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A                                                                                                                                                         [Top of Page]

A title abstract is the notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property. The title agency produces a Binder from the information in the abstract.

The buildup of land from natural forces such as wind or water

As a verb, the confirmation by a party executing a legal document that this is his signature and voluntary act. This confirmation is made to an authorized officer of the Court or notary public who signs a statement also called an acknowledgment.

43,560 square feet of land.

A person appointed by the Court to settle the estate of a person who dies without a will.

Adjustable-rate mortgage (ARM)
A mortgage that changes interest rate periodically based upon the changes in a specified index.

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

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

Adverse Possession
A claim made against land titled in another person based on open, notorious and hostile possession and use of the land to the exclusion of the titled owner.

A sworn statement in writing.

ALTA 8.1 Is an endorsement to a title insurance policy that protects the lender against loss of priority of a loan due to the filing of an environmental protection lien.

Root word from French meaning death (end of life)

The repayment of a mortgage loan by installments with regular payments to cover all of the interest and part of the principal. Over a period of time the payments will eventually extinguish or “kill” the loan.

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.

To reduce a debt by means of regular periodic payments which include amounts applicable to both principal and interest.

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).

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.

Anything attached to the land or used with it that will pass to the new owner on conveyance of the land.

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

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

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

Anything of monetary values 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).

One who receives an assignment or transfer of rights. An assignment of a contract transfers the right to buy property.

The transfer of a mortgage from one person to another.

The one who assigns to another person.

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

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.

Seizure of property through Court process to repay a debt.

Attorney in Fact
A type of agency relationship where one person holds a Power of Attorney allowing him to execute legal documents on behalf of another. Decisions made by the attorney in fact are binding on the principal.

Augmented Estate
To prevent a party from purposely disinheriting a spouse, the surviving spouse can claim a portion of the decedent's augmented estate. The augmented estate includes property given away during life and property sold under terms that were not bone fide and supported by consideration.

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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.

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.

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.

Before-tax income
Income before taxes are deducted.

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

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

Biweekly payment mortgages
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 saving in interest.

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

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.

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."

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.

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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.

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 Satisfaction
A document signed by the Noteholder and recorded in the land records evidencing release of a Deed of Trust or other lien on the property.

Certificate of title
A statement provided by an abstract company, title company, or attorney stating that the current owner legally holds the title to real estate.

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.

A meeting at which the buyer signing the mortgage documents and paying closing costs finalizes a sale of a property. 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 costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing cost percentage will vary according to the area of the country. Closing statement Also referred to as the HUD1. The final statement of costs incurred to close on a loan or to purchase a home.

Closing Protection Letter (CPL)
An indemnity given to a lender from a title insurance company, agreeing to be responsible if the closing agent does not follow the lender's instructions or misappropriates the loan proceeds.  Lender's usually require a  closing protection letter be on file for each settlement.

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

When more than one insurance company shares the risk of a particular transaction or series of transactions. Lenders may require co-insurance on large commercial projects. 

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.

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

A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment. See endorser.

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 letter
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

common areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Community Home Improvement Mortgage Loan
An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.

Community property
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.

An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparable are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparable helps the appraiser determine the approximate fair market value of the subject property.

Taking of private property for a public use through exercise of the power of Eminent Domain. The Constitution protects against taking without fair compensation.

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.

Condominium conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

Also called a Committee or Guardian, a person designated by the Court to protect and preserve the property of someone who is not able to manage their own affairs. Examples include the mentally incompetent, minors and incarcerated persons.

Construction loans
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Consumer reporting agency (or bureau)
An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.

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.

An oral or written agreement to do or not to do a certain thing.

Contract for Deed
A method of financing where title remains in the Seller's name until the Buyer has paid the full purchase price. A Contract for Deed will normally trigger the Due on Sale Clause in a Deed of Trust but Veterans Administration regulations specifically allow Contracts for Deed without invoking the Due on Sale Clause.

Conventional mortgage
A mortgage that is not insured or guaranteed by the federal government.

Convertibility clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

Convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

Cooperative (co-op)
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.

Corporate relocation
Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

Cost of funds indexes (COFI)
An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.

Ownership in the same land by more than one person. See, Tenancy in Common, Joint Tenants, Tenancy by the Entireties.

A clause in a mortgage that obligates or restricts the borrower and that, if violated can result in foreclosure.

An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

Credit history
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

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. See merged credit report.

Credit repository
An organization that gathers record updates, and stores financial and public record information about the payment records of individuals who are being considered for credit.

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An amount owed to another.

The legal document conveying title to a property.

A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure.

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

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

Deficiency Judgment
If the foreclosure sale does not bring sufficient proceeds to pay the costs of sale and pay the note in full, the holder of the note may obtain a judgment against the maker for the difference.

Failure to make mortgage payments when mortgage payments are due.

