Homebuyers & Homeowners

A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance in full and to refuse monthly payments in the event of default under the terms of the mortgage.

A form of compensation a mortgage broker receives from a lender for originating and processing a loan.

A deed that contains covenants and guarantees that affirmatively state that the seller holds clear title to a piece of real estate and has a right to sell it.

A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

See Adjustable-Rate Mortgage (ARM)

In general, giving legal advice, representing individuals in court, or drafting legal documents without a law license would constitute the unauthorized practice of law. A small number of states consider it the unauthorized practice of law for a non-attorney to conduct a real estate closing.

A form of ownership by husband and wife, whereby each owns the entire property. In the event of the death of one, the survivor owns the property without probate.

A form for taking title when two or more people buy property and own it together with either equal or unequal shares. The shares are treated as the individual property of the person holding the share, and when an owner dies, the ownership of the share passes to the owner's estate, not to the other owner/owners.

Tenancy in Survivorship also known as Joint Tenancy is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant.

A person's right or series of rights to or for ownership in real property.

A contractual obligation between a homeowner and/or a lender and the title insurance company, wherein the title insurer, in exchange for a premium payment, provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing.

A review of all recorded documents affecting a specific piece of property to determine the present condition of the title.

State or local tax payable when title passes from one owner to another.

An index based on the actions of US Treasury bills, or on the U.S. Treasury's daily yield curve. There are different indexes for different term treasury bills. Treasury indexes are commonly used as the index for Adjustable Rate Mortgages. For example, a loan might be fixed at 5% for three years, and then will adjust pursuant to a formula that is the one-year U.S. Treasury Index + 2.75%.

A federal law form that discloses the terms and conditions of a mortgage, including charges related to the loan and the annual percentage rate (APR).

A mortgage that has a lien position subordinate to the first mortgage. Second mortgages are often home equity credit lines or home equity loans.

The buying and selling of existing mortgages by investors, usually as part of a "pool" of mortgages.

Represents the interest of the seller in a real estate transaction.

A loan in which interest is calculated, based on the outstanding principal sum, and is not compounded on interest due or the original amount borrowed.

Any loan or mortgage that has lower priority than the first mortgage.

A drawing or map that details the legal boundaries of a property and the location of improvements, easements, rights of way, encroachments, and other physical features.

The final stage of a real estate transaction in which documents are signed and executed. Depending upon where you live and local customs, funds may be exchanged and title transferred at the time of the closing. In some areas, transfer of title and the exchange of funds takes place subsequent to document signing and execution.

A radioactive gas that has been found to be a cause of cancer. For real estate purposes, especially in the Northern half of the United States, it is relevant in that it can seep into homes. It is important to have a radon test completed before the purchase of your home. If radon is found to be above an acceptable level, there are radon remediation systems available to protect the health of the occupants of the home.

A refinance transaction in an amount that does not exceed the balance due on the loan being refinanced plus any costs associated with the new loan transaction.

A discounted rate of title insurance that is offered when the property being insured was previously insured by an existing title insurance policy. The amount or availability of a discount may vary, based upon the length of time since the issuance of the existing title policy. In refinance transactions, the re-issue rate is often referred to as a refinance rate.

A person licensed to negotiate and transact the sale of real estate. Generally, real estate agents cannot work by themselves and must work for a real estate broker.

A person licensed to negotiate and transact the sale of real estate. In general, a broker can work independently, and they are often perceived to be more experienced and better trained than agents.

Land and any improvements permanently affixed to it, such as buildings.

A real estate agent, broker, or an associate that is an active member of the National Association of Realtors.

The filing of a document with a government agency that becomes part of the permanent records of the registrar's office.

Paying off an existing loan with the proceeds from a new loan, and using the same property as collateral.

The public official who keeps records of transactions that affect real property in the area. Where documents are recorded varies according to local rules and can include town clerk's offices, county clerk's offices, and other locations.

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease a property before he or she offers it for sale or lease to others. Can also require that the person holding the right of first refusal be given the opportunity to match any offers made to buy or lease the property.

The right of a borrower to cancel a loan transaction within three business days of signing the closing documents.

A deed intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.

The date when a new, monthly payment amount takes effect on an adjustable-rate mortgage.

Interest charged or accrued daily.

