carmel valley, house for sale, home buying

Home Buying Terms

Acknowledgment:

A formal declaration

made before an authorized official (usually a notary public) by the person who has executed (signed) a document that his/her own act and deed. In most instances, documents must be acknowledged (notarized) before they can be accepted for recording.

Adjustable Rate Mortgage (ARM)

A mortgage with an interest rate that changes over time in line with movements in the index. ARMs are also referred to as AMLs (adjustable mortgage loans) or VRMs (variable rate mortgages). Adjustment Period: The length of time between interest rate changes on an ARM. For example, a loan with adjustment period of one year is called a one-year ARM, which means that the interest rate can change once a year. Affidavit A sworn statement in writing, made before an authorized official. A.L.T.A. Abbreviation for the American Land Title Association.

Amortization

Repayment of a loan in equal installments of principal and interest, rather than interest-only payments. Annual Percentage Rate (APR) The total finance charges (interest, loan fees, points) expressed as a percentage of the loan amount. Assessments Specific and special taxes (in addition to normal taxes) imposed on real property to pay for public improvements within a specific geographic area.

Assumption of Mortgage

A Buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability. Attorney -In-Fact An agent authorized to act for another under a Power of Attorney. Balloon Payment A lump sum principal payment due at the end of some mortgages or other long-term loans.

Beneficiary

As used in a trust deed, the Lender is designated as the Beneficiary, i.e. obtains the benefit of the security. Cap The limit on how much the interest rate can be adjusted over the life of the mortgage. CC&Rs Covenants, Conditions and Restrictions. A document that controls the use, requirements and restrictions of a property. Certificate of Reasonable Value (CRV) A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.

Conventional Loan

A mortgage loan which is not insured or guaranteed by a governmental agency.

Closing Statement

The financial disclosure statement that accounts for all of the funds received and disbursed at the closing, including deposits for taxes, hazard insurance, and mortgage insurance.

Condominium

A form of real estate ownership. The owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors, and ceilings) serve as its boundaries. Contingency A condition that must be satisfied before a contract can be completed.  For instance, a sales agreement may be contingent upon the buyer obtaining financing. Conversion to Clause A provision in some ARMs that enables your to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may cost extra.

CRB Certified Residential Broker.

To be certified, a broker must be a member of the National Association of Realtors, have five years’ experience as a licensed broker and have completed five required Residential Division courses.

Deed

Written instrument by which the ownership of land is transferred from one person to another.

Deed of Trust

Written instrument by which title to land is transferred to a trustee as security for a debt or other obligation. Also called Trust Deed. Used in place of mortgages in many states. Deposit Receipt Used when accepting

“Earnest Money” to bind an offer for property

by a prospective purchaser; also includes

terms of a contract.

Due-On-Sale Clause

An acceleration

clause that requires full payment of a

mortgage or deed of trust when the secured

property changes ownership.

Earnest Money The portion of the down

payment delivered to the seller or escrow

agent by the purchaser with written offer as

evidence of good faith. It is deposited into

escrow upon opening of escrow.

Easement A right to use the property of

another for a specified purpose.

Escrow A procedure in which a third party

acts as a stakeholder for both the buyer and

the seller, carrying out both parties’ instructions

and assuming responsibility for handling all of

the paperwork and distribution of funds.

FHA (Federal Housing Administration )

A federal agency, created by the National

Housing Act of 1934, for the purpose of

expanding and strengthening home ownership

by making private mortgage financing possible

on a long-term, low-down payment basis. FHA

include a mortgage insurance program, with

premiums paid by the homeowner, to protect

Lender’s against loss on these higher-risk

loans. Since 1965, FHA has been part of the

newly-created Department of Housing and

Urban Development (HUD).

Title365.com | CALIFORNIA Home BUYERS Guide 26

 

Federal National Mortgage Association (FNMA)

Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.

?

Title365.com | CALIFORNIA Home BUYERS Guide 26

Federal National Mortgage

Association (FNMA) Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.

Title365.com | CALIFORNIA Home BUYERS Guide 26

Federal National Mortgage

Association (FNMA) Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.

Home Buying Terms

?

Acknowledgment A formal declaration

made before an authorized official (usually a

notary public) by the person who has executed

(signed) a document that his/her own act and

deed. In most instances, documents must be

acknowledged (notarized) before they can be

accepted for recording.

?

Adjustable Rate Mortgage (ARM)

A mortgage with an interest rate that

changes over time in line with movements

in the index. ARMs are also referred to as

AMLs (adjustable mortgage loans) or VRMs

(variable rate mortgages).

?