A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan.

Deposit or Earnest Money
Advance payment of part of the purchase price to bind a contract for property.

Due-on-Sale Clause
A provision in a mortgage or deed of trust which requires the loan to be paid in full if a property is sold or transfered.

A decline in the value of property; the opposite of appreciation.

Down payment
The part of the purchase prices of a property that the buyer pays in cash and does not finance with a mortgage.

Due-on-sale provision
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 deposit
A deposit made by the potential homebuyer to show that he or she is serious about buying the house.

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

Effective age
An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.

Effective gross income
Normal annual income including overtime that is regular or guaranteed. The income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.

Eminent Domain
The power of the state to take private property for public use upon payment of just compensation.

The physical intrusion of a structure or improvement on the land of another. Examples include a fence or driveway over the property line.

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

A person who signs ownership interest over to another party. Contrast with co-maker.

Equal Credit Opportunity Act (ECOA)
A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

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.

Property that reverts to the state when an individual dies with heirs and without a will.

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.

Escrow analysis
The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

Escrow collections
Funds collected by the servicer and set aside in an escrow account to pay the borrower's property taxes, mortgage insurance, and hazard insurance.

Escrow disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

Escrow payment
The portion of a mortgagor's monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

The lawful expulsion of an occupant from real property.

Examinations of title
The report on the title of a property from the public records or an abstract of the title.

A person named in a will to carry out its terms and administer the estate. Depending upon the terms of the Will, the Executor may not have power to sell the real estate; that power may rest in the individual heirs.

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Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

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
A congressionally chartered shareholder-owned company that is the nation's largest supplier of home mortgage funds.

Fannie Mae's Community Home Buyer's Program
An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderate-income family's buying power and to decrease the total amount of cash needed to purchase a home. Borrowers who participate in this model are required to attend pre-purchase homebuyer education sessions.

Federal Housing Administration (FHA)
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.

Fee simple
The greatest possible interest a person can have in real estate.

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

Finders fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.

First mortgage
A mortgage that is the primary lien against a property.

Fixed-rate mortgage (FRM)
A mortgage in which the interest rate does not change during the entire term of the loan.

An item of personal property attached to real property so that it can not be removed without damage to the real property. It then becomes a part of the real property.

Flood insurance
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

Florida Form 9, Is an endorsement to a Florida title insurance policy that protects a lender against any loss which may occur from four main categories. One, any present violations of restrictions, covenants or conditions set forth on the property. Two, any future violations of existing restrictions, covenants or conditions on the property. Three, damage to existing improvements; this may occur as a result of an individual exercising their right to maintain an easement across the property. Typically foliage is excepted from included damages. Four, encroachments into easements and setback lines, and the damages which may occur as a result of said encroachments.

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Form 9.1 Is an endorsement to a Florida title insurance policy for unimproved property endorsement provides two types of coverage for the owner of the property. One, this endorsement insures that there are no other title matters affecting the property other than shown on Schedule B. Second, the endorsement insures against any loss which may occur as a result of the rights of the matters shown on Schedule B (i.e. a building being damaged as a result of the use of an easement).

Form 9.2 Is an endorsement to a Florida title insurance policy for improved property endorsement provides two types of coverage for the owner of the property. One, this endorsement insures that there are no other title matters affecting the property other than shown on Schedule B. Second, the endorsement insures against any loss which may occur as a result of the rights of the matters shown on Schedule B (i.e. a building being damaged as a result of the use of an easement).

Fully amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balances, at the interest accrual rate, over the amortization term.

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General Warranty Deed
The Grantor warrants title against all claims.

Good faith estimate
An estimate of charges which a borrower is likely to incur in connection with a settlement.

A person who acquires an interest in land by deed, grant or other written instrument.

A person who, by a written instrument, transfers to another interest in land.

One appointed by the Court to administer the affairs of a minor. A guardian ad litem is appointed to protect one's interest in a particular legal action.

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Hazard insurance
Insurance protecting against loss to real estate caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy.

One who might inherit or succeed to an interest in lands under the rules of law applicable where an individual dies without leaving a will.

A declaration filed with the tax appraiser’s office that an individual is asserting his homestead exemption. That exemption gives certain legal rights to protect against the claims of creditors.

Housing ratio
The ratio of the monthly housing payment in total (PITI - Principal, Interest, Taxes, and Insurance) divided by the gross monthly income. This ratio is sometimes referred to as the top ratio or front-end ratio.

The U.S. Department of Housing and Urban Development.

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A published interest rate to which the interest rate on an Adjustable Rate Mortgage (ARM) is tied. Some commonly used indexes include the 1-Year Treasury Bill, 6 Month LIBOR, and the 11th District Cost of Funds (COFI).

Ingress and Egress
Applied to Easements, meaning the right to go in and out over a piece of property but not the right to park on it.