A limit on the amount that minimum payments can increase or decrease during any one adjustment period when the interest rate and minimum payment for an adjustable-rate mortgage fluctuate independently. This can lead to negative amortization when the monthly interest amount exceeds the payment amount.

For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one rate adjustment.

A type of ownership where individuals own the building or unit they live in, but common areas are owned jointly with the other members of the development or association.

One percent of the amount of a mortgage. Paying a point at closing can lower the interest rate you pay for a mortgage.

A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

A written document provided by a lender that provides the borrower with a guideline regarding the type and amount of mortgage he or she can obtain. This is often more formal than a pre-qualification as it may require validation through written documentation and other methods.

A written document provided to potential borrowers that gives a general understanding of the amount and type of mortgage he/she can will qualify for. In general, a pre-qualification is considered to be less formal than a pre-approval (see above) as it is often provided based on verbal information provided by the potential borrower with little or no documentation.

Interest that is paid for the period of time between the closing date and one month before the first mortgage payment date. The date that you close will impact the amount of the prepaid interest you must pay at closing and the total funds you will be required to bring to closing.

A fee that may be charged to a borrower who pays off all or a portion of a loan before the expiration of a time period that is designated either in the loan note or in a rider. This penalty is often waived or reduced in the event that the loan is being paid off as the result of a sale of the property.

The interest rate that banks charge to their preferred customers. Often is used as the index for home equity lines of credit.

The amount borrowed or amount remaining to be paid on a loan.

The original amount of your mortgage or the amount outstanding on your mortgage excluding interest, late fees, penalties, or other charges.

Insurance paid for by borrowers that protects lenders from loss if a borrower defaults. Most lenders generally require PMI when the borrower obtains a loan that is greater than 80% of the mortgaged property's value.

A written promise to repay a specified amount over a specified period of time, subject to the conditions detailed in the document.

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

The total number of points a borrower pays as part of their mortgage loan.

A title policy that provides coverage up to the purchase price of the property. When compared to a lender's policy, an owner's policy protects owner's equity in the property.

An adjustable rate mortgage that offers the option to pay a minimum payment amount that may be less than the amount of interest that accrues between payments. The unpaid interest is considered deferred interest and is added to the principal balance of the loan.

Generally a fixed interest rate amount that is added to an index to determine the interest rate on an adjustable rate loan.

Generally a fixed interest rate amount that is added to an index to determine the interest rate on an adjustable rate loan.

A lien filed by a contractor for work performed on a property. The time frame for which a mechanic's lien can be filed is generally limited by statute. However, in many jurisdictions, a lien can be filed by a contractor after the transfer of the property. Your EnTitle Direct insurance policy provides protection for property-filed mechanic's liens that are filed after the transfer of title.

The conveyance of an interest in property as security for the repayment of money borrowed.

An offer in writing that states the terms and conditions under which a lender agrees to make a mortgage loan. If a borrower is unable to obtain a mortgage commitment while exercising their best efforts to obtain one, many times they can opt to terminate a real estate transaction if they negotiated a mortgage contingency clause and they notify the seller within the time specified in the contingency.

A mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indexes. Adjustable Rate Mortgages often have fixed rates for a designated period of time and then adjust on a pre-determined schedule in accordance with values of a chosen index. The most common indexes are the rates on 1-year constant-maturity Treasury (CMT) securities, the Cost of Funds Index (COFI), and the London Interbank Offered Rate (LIBOR).

National trade organization for the title insurance industry that provides recommended guidelines and procedures for the title insurance industry. ALTA also produces standardized forms and documents, including title insurance policies that are used in the vast majority of states by title companies.

A table which shows the breakdown of principal and interest payments for each payment over the life of a loan. It also details the gradual decrease of the loan balance over the life of the loan.

A percentage rate that is derived by taking into account the interest rate and one-time loan fees. It is an attempt to standardize borrowing costs for consumers to allow them to compare loan products.

For residential transactions, an appraisal is generally a written document that provides an estimate of the market value of a home that is primarily based upon sales of similar homes located near the subject property.

The valuation placed on property by a taxing authority for purpose of taxation. Often times this value does not correspond to the actual value of the property.

The taxing authority that establishes the value of a property for tax purposes.

