Adjustable Rate Mortgages
Mortgages with an interest rate that may change up or down depending on an indicator. These are usually based something like the current Treasury bill rate.

Affidavit
A sworn statement in writing.

ALTA - American Land Title Association
The trade association of the title industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.

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

Appraisal
A report from an independent third party detailing the estimated value of real estate.

Appurtenance
A right or privilege that is part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.

APR - Annual Percentage Rate
On some mortgages the APR is higher than your actual mortgage rate.

Assessment
(1) The valuation for proposed taxes or special improvement charges. (2) The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.

Assignment
(1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. (2) The instrument or paper by which one person transfers such ownership to another.

Assumption
A mortgage that allows a new owner to take over payments. The original borrower remains liable on the mortgage note.

Bankruptcy
A proceeding in the U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.

Binder
Sometimes called a "Preliminary Certificate" or "Commitment". (1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (2) A deposit in escrow of a small part of real estate as evidence of good faith and to bind an agreement to purchase.

Broker
Also known as a "Real Estate Broker". A middleman or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have the title to the property, but generally represents the owner.

Building Line or Setback
Distances from the ends and/or sides of lot beyond which construction may not extend. The building line may be established by a field plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning regulations.

Certificate of Title
A certificate issued by a title examiner Stating the condition of a title.

Chain
In real estate measurements (surveying), a chain is 66 feet long or 100 links, each link being 7.92 inches. The measurement may change when used in fields other than surveying.

Chain of Title
The successive ownerships or transfers in the history of title to a tract of land.

Claim
An adverse right or interest by one part against another or against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as from hidden title defects such as fraud, forgery, missing heirs, etc.

Clear Title
Real property ownership free of liens, defects, encumbrances or claims.

Closing
Also called "Settlement". A meeting of all parties involved in a property transaction during which the transaction is consummated.

Clouded Title
An irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title.

Commission
Money paid to a real estate agent or broker by the seller as a compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price - 6 to 7 percent on houses, 10 percent on land.

Commitment
Also called a "Binder". A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.

Conveyance
The transfer of title to a property from one person to another.

Deed
A written document by which the ownership of land is transferred from one person to another.

Deed of Trust
Instrument used to secure a loan on real estate. Like a mortgage, generally used in the South. The major difference is in how foreclosures are handled. Foreclosures are much faster with a Deed of Trust than with a Mortgage.

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

Documentary Stamps
A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.

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 transferred.

Easements
A right to use all or part of the land owned by another for a specific purpose. An easement may, for example entitle its owner to install and maintain sewer or utility lines.

Eminent Domain
The right of a government to take privately owned land for public purposes under the condemnation proceedings subject to payment of its fair market value.

Encroachment
Any building, improvement, or structure located on one property (such as wall, fence, or driveway) that intrudes on the property of another.

Encumbrance
Any interest, right, or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden of charge upon the property.

Equity
The interest of value in which an owner has in real estate over and above the debts against it.

Escrow
A procedure in whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer. Money that is kept by the mortgage company to ensure that taxes can be paid in full when due. This is paid up front of settlement sheet lines 1001 - 1006 and is added to the mortgage payment monthly over the principal and interest figure.

Exception
A provision in a title insurance Binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.

FNMA (Fannie-Mae)
The Federal National Mortgage Association, a federally sponsored private corporation which provides a secondary market for housing mortgages.

Fixed Rate Mortgages
Mortgages with a fixed interest rate. Your payment for principal and interest will not change for the life of the loan. Your money payment may change if taxes or insurance rates change.

FHA - The Federal Housing Administration
An agency of the federal government which insures private loans for financing of new and existing housing and for home repairs under government approved programs.

FHLMC (Freddie Mac) Federal Home Loan Mortgage Corporation
An affiliate of the Federal Home Loan Bank, which creates a secondary market in conventional residential loan and FHA and VA loans by purchasing mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.

Foreclosure
A legal term applied to any of the various methods of enforcing payment of the debt by a mortgage, or deed of trust, by taking and selling the mortgaged property, and deprive the mortgager of possession.

Forgery
The fraudulent signing of another's name to an instrument such as a deed, mortgage or check.

