Buyer pool
The entire market of prospective home buyers in a specific area or looking for a type of home.
Cap
A limit on the maximum that interest rates can rise on a variable – rate mortgage (ARM) during a specified period and over the life of the loan.
Clear or marketable title
A title that does not have any liens or claims against it that would keep it from being transferred, put the buyer in a position to sue for property rights or be obligated for claims.
Closing / Settlement
The date that the buyer and seller exchange funds and property. The conclusion of the transfer of ownership on a property.
Closing Costs
Costs associated with the transfer of ownership of a property.
Credit Report
A report carried out by a credit reporting agency and used by the lender to determine whether an applicant is eligible for credit.
Deed
The legal document that is used to transfer the title from one owner to another.
Deed of Trust
In some states, the instrument used in place of a mortgage.
Depreciation
The loss of value in real estate (property).
Discount or Discount Points or Points
A single charge imposed by the lender to adjust the interest rate of the loan to the required yield.
Down Payment
The portion of the amount for the purchase of real estate that is given in cash and in advance by the borrower.
Earnest Money or Good Faith Deposit
The deposit made by the person buying a property to a third agency, which is held in escrow until the transaction is completed. (Money deposited by a potential buyer to show serious intent to buy.)
Equity
The amount of ownership that one has in a home. Equity is the sale price minus selling costs and the remaining mortgage principal.
Escrow
An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition; i.e. the deposit of funds or documents with an attorney or escrow until the transaction is completed.
Exclusive right-to-sell contract
A listing contract whereby the real estate broker has sole right to sell, and receives a commission, regardless of who produces the buyer.
First Mortgage (first lien position)
A mortgage having priority over all other liens.
General warranty deed
The type of deed considered to provide the most protection to an owner, because the seller guarantees that he or she is the true owner of the property and that no claim will be brought against the property.
HUD – 1 Settlement Statement
Itemizes the charges to the buyer and the seller, and shows how the money gets paid out.
Judgment Lien
A judgment by the court and placed as a lien against a property.
Listing contract
A contract with the broker or firm you hire to represent you in the sale of your home, according to the terms of the sale that you specify. In exchange for producing a ready, willing and able buyer for you, the agent is paid a commission.
Loan-to-Value Ratio
The relationship between the value of property and the loan amount.
Loss Payee Clause
The clause in an insurance policy indicating who is to be paid in the event of a loss.
Margin
The percentage a lender adds to the index rate to determine the new interest rate.
Maturity
The due date of a note.
Mortgage
A legal document that transfers interest in a property and serves as a security for payment of a debt.
Mortgage Banker
A firm dedicated to making real estate loans.
Mortgage Banking
The packaging of mortgage loans to be sold to a permanent investor.
Mortgage Insurance
Insures the lender against loss caused by the borrower’s failure to make the payments.
Mortgage Note
A written promise to repay a stated amount of money at a stated interest rate over a stated period of time.
Multiple Listing Service (MLS)
A networking system, frequently on computer, in which a number of real estate firms share information about their clients' houses that are for sale.
Offer to purchase/Purchase offer/Earnest money agreement/Contract of purchase/Deposit receipt
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property.
Offer to purchase and acceptance/Contract of sale/sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that outlines all details of the property transaction.
Origination Fee
A fee (points) charged by a lender to cover the cost of the process of making a mortgage loan.
PITI
The acronym for Principal, Interest, Taxes and Insurance, usually the four parts of your monthly mortgage payment
Points
Points: a one-time charge by the lender to increase the yield of the loan: a point is 1 percent of the amount of the mortgage
Prepayment Penalty
A fee charged on some loans if you sell or pay off your mortgage before a specified time.
Principal
The amount of debt
Private Mortgage Insurance (PMI)
See MORTGAGE INSURANCE
Purchase Contract
See AGREEMENT OF SALE
Realtor®
An active member of a local board of realtors. Local boards are affiliated with the National Association of Realtors.
Release of Lien
An instrument that discharges a Lien.
Refinance
Process of paying off one loan with the proceeds from a new loan using the same property as security
RESPA
Real Estate Settlement and Procedures Act. A law that requires the lender to disclose information to the borrower, including a Good Faith Estimate (GFE) of the borrower’s closing costs.
Security Instrument
The mortgage or deed of trust of the property
Subordination
The act of acknowledging that a lien will have a position after a mortgage loan. This is accomplished by recording of Subordination Agreement.
Tax Lien
A lien against a property for unpaid taxes
Term
The period of time over which a loan is paid
Title
Evidence that establishes ownership of a property
Title Insurance Policy
A policy which protects the lender in the event of a loss due to a defect in the Title. The owner’s policy protects the owner in this same way.
Truth-in-Lending (TIL) Disclosure
Outlines the costs of a loan and discloses the APR and other terms of the loan, including the finance charge, the amount financed, payment amount, and the total payments required. The lender is required to present the final version of a TIL disclosure at or prior to the closing meeting.
Trust Deed
An instrument given by the borrower to a third person (the trustee) vesting title to the property in the trustee’s name as security for the borrower’s payment of the mortgage loan
Underwriting
The risk analysis of a borrower’s loan application