A mortgage that does not fully amortize over the term of the note, thus leaving a balance due at maturity. For example, a loan may be amortized as if it would be paid over a 30-year period, but requires that at the end of the fifth year the entire remaining balance must be paid.

The final lump sum payment that is due at the termination of a balloon mortgage.

A deed in which the transferor of title conveys the property without guarantee of title or covenants.

A mortgage in which you make one-half of a mortgage payment every two weeks which results in a total of 13 full mortgage payments during the course of the year. The extra payment leads to accelerated amortization of your mortgage.

In residential real estate transactions, a bridge loan is often defined as a short-term loan secured by the equity in your current home. The proceeds of the loan are used to purchase a new home, and the bridge loan will be paid off when your current home is sold.

A term that is used to describe the condition that a Seller is supposed to leave the property at the time of conveyance to the purchaser. Generally, is interpreted to mean that the premises should be free from debris.

A real estate broker who exclusively represents the buyer's interests in a transaction and whose commission is paid by the buyer rather than the seller.

When a borrower refinances his mortgage at a higher amount than the current loan balance.

A document which states that a dwelling has been inspected and has met all building codes. This document is often required by lenders before they will authorize a loan to close.

The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. Its jurisdiction includes banks, credit unions, securities firms, lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial firms operating in the United States.
 
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–2008.

The chronological listing of transfers of a piece of property from the original owner to the present owner.

The final stage of a real estate transaction in which documents are signed and executed. Depending upon where you live and local customs, funds may be exchanged and title transferred at the time of the closing. In some areas, transfer of title and the exchange of funds takes place subsequent to document signing and execution. Your ENTITLE DIRECT Closing Specialist will be able to assist you in scheduling your closing, and will advise you of the local customs and procedures regarding the transfer of title and exchange of funds

The adjustment at closing for certain items for which the seller has made advanced payment or for which the seller has not paid as of the closing related to his/her ownership of the property prior to closing. Examples include reimbursement to the seller for taxes paid in advance, fuel remaining in fuel tank, or a credit to the buyer for unpaid taxes that the seller will pay from the closing funds. It is important to note that closing adjustments often have a significant impact on the amount of funds the seller will receive or the buyer will be required to bring to closing

The unnecessary level of stress felt by consumers in the time period leading up to and including their home closing or refinancing. This is usually brought on by receiving the HUD-1 Settlement Statement and other documents for the first time at closing. Symptoms include feeling uninformed and writing checks for last-minute surprise closing costs. Recommended Treatment: ENTITLE DIRECT.

Fees and costs that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include appraisal fees, credit report fees, discount points, bank fees, title searches, title insurance, surveys, transfer taxes, deed-recording fees and credit report charges. Your ENTITLEDIRECT Closing Specialist will provide you with an estimated HUD-1 Settlement Statement throughout the closing that will be updated as new information is received. This will help you to prepare for your closing and to alleviate some of the stress related to the closing process.

A Closing Disclosure is a five-page form that provides final details about a mortgage. It includes such information as the loan terms, projected monthly payments, and how much a person will pay in fees and other costs to get a mortgage.
The Closing Disclosure is a new form (October 2015) created by the Consumer Financial Protection Bureau (CFPB).  The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan.

Any additional borrower(s) whose name(s) appear on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have a direct obligation to repay the loan as opposed to a co-signer whose obligation to repay the loan does not arise until the default of the borrower.

An individual who guarantees payment of a loan whose obligation to pay is contingent upon the default of the borrower.

Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Some common areas are: hallways, staircases, parking areas, and recreational facilities.

An individual home unit that is located within a larger building and/or common area in which the unit owner owns the right to the air space within the unit and often the dry wall, and a corporation established at the time the condominium is created owns the land on which the condominium sits and the common areas. Your lender will require information from the Condominium Board of Directors and/or Management Company regarding insurance, common charges, by-laws of the Condominium Association, etc. Your ENTITLE DIRECT Closing Specialist will determine what is required and assist you in obtaining the necessary information for your lender.

An insurance policy that is purchased that will make the borrower's mortgage payments in the event of a disability or pay your mortgage balance upon your death.

A short-term, interim loan for financing the cost of construction that may convert to a longer-term loan after construction is complete. Typically, lender makes payments to the building contractors at periodic intervals as the work progresses.

The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. Its jurisdiction includes banks, credit unions, securities firms, lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial firms operating in the United States.
 