Insurable Title
Title subject to a defect or claim which a title insurance company is willing to insure against.

Interest only payments
A mortgage where only the interest is paid on a monthly basis. This means that the buyer gets no equity.

A written document.

An estate without a Will.

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Joint Ownership Agreement
An agreement between owners defining their rights and responsibilities. The agreement could be between an investor and an occupant or among occupants. If an investor is involved, the investor does not take depreciation deductions and none of the occupant's payment is deemed rent for tax purposes.

Joint Tenancy
Two or more persons own a property. Joint tenants with the common law right of survivorship means the survivor inherits the property without reference to the decedent's will. Creditors may sue to have the property divided to settle claims against one of the owners.

Judgment Lien
A judgment automatically becomes a lien against all real property owned by the judgment debtor in the county where the judgment is docketed (recorded).

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Lender's Title Insurance
A Title Insurance policy covering the lender for the loan amount. The coverage declines as the loan is paid down and when the loan is paid off, there is no further coverage.

An encumbrance against property for money due, either voluntary or involuntary.

Life Estate
The right to use, occupy and own for the life of an individual.

Lifetime cap
A provision of an ARM that limits the highest rate that can occur over the life of the loan.

Loan to value ratio (LTV)
The ratio of the amount of your loan to the appraised value of the home. The LTV will affect programs available to the borrower and generally, the lower the LTV the more favorable the terms of the programs offered by lenders.

A written agreement guaranteeing the homebuyer a specified interest rate provided the loan is closed 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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The number of percentage points a lender adds to the index value to calculate the ARM interest rate at each adjustment period. A representative margin would be 2.75%.

Marketable Title
Title without defects or claims so as to be readily accepted without fair or reasonable doubt.

Mechanic's Liens
The right of an unpaid contractor, laborer or supplier to file a lien against property to recover the value of his work.

Metes and Bounds
A means of describing land by directions and distances rather than reference to a lot number. Generally used when land has not been subdivided into lots.

Mortgage Insurance Protection

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

Mortgage Disability Insurance
A disability insurance policy which will pay the monthly mortgage payment in the event of a covered disability of an insured borrower for a specified period of time.

Mortgage insurance (MI)
Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by mortgage default. Usually required for loans with an LTV of 80.01% or higher.

The person or company who receives the mortgage as a pledge for repayment of the loan. The mortgage lender.

The mortgage borrower who gives the mortgage as a pledge to repay.

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Navigational Servitude
 Is an endorsement to a Florida title insurance policy which provides the insured coverage against a loss  which may occur as a result of the forced removal of improvements located on lands which are or were navigable waters. Possible takings include wartime necessity as well as shipping line routing  improvements

Negative Amortization
A negative amortization loan is a type of loan where the initial monthly payment is not enough to cover the interest.  The unpaid interest is then added to the outstanding principal. In fact, with a negative  amortization loan your loan balance increases over time but is usually limited to 125% of the original loan amount.

Non-conforming loan
Also called a jumbo loan. Conventional home mortgages not eligible for sale and delivery to either Fannie Mae (FNMA) or Freddie Mac (FHLMC) because of various reasons, including loan amount, loan characteristics or underwriting guidelines. Non-conforming loans usually incur a rate and origination fee premium. The current non-conforming loan limit is, 601 and above.

A written agreement containing a promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand.

Notary Public
One authorized by law to acknowledge and certify documents and signatures. Florida requires a notary to pass a test

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Origination fee
A fee imposed by a lender to cover certain processing expenses in connection with making a real estate loan. Usually a percentage of the amount loaned, such as one percent.

Owner financing
A property purchase transaction in which the property seller provides all or part of the financing.

Owner's Title Insurance
A policy of Title Insurance for the buyer insuring the full purchase price of the property. The insurance premium is paid at settlement, and the coverage continues forever.

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Planned Unit Developments (PUD)
A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels.

A map showing the division of a piece of land with lots, streets and, if applicable, common area.

Principal, interest, taxes and insurance--the components of a monthly mortgage payment.

Private mortgage insurance.

Purchase money mortgage. A mortgage given by the seller simultaneously with the purchase of real estate to secure the unpaid balance of the purchase price.

Paid outside of closing. Sometimes the lender requests this money before settlement. If you pay any charges before settlement they should be written on the settlement sheet. They are written on the proper line outside of your column. They should also be marked P.O.C.

Charges levied by the mortgage lender and usually payable at closing. One point represents 1% of the face value of the mortgage loan.

Power of Attorney
A written document authorizing another to act on his behalf as an Attorney in Fact. One does not need to be a licensed attorney to act as an attorney in fact but, power of attorney forms are legal documents and should only be prepared by a licensed attorney.

Those expenses of property which are paid in advance of their due date and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

prepayment penalty
A charge imposed by a mortgage lender on a borrower who wants to pay off part or all of a mortgage loan in advance of schedule.