Adjustment Period: The length of time

between interest rate changes on an ARM. For

example, a loan with adjustment period of one

year is called a one-year ARM, which means

that the interest rate can change once a year.

Affidavit A sworn statement in writing,

made before an authorized official.

A.L.T.A. Abbreviation for the American Land

Title Association.

?

Amortization Repayment of a loan in

equal installments of principal and interest,

rather than interest-only payments.

Annual Percentage Rate (APR) The

total finance charges (interest, loan fees, points)

expressed as a percentage of the loan amount.

?

Assessments Specific and special taxes

(in addition to normal taxes) imposed on

real property to pay for public improvements

within a specific geographic area.

Assumption of Mortgage A Buyer’s

agreement to assume the liability under an

existing note that is secured by a mortgage

or deed of trust. The lender must approve the

buyer in order to release the original borrower

(usually the seller) from liability.

Attorney -In-Fact An agent authorized to

act for another under a Power of Attorney.

Balloon Payment A lump sum principal

payment due at the end of some mortgages

or other long-term loans.

Beneficiary As used in a trust deed, the

Lender is designated as the Beneficiary, i.e.

obtains the benefit of the security.

Cap The limit on how much the interest rate

can be adjusted over the life of the mortgage.

CC&Rs Covenants, Conditions and

Restrictions. A document that controls the use,

requirements and restrictions of a property.

Certificate of Reasonable Value

(CRV) A document that establishes the

maximum value and loan amount for a VA

guaranteed mortgage.

Conventional Loan A mortgage loan

which is not insured or guaranteed by a

governmental agency.

Closing Statement The financial

disclosure statement that accounts for all

of the funds received and disbursed at the

closing, including deposits for taxes, hazard

insurance, and mortgage insurance.

Condominium A form of real estate

ownership. The owner receives title to a

particular unit and has a proportionate

interest in certain common areas. The unit

itself is generally a separately owned space

whose interior surfaces (walls, floors, and

ceilings) serve as its boundaries.

Contingency A condition that must be

satisfied before a contract can be completed.

For instance, a sales agreement may be

contingent upon the buyer obtaining financing.

Conversion to Clause A provision in

some ARMs that enables your to change an

ARM to a fixed-rate loan, usually after the

first adjustment period. The new fixed rate is

generally set at the prevailing interest rate for

fixed-rate mortgages. This conversion feature

may cost extra.

CRB Certified Residential Broker. To be

certified, a broker must be a member of the

National Association of Realtors, have five

years’ experience as a licensed broker and

have completed five required Residential

Division courses.

Deed Written instrument by which the

ownership of land is transferred from one

person to another.

Deed of Trust Written instrument by

which title to land is transferred to a trustee

as security for a debt or other obligation.

Also called Trust Deed. Used in place of

mortgages in many states.

Deposit Receipt Used when accepting

“Earnest Money” to bind an offer for property

by a prospective purchaser; also includes

terms of a contract.

Due-On-Sale Clause An acceleration

clause that requires full payment of a

mortgage or deed of trust when the secured

property changes ownership.

Earnest Money The portion of the down

payment delivered to the seller or escrow

agent by the purchaser with written offer as

evidence of good faith. It is deposited into

escrow upon opening of escrow.

Easement A right to use the property of

another for a specified purpose.

Escrow A procedure in which a third party

acts as a stakeholder for both the buyer and

the seller, carrying out both parties’ instructions

and assuming responsibility for handling all of

the paperwork and distribution of funds.

FHA (Federal Housing Administration )

A federal agency, created by the National

Housing Act of 1934, for the purpose of

expanding and strengthening home ownership

by making private mortgage financing possible

on a long-term, low-down payment basis. FHA

include a mortgage insurance program, with

premiums paid by the homeowner, to protect

Lender’s against loss on these higher-risk

loans. Since 1965, FHA has been part of the

newly-created Department of Housing and

Urban Development (HUD).

?

Title365.com | CALIFORNIA Home BUYERS Guide 26

Federal National Mortgage

Association (FNMA) Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.

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Title365.com | CALIFORNIA Home BUYERS Guide 26

Federal National Mortgage

Association (FNMA) Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.

Title365.com | CALIFORNIA Home BUYERS Guide 26

Federal National Mortgage

Association (FNMA) Popularly known as

Fannie Mae. A privately owned corporation

created by Congress to support the

secondary mortgage market. It purchases

and sells residential mortgages insured by

FHA or guaranteed by the VA, as well as

conventional home mortgages.

Fee Simple An estate in which the owner

has unrestricted power to dispose of the

property as he wishes, including leaving by

will or inheritance. It is the greatest interest a

person can have in real estate.