The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the financial crisis of 2007–2008.

Damage or imperfection that cannot be detected during a thorough inspection of the property. Generally, sellers of property can be held liable for latent defects that become known after the transfer of title to property, unless the purchase and sale agreement specifically provides that the seller is not liable for latent defects, or if the seller was unaware of the imperfection or defect at the time of the property transfer.

An event or condition that if not met, will allow a party to a contract to terminate the transaction. For example, home purchase contracts often contain mortgage contingency clauses that allow the purchaser to terminate the contract if they are unable to obtain a mortgage to purchase the property. It is important that any contingency is negotiated carefully to avoid confusion as to when a contingency clause can be exercised.

A written agreement for the purchase/sale, exchange, or other conveyance of real estate between parties.

Refers to home loans other than government loans (VA and FHA).

Sellers are required to provide the buyers of property that was built before 1978 with a lead paint disclosure that details any information the seller may have regarding the existence of lead paint. It is important to test for lead paint and take any remedial measures that may be necessary to protect against exposure to lead paint, as such exposure has been found to be a health risk.

An adjustable rate mortgage that allows the borrower to change the adjustable rate mortgage to a fixed rate mortgage within a specified time period.

A tax imposed on the transfer of real property.

A type of multiple ownership in which the residents of a multi-unit housing complex own shares in a cooperative corporation which grants them the right to occupy a specific unit or apartment. The ownership of the shares is considered personal property, not real property.

A report outlining the credit history of an individual which includes current and previous debts, payment amounts, late payments and past due amounts and other related information, including judgments and liens.

A formal depiction of the dimensions and location of a property; generally included in deeds, leases, sales contracts, and mortgage contracts for real property.

A title policy that is issued in the amount of the borrower's mortgage loan. It protects the lender up to the amount of the outstanding balance of the mortgage if a title claim is made. If you are financing a property with a commercial lender, they will require that you purchase a lender's policy of title insurance.

A formal statement that the buyer intends to purchase the property for a stated price under defined terms. This is generally a preliminary document that will serve as the foundation for a formal contract that will be entered into at a later date.

The legal document used to transfer ownership of property.

An instrument that is used in place of a mortgage to provide security for a loan. Local custom generally dictates if a deed of trust or mortgage is utilized by the lender. A deed of trust involves a third party called a trustee, usually a title insurance company, who acts on behalf of the lender. When the borrower signs a deed of trust, he/she is giving a trustee title to the property, but the borrower holds the rights and privileges to use and live in, or on, the property. The trustee holds the original deed for the property until the borrower repays the loan.

Can include taking a prohibited action, failure to perform a promised task, and failure to make a payment when due.

Failure to make mortgage payments when mortgage payments are due.

An amount of money that is placed in escrow to be applied to the full purchase price at closing. The amount and the timing of the deposit varies greatly based upon local custom.

The percentage of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.

An amount that is offered to the purchaser as part of the purchase price as evidence of good faith.

An interest in another's land that entitles the holder of the easement only to use the land of another in the specified manner.

An improvement/structure that intrudes illegally on another's property.

Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

Add additional coverage to the title insurance policy. Also, in many instances, override express policy provisions that deny coverage for certain types of claims.

The quote you receive from ENTITLE DIRECT for owner's title insurance policies is for an enhanced homeowner's policy which provides additional protection against title-related claims when compared to a standard title insurance owner's policy. Some of the additional coverages provided by an enhanced homeowner's Policy, include, but are not limited to, the following:

Post Policy Forgery and Identity Theft
Building Permit Violations of Previous Owners
Violations of Restrictive Covenants
Inability to Access Property
Zoning Law Violations
Building Permit Violations

An ENTITLE DIRECT homeowner's policy of title insurance also increases in value by 10% each year for the first five years you hold the policy.

The difference between the fair market value of the property and the amount still owed pursuant to any mortgages or liens.

The depositing with an agreed-upon party called the escrow agent of anything pertaining to a real estate transaction, including closing funds and documents, for disbursement and delivery to designated parties by the escrow agent when agreed-upon conditions have been met

In a real estate closing, an escrow account consists of funds held by an escrow agent for disbursement to designated parties only when agreed-upon conditions have been met. Also, lenders often require that you set up an escrow account for the payment of real estate taxes, homeowner's insurance, flood insurance, and private mortgage insurance. An initial amount is collected at closing to establish the account, and additional funds are added to your monthly payment each month to fund the account. It is important to note that the establishment of escrow accounts and the payment of taxes and insurance premiums at closing often have a significant impact on the amount of funds the buyer will be required to bring to closing.