Amount of debt, not including interest. The face value of a note or mortgage.

Private mortgage insurance (PMI)
Insurance provided by nongovernment insurers that protects lenders against loss if a borrower defaults. Fannie Mae generally requires private mortgage insurance for loans with loan-to-value (LTV) percentages greater than 80%.

To allocate between seller and buyer their proportionate share of an obligation paid or due.

Promisory Note
A promise to pay. The promisory note document gives the mortgage company "in personam" jurisdiction over the mortgagor.

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Qualifying ratios
The ratio of your fixed monthly expenses to your gross monthly income, used to determine how much you can afford to borrow. The fixed monthly expenses would include PITI along with other obligations such as student loans, car loans, or credit card payments.

Quiet Title Action
A suit brought to remove a claim or objection on title.

Quitclaim Deed
A deed releasing whatever interest you may hold in a property but making no warranty whatsoever.

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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.

Compensation received from a wholesale lender, which can be used to cover closing costs, or as a refund to the borrower. Loans with rebates often carry higher interest rates than loans with "points" (see above).

The process of paying off one loan with the proceeds from a new loan using the same property as security.

Re-issue Rate
A discounted rate for title insurance when the title was previously insured with an owner's title insurance policy.

An interest in land that is postponed until the termination of some other interest such as a Life Estate.

Residential mortgage credit report (RMCR)
A report requested by your lender that utilizes information from at least two of the three national credit bureaus and information provided on your loan application.

A provision in a conveyance that the land will return to the grantor, or his heirs, upon the happening of an event or contingency.

Riparian Rights
The rights of an owner of land adjacent to water.

Rentable square feet is how much space you're paying for, including shared common areas. The measurement called a load factor is the difference between RSF and Usable square feet (USF), expressed as a percentage of USF

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Second Mortgage
A mortgage, the lien of which is subordinate to that of another mortgage.

A required distance from a property boundary in which no building may take place. This restriction may appear in the original plat of subdivision, restrictive covenants or by building codes and zoning ordinances.

Short Sale
Is when a lender agrees to except a payoff of a loan for a value less then the outstanding balance of the loan.

Special Warranty Deed
The seller warrants he has done nothing to impair title but makes no warranty before his ownership. Builders, trustees and estates often grant by special warranty deed. This is not a concern so long as the buyer gets an Owner's Title Insurance Policy.

Statute of Limitations
The time period to file a law suit to enforce a claim or it is barred by law.

Dividing land into lots and streets. The owner signs a Plat and Deed of Resubdivision which is recorded among the land records. The state and county have strict requirements for subdivision of land.

Subject To
Taking title to property with a lien but not agreeing to be personally responsible for the lien. If the holder who forecloses the lien can take the property but may not collect any money from the owner who took "subject to."

A print showing the measurements of the boundaries of a parcel of land, together with the location of all improvements on the land and sometimes its area and topography.

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Tax Service Fee
A fee paid to the mortgage company to verify that they actually pay the real estate taxes.

Tenants by the Entirety
A husband and wife own the property with the common law right of survivorship so, if one dies, the other automatically inherits. One may not sue the other to Partition the property. A creditor of one may not claim the property or the proceeds of sale.

An undivided interest in property taken by two or more persons. The interest need not be equal. Upon death of one or more persons, there is no right of survivorship.

To die with a Will.

One who makes out a last will and testament.

The evidence one has of right to possession of land.

Title Commitment
A report issued by a title insurance company binding or committing the title insurance company to issue the form of policy designated in the commitment or binder upon compliance with and satisfaction of requirements set forth in the commitment or binder.

Title insurance
Insurance against loss resulting from defects of title to a specifically described parcel of real property.

Title search
An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

Total debt ratio
Monthly debt and housing payments divided by gross monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.

A right to or in property held for the benefit of another. A trust may be written or implied. An implied trust is called a Constructive Trust.

One who holds property in Trust for another.

Truth-in-Lending Act
A federal law requiring a disclosure of credit terms using a standard format. This is intended to facilitate comparisons between the lending terms of different financial institutions.

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usable square footage is the actual space you occupy from wall to wall. Usable square footage does not include common areas of a building such as lobbies, restrooms, stairwells, storage rooms, and shared hallways.

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Veteran's Administration (VA)
A government agency-guaranteeing mortgage loans with no down payment to qualified veterans.

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A written document properly witnessed, providing for the distribution of property owned by the deceased.

The debt secured includes an existing debt already on the property. The payments made to the holder of the wraparound include payments due on the existing loan and the holder must forward the appropriate portion of each payment to the existing note holder. Often used to avoid a Prepayment Penalty or a Due on Sale Clause. Can be used to refer to a wraparound Deed of Trust or Contract for Deed.

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Regulation of private land use and development by local government.

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