straight Note
A promissory note calling for payment of principal in one sum rather than in installments.

Subdivision
The division of a tract of land into separate parcels.

Title
A document indicating ownership of a specific parcel of property.
Back to the Top

Title Insurance or Title Policy
A contract indemnifying the policy holder against loss resulting from a defect in the title to the insured interest in real property.

Title Search
The steps required to complete the chain of title to a parcel of real property.

Trustee
The fiduciary designated to hold title to real property for the benefit of another.

Usury
The exaction of a greater payment or return for a loan of money than is permitted by law.
Back to the Top