Firms that act as neutral third parties to ensure that all conditions that the buyer, seller, and lender establish in a real estate transaction are met

A written contract that gives a real estate agent or broker the exclusive right to sell.

Often requested by lenders, this policy extends additional protections to lenders, including protections from unrecorded easements, material and labor liens, and the removal of certain policy exceptions required by the lender.

The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.

A Congressionally chartered corporation that purchases residential mortgages in the secondary market.

The level of ownership in real estate that gives the owner unqualified ownership in a property and unlimited power to sell the property.

A mortgage that is insured by the Federal Housing Administration (FHA) that is made available for individuals who generally meet certain guidelines regarding income, and whether or not they are buying a property for the first time.

A mortgage in which the interest rate does not change during the entire term of the loan.

Personal property that becomes real property when attached to real property. It is important to note that unless specifically excluded in a purchase and sale agreement, the buyer will be Entitled to ownership of the fixture as part of the purchase price.

Insurance that compensates for property damage resulting from flooding. It is required by lenders for properties located in federally designated flood areas.

An interest rate that participating banks charge for loans from one bank to another. This is often used as an index for adjustable rate mortgages.

A promise by a lender or other financial institution to make a loan for a specified amount and on specific terms.

A document that must be provided to borrowers by lenders that provides estimates of the costs associated with a mortgage loan. Your ENTITLE DIRECT Closing Specialist will provide you with a draft HUD-1 Settlement Statement that includes the estimated closing costs. While this will only be an estimate, it will prove to be a useful tool as you prepare for your closing, as it will give a better understanding of the amount of funds you may need to bring to closing.

A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that provided funds for government loans (VA and FHA).

The person or entity to whom an interest in real property is conveyed.

The person or entity that conveys real property.

Provides insurance for physical damage to property. It is important to understand what events are excluded from coverage, and if you can obtain insurance for such events at no charge or for an additional premium.

A mortgage loan, usually in second position, that allows the borrower to draw funds against the equity of his home.

An inspection of a prospective home done by a professional, soon after an offer is made, to establish the structural and mechanical integrity of the house. It is important for purchasers to negotiate an inspection contingency in their purchase and sale contract.

An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents. Lenders require proof of homeowners insurance before they will approve a loan for closing. Further, the lender will require that it is listed as a loss payee on the policy.

See Lender's Policy 

A warranty often purchased by homebuyers or included as incentive by sellers or realtors that will cover repairs to certain items, such as appliances, and heating and air conditioning systems.

A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

A standardized closing form required by United States Department of Housing and Urban Development (HUD) for residential closings. The HUD-1 provides detailed information regarding loan closing cost and closing adjustments. It is important that you review this document in advance of closing to determine if the costs you were expecting are consistent with the HUD-1 Statement. The HUD-1 is also useful in determining the amount of funds you will receive or will need to bring to the closing table. Your ENTITLE DIRECT Closing Specialist will provide you with a draft HUD-1 throughout the closing process that will enable you to monitor your closing costs and to prepare for closing.

The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).

A limit on the change in the interest rate of an adjustable rate mortgage for an adjustment period. For example, a mortgage that adjusts each year may allow for a maximum adjustment of two percent at the time of each adjustment.

The highest interest rate that an adjustable rate mortgage can adjust to over the life of the loan.

A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.

A loan that allows the borrower to make payments based upon the amount of interest that accrues each month, plus any required escrow deposits.

Joint Tenancy and Tenancy in Survivorship is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant.

A court-ordered lien on a debtor's property, granted to a creditor to enforce an unpaid debt.

A mortgage loan in an amount that exceeds the limit established by the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). The amount is adjusted periodically and lenders often charge a slightly higher interest rate for jumbo loans.

The Loan estimate form, created by the Consumer Financial Protection Bureau (CFPB), went into effect October 2015.  This three-page form provides important information about your mortgage loan, including the estimated interest rate, monthly payment, and total closing costs. The Loan Estimate also provides  information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future.