Finance Charge The total cost a borrower

must pay, directly or indirectly, to obtain credit

according to Regulation Z.

Graduate d Payment Mortgage A

residential mortgage with monthly payments

that start at a low level and increase at a

predetermined rate.

Grant A transfer of real property.

Grantee The person to whom a grant is

made.

Grantor The person who makes a grant.

GRI Graduate Realtors Institute. A professional

designation granted to a member of the

National Association of Realtors who has

successfully completed three courses covering

Law, Finance and Principles of Real Estate.

Home Inspection Report A qualified

inspectors report on a properties overall

condition. The report usually includes

an evaluation of both the structure and

mechanical systems.

Home Warranty Plan Protection against

failure of mechanical systems within the

property. Usually includes plumbing, electrical,

heating systems and installed appliances.

Impound Account Funds retained by

a lender to cover such items as taxes and

hazard insurance premiums.

Index A source of interest rates used to

determine changes in an ARMs interest rate

over the term of the loan.

Joint Tenancy An equal undivided

ownership of property by two or more persons.

Upon the death of any owner, the survivors

take the decedents interest in the property.

Lien A legal hold or claim on property as

security for a debt or charge.

Loan Commitment A written promise

to make a loan for a specified amount on

specified terms.

Loan-To-Value Ratio The relationship

between the amount of the mortgage and the

appraised value of the property, expressed as

a percentage of the appraised value.

Margin The number of percentage points the

lender adds to the index rate to calculate the

ARM interest rate at each adjustment.

Mortgage Banker A company or

individual engaged in the business of

originating mortgage loans with its own funds.

Frequently those loans are sold to long-term

investors, with the mortgage banker servicing

the loans for the investor until they are paid

in full.

Mortgage Life Insurance A type of term

life insurance often bought by borrowers. The

coverage decreases as the mortgage balance

declines. If the borrower dies while the policy

is in force, the debt is automatically covered by

insurance proceeds.

Negative Amortization Negative

amortization occurs when monthly payments

fail to cover the interest cost. The interest that

isn’t covered is added to the unpaid balance,

which means that even after several payments

you could owe more than you did at the

beginning of the loan. Negative amortization

can occur when an ARM has a payment cap

that results in monthly payments that aren’t

high enough to cover the interest.

Origination Fee A fee or charge for

work involved in evaluating, preparing, and

submitting a proposed mortgage loan. The fee

is limited to 1 percent for FHA and VA loans.

Personal Property Movable property;

all property which is not real property: e.g.,

furniture, car, clothing.

PITI Principal, interest, taxes and insurance.

Planned Unit Development (PUD) A

zoning designation for property developed at

the same or slightly greater overall density

than conventional development, sometimes

with improvements clustered between open

common areas. Uses may be residential,

commercial or industrial.

Point An amount equal to 1 percent of the

principal amount of the investment or note.

The lender assesses loan discount points at

closing to increase the yield on the mortgage

to a position competitive with other types of

investments.

Prepayment Penalty A fee charged to a

mortgagor who pays a loan before it is due.

Not allowed for FHA or VA loans.

Private Mortgage Insurance (PMI)

Insurance written by a private company

protecting the lender against loss if the

borrower defaults on the mortgage.

Purchase Agreement A written

document in which the purchaser agrees

to buy certain real estate and seller agrees

to sell under stated terms and conditions.

Also called a sales contract, earnest money

contract, or agreement for sale.

Real Property Land and buildings as

opposed to personal property or chattels.

Realtor ® A real estate broker or associate

active in a local real estate board affiliated

with the National Association of Realtors.

Recordation Filing for record in the office

of the county recorder.

Regulation Z The set of rules governing

consumer lending issued by the Federal

Reserve Board of Governors in accordance

with the Consumer Protection Act.

Tenancy in Common A type of joint

ownership of property by two or more

persons with no right of survivorship.

Title Evidence of a persons right or the

extent of his interest in property.

Title Insurance Policy A policy that

protects the purchaser, mortgagee or other

party against losses.

VA Loan A loan that is partially guaranteed

by the Veterans Administration and made by

a private lender.

Veterans Administration (VA) An

independent agency of the federal government

created by the Service Mens Readjustment

Act of 1944 to administer a variety of

benefit programs designated to facilitate the

adjustment of returning veterans to civilian

life. Among the benefit programs is the

Home Loan Guaranty Program designated

to encourage Lenders to offer long-term low

down payment financing to eligible veterans

by guaranteeing the lender against loss on

these higher-risk loans.