Glossary of Terms
Rate Mortgage (ARM) - A mortgage
in which the interest rate varies during the term of the mortgage. Also called
a Variable Rate Mortgage.
- The process of repaying a loan through a series of installment payments.
- An estimate of a property's valuation by an appraiser who is usually presumed
to be expert in this work.
note - A note that usually calls for a final payment greater than that of
the regular periodic payments.
loan - A short-term loan in effect from the end of one loan to the beginning
of another loan, or prior to permanent financing.
mortgage - A mortgage made by a bank or other private institution and not
insured by a governmental agency.
ratio - Percentage of borrowers monthly income.
- An instrument in writing duly executed and delivered, that conveys title to
points - A charge made by the lending institution to the borrower that is
based on the mortgage amount. A point is one percent of the principal mortgage
- The interest or value which the owner has in real estate over and above the
liens against it.
- A written agreement between two or more parties providing that certain instruments
or property be placed with a third party to be delivered to a designated person
upon the fulfillment or performance of some act or condition.
Housing Administration (FHA) mortgage - A mortgage loan made by a lender and
insured by the Federal Housing Administration.
mortgage - The primary mortgage on a property. If a foreclosure occurs, the
first mortgage is repaid before any "junior" mortgages.
Rate Mortgage - A mortgage in which the monthly payments remain the same for
the term of the loan. This loan is self-liquidating.
- A procedure whereby property pledged as security for a debt is sold to pay the
debt in the event of default in payment or terms.
Money" loans - Mortgage loans that are made to borrowers who have significantly
adverse credit. These loans are usually made by private investors or funding companies.
rem - A proceeding against the realty directly; as distinguished from a proceeding
against a person. (Used in taking land from nonpayment of taxes, etc.)
- The amount of money earned by the principal during a specified period of time.
rate - A percentage that when multiplied by the principal determines the amount
of money that the principal earns over a period of time, usually one year.
mortgage - A mortgage of lesser rank than the first mortgage. A mortgage second
in lien to a previous mortgage. Also see "first mortgage".
- A legal right or claim upon a specific property which attaches to the property
until a debt is satisfied.
pendens - A legal document filed in the office of the county clerk giving
notice that an action or proceeding is pending in the courts affecting the title
to the property.
to value (LTV) - The percentage of loan available toward the value of the
- A legal document that establishes real estate as the security for the loan which
finances that real estate. Colloquially, the term "mortgage" is sometimes used
to refer to the loan itself.
commitment - A written offer of a mortgage loan by a lending institution .
Often in the form of a letter, the commitment specifies the terms and conditions
of the mortgage loan being offered to the prospective borrower.
- The institution or person who is the lender or creditor on a mortgage loan.
- The institution or person who is the borrower or debtor on a mortgage loan.
- See "discount points".
clause - A clause in a mortgage enabling the borrower to pay off the mortgage
balance before the end of the mortgage term. This privilege sometimes involves
a prepayment penalty.
- The employer of an agent or broker; the broker's or agent's client.
money mortgage - A mortgage given by a guarantee in part payment of the purchase
price of real estate.
property - Land and generally whatever is erected upon or affixed thereto.
- The act of writing or entering in a book of public record instruments affecting
the title to real property.
- A mortgage which replaces an existing mortgage.
contract - A contract by which the buyer and seller agree to terms of sale.
clause - A clause which permits the placing of a mortgage at a later date
which takes priority over an existing mortgage.
- Evidence that an owner of land is in lawful possession thereto; evidence of
insurance - A policy of insurance which indemnifies the holder for any loss
sustained by reason of defects in the title.
search - An examination of the public records to determine the ownership and
encumbrances affecting real property.
- Free of liens and other encumbrances. Free and clear.
title - Not saleable. A title which has serious defects.
- The person who transfers property by sale. Another word for "seller". Commonly
used in land contract sales.
- To knowingly abandon, relinquish, or surrender a right, benefit, or claim.
- Ratio of income from an investment to the total cost of the investment over
a given period of time.