ABSTRACT OF TITLE: A condensed version of the history of title to land, consisting of a summary of the various links in the chain of the title and a statement of all liens, charges or encumbrances affecting the property.
ARM: Adjustable Rate Mortgage: A loan that allows the interest rate to be changed periodically.
APR: Annual Percentage Rate: The total finance charges (including interest, loan fees, and points) expressed as a percentage of the loan.
AMORTIZATION: The gradual repayment of a mortgage by periodic installments.
APPRAISAL: An estimate of quantity, quality or value. The process through which property value is established.
ASSESSED VALUE: The valuation placed on property by a public tax assessor as the basis of the property taxes.
ASSUMPTION OF MORTGAGE: Agreement by the buyer to assume responsibility for a mortgage owned by the seller; the seller remains liable to the lender unless the lender agrees to release him.
BALLOON MORTGAGE: A mortgage that has a substantial amount of the principal due at the maturity of the note.
BROKER: A person licensed by a state real estate commission to act independently in conducting a real estate brokerage business.
BUYDOWN: A payment to the lender from the seller, buyer or third party causing the lender to reduce the interest rate during the early years of the loan.
CAP: A maximum amount of interest that can be charged.
CASH FLOW: Income created by a successful investment.
CLOSING: The final step in transferring ownership of property from seller to buyer.
CLOSING COSTS: Funds paid by sellers and borrowers for the closing of a real estate transaction that conveys title to a property.
CONDOMINIUM: Ownership that involves a separation of property into individual ownership elements and common ownership elements.
CONTINGENCY: A condition that must be satisfied before a contract is binding.
DEED: A legal document conveying title to a property.
DISCOUNT POINTS: See “Points”.
EARNEST MONEY DEPOSIT: A payment given to the seller by a potential buyer indicating the buyer™s intent to complete the purchase of the property.
EQUITY: The difference between the market value and the amount of the owner™s indebtedness on a property.
ESCROW: The placement of money and/or documents with a third party for safekeeping pending the fulfillment or performance of a specific act or condition.
FHA MORTGAGE: Federal Housing Administration: A mortgage loan insured by FHA that permits lenders to offer better terms.
FIXED RATE MORTGAGE: A loan that has only one stated interest rate.
FORECLOSURE: A legal process instituted by a lender to have the proceeds from the sale of a property applied to the payment of a defaulted debt.
GENERAL WARRANTY DEED: A covenant that the grantor, his heirs, and personal representative will forever warrant and defend the property unto the grantee. A general warranty is the customary warranty in Virginia.
HUD: Housing Urban Development: A united States Government agency established to implement certain federal housing and community development programs.
LIEN: A legal claim against a property such as security for a debt, a judgment, or mortgage or taxes due.
LOAN ORIGINATION FEE: The charge paid to a lender by a borrower for processing a mortgage.
MARKET VALUE: The highest price a ready, willing and able buyer will pay and the lowest price a seller will accept.
MORTGAGE: A lien on real estate given by the buyer as security for money borrowed from a lender.
MULTIPLE LISTING SERVICE: An index listing of all available properties in a given area; listing information includes asking price, type of property, tax amount, etc.
NOI- Net Operating Income: A property’s gross income less operating expenses.
P & I: Principal and Interest Payment: A periodic payment that includes the interest charges for the period plus an amount applied to amortization of the principal balance.
PITI: Principal, Taxes and Insurance Payment: The periodic payment that includes a principal and interest payment plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgage.
POINTS: A dollar amount, expresses as a percentage of the mortgage amount, which is paid to a lender as a consideration for making a loan. A point is 1% of the amount of the mortgage loan, also called discount point.
PREPAYMENT: Payment of a mortgage before the due date.
PRINCIPAL: The amount of money borrowed (excluding taxes, insurance, etc.)
REAL PROPERTY/REAL ESTATE: Land; anything affixed to land which can be regarded as a permanent part of the land, and that which is immovable by law.
REALTOR/REAL ESTATE ASSOCIATE: Registered collective membership marks that identify real estate professionals who are members of the National Association of Realtors and subscribe to its Code of Ethics.
SPECIAL WARRANTY DEED: When property goes to foreclosure, becomes bank or government owned, meaning that the bank cannot warrant the title until title search is executed. The deed cannot convey unless free and clear from any liens. Once title search is clear the deed is just as good as a general warranty deed. Once the property convey again it will automatically convey as general warranty deed.
TITLE: A document showing evidence of ownership.
TITLE INSURANCE: Protection for lenders and borrowers against financial loss resulting from legal defects in the title.
TITLE SEARCH: A review of title records to identify liens, encumbrances and ownership rights to the property.