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

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

Hazard Insurance
The homeowner's insurance policy.

Heir
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.

Heriditaments
Any and all kinds of estates, interest and rights in real estate that can be inherited.

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

Instrument
A written document.

Judgment
A decree of a court.

Lessee
The tenant holding a leasehold.

Lessor
A landlord, one who gives a leasehold to a lessee.

Lien
A claim by one person on the property of another as a security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor. (See also Special Lien)

Lis Pendens
A legal notice intending to bind third parties of litigation claiming an interest in real estate.

Loan Origination Fees
Money required by the lender to be paid to start the work of approving a mortgage.

Loan policy
Also called a "Mortgage Policy". A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against lost caused by invalidly or unenforceabilty of a lien, or loss of priority of the mortgage or deed of trust.

Metes and Bounds
A land description in which boundaries are described by courses, directions, distances and monuments.

Mortgage
A lien or claim against a property given by the buyer to the lender as a security for money borrowed. Under government - issued or loan - guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.

Mortgage Commitment
A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Mortgage Note
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an undebtedness, and states the manner in which it shall be paid. The note states the actual amount of debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

Mortgagee
A designation for the mortgage lender on lands.

Mortgagee Policy
Also called a "Loan Policy". A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.

Mortgagor
A designation for the mortgage borrower on lands.

MIP
Mortgage insurance protection.

Note
A written promise to pay a certain amount of money, at a certain time, or in a certain number of installments. It usually provides for payment of interest and its payments is at times secured by a mortgage.

Owners Policy
A policy of title insurance insuring an owner of real estate against the loss occasioned by defects in, liens against, or unmarketability of the owner's title.

P.O.C.
Paid outside of closing. Sometimes the lender requests this money before settlement. If you pay any charges before the 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.

PMI
Private mortgage insurance.

PMM - 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.

Point
A percentage point. Equal to one percent of the loan amount.

Power of Attorney
An instrument authorizing another to act on one's behalf as his agent or attorney.

Premium
The amount payable for an insurance policy.

Promisory Note
A promise to pay.

Quitclaim Deed
A deed which transfers whatever interest a maker of the deed may have in a particular parcel of land. A quitclaim deed is often given to clean the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. (See also Deed)

Real Property
Land and that which is affixed to it.

Recording
The noting in a public office if the details of a legal document - such as a deed or mortgage - affecting the title to real estate. When such an instrument is properly recorded, it is considered to be a matter of public record. Legally, that means that all subsequent purchasers are deemed to have constrictive knowledge of that information.

Refinancing
The process of the same mortgagor paying off one loan with the proceeds of another loan.

Reissue Rate
A reduced rate of the title insurance premium applicable in cases where the owner of the land has been previously in an owner's policy by the insurer within a certain time.

Riparian Rights
The rights of owners of lands bordering watercourses which relate to the water and its use.

Search
A careful exploration and perusal of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Second Mortgage
A mortgage ranking on priority immediately below a first mortgage.

Special Assessments
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

State Stamps
A state tax in the form of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each state.

Survey
The process of measuring land to determine its size, location and physical description and the resulting drawing or map.

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

Title
The evidence or right a person has to the ownership and possession of land.

Title Insurance
Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property.

Title Insurance Binder or 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 satisfaction of requirements set forth in the commitment or binder.

Title Search
An examination of public records and court decisions to disclose the current facts regarding ownership of real estate.

Trustee
A party who is given legal responsibility to hold in the best interest of or "for the benefit of" another. The trustee in one placed in a position of responsibility for another, a responsibility enforceable in a court of law. (See also Deed of Trust)

Underwriter
An insurance company that issues insurance policies to the public or to another insurer.

VA - The Veterans Administration
They insure mortgages.

Variable Interest Rate
Also called "Flexible Interest Rate". An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.

Warranty
In a broad sense, an agreement or undertaking by a seller to be responsible for present or future losses of the purchaser occasioned by deficiency or defect in the quality, condition or quantity of the thing being sold. In a stricter sense, the provision or provisions in a deed, lease, or other instrument conveying or transferring an estate or interest in real estate under which the seller becomes liable to the purchaser for the defects in or encumbrances on the title. ( See also Title Covenants)

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

Zoning
Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.