Sanford NC
Homes and Real Estate
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Abstract of title A condensed history of a title to a particular piece of real estate. Consists of a summary of the original grant and all subsequent transfers and encumberances affecting the property and a certification by the creator that the history is complete and accurate.

Acceleration clause A section in a mortgage or deed of trust that can be enforced to make the entire note due immediately if the borrower fails to make payments as promised or violates part of the agreement.

Acceptance An offeree's (often the seller's) consent to enter into a contract and be bound by the terms of the offer.

Accrued items Expenses owed but not yet payable. On a closing statement this could include current year taxes or interest for the current month.

Acre A measure of land equal to 43,560 square feet. A 200 foot by 200 foot lot is just under an acre.

Adjustable rate mortgage (ARM) A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.

Ad valorem tax A tax levied according to value, for real estate this is typically called a property tax.

Adverse possession A means of acquiring title to another's land without compensation. Generally they must do this continuously without challenge by the lawful owner for a fixed statutory period in order to acquire title.

Affidavit of title A written statement made under oath by the seller and acknowledged by a notary public in which the seller: identifies themselves and marital status, certifies that since the last title examination no defects have occurred in the title, and certifies that they are in possession of the property.

Amortization The gradual repayment of a mortgage loan by installments.

Annual Percentage Rate (APR) The cost of a mortgage stated as a yearly rate; must be disclosed under the Truth-in-Lending Act.

Appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appreciation An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Appurtenance A right, privilege, or an improvement belonging to and passing with property. Examples include a storage shed to a house, or an easement to land.

Assessed Value The valuation placed on property by an assessor for taxation purposes.

Asset Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others.

Assignment The transfer of a loan from one owner to another.

Assumption of Mortgage The transfer of the seller's existing mortgage to the buyer.

Attorney-In-Fact One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

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Back Ratio or Back-End Ratio The ratio of total monthly debt (mortgage, car loans, credit cards, etc.) to gross monthly income, used by the lender to evaluate an applicant's qualification for a loan. The range varies by lender and by creditworthiness of the buyer, but is typically 32 - 45 percent.

Balloon Mortgage A mortgage that has lconstant monthly payments for a fixed term but that ends in a large lump sum payment.

Bill of Sale A written document that transfers title to property.

Binder A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Bona Fide In good faith, without fraud.

Breach of Contract Violation of any of the terms of an agreement without legal cause. Failure to make payments as agreed is an example of breech of contract.

Bridge Loan A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."

Broker A person who brings parties together and assists in negotiating contracts between them for a commission or fee.

Broker in Charge (BIC) The person legally in charge of and responsible for the actions of agents for a particular real estate firm.

Buffer Zone A strip of land separating land intended for different uses. Commercial development bordering residential property sometimes requires a buffer zone.

Building Code Regulations that control design, construction, and materials used in construction in an attempt to maintain safety and health standards.

Building Permit Written governmental permission for the construction, demolition, or alteration of an improvement in accordance with building codes and zoning ordinances.

Buyer Agency Agreement An agreement where the broker represents the buyer.

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Capital Gain The profit earned from the sale of an asset; may be subject to tax.

Cash Flow The income from an investment determined by subtracting all operating and fixed expenses from the gross income. When expenses exceed income a negative cash flow results. For example, if an investor owns a home with $1000 monthly rent, $100 in operating expenses (water bill, repairs, etc.), and $800 in monthly mortgage, the owner has a $100 positive cash flow.

Caveat Emptor Latin phrase meaning "buyer beware".

Certificate Of Eligibility A document issued by the veteran's administration certifying a veteran's eligibility for a Department of Veterans Affairs (VA) mortgage.

Clear Title A title that is free of liens and which has no legal questions as to ownership of the property.

Closing In typical usage, a meeting where all the paperwork is signed and financial transactions are completed, the deed is prepared, and the ownership of the property changes from the seller to the buyer; also called the settlement.

Closing Costs Closing costs are separated into two categories - "non-recurring" and "pre-paid". Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan, such as real estate transfer tax or a loan origination fee. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance.

Closing Statement See HUD-1 Statement

cloud on title Any conditions revealed by a title search that adversely affect the title to real estate. Usually cannot be removed except by deed, release, or court action.

Collateral As asset pledged to secure a loan; collateral for a mortgage is typically the property itself.

Commission The fee charged by a broker or agent for negotiating a real estate or loan transaction, usually a percentage of the selling price of the property or amount of the loan.

Commitment letter A formal document issued by a lender stating the terms under which the lender agrees to lend money to a homebuyer.

Common Area Those portions of a building, land, and amenities owned by a homeowner's or property owner's association that are used by all of the property owners, who share in the common expenses of their operation and maintenance. Common areas can include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Comparable Sales (Comps) Recent sales of similar properties in nearby areas used to help determine the market value of a property.

Competitive / Comparable Market Analysis (CMA) A comparison of the prices of recently sold properties that are similar to a listing seller's home in terms of location, style, size, condition, and amenities.

Conditional-use Permit Written government permission to allow a use of a property that is inconsistent with existing zoning laws.

Construction Loan A short-term loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Contingency A condition that must be met before a contract is legally binding. Home buyers often include a contingency that specifies that the contract is not binding until the purchaser obtains a financing or a satisfactory home inspection.

Contract An oral or written agreement to do or not to do a something. Failure to follow a contract may have legal consequences.

Conventional Loan / Mortgage A real estate loan or mortgage that is not insured or guaranteed by a government agency, such as the VA or FHA.

Convertible ARM An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.

Conveyance Any document by which the title to real property is transferred. Also used to describe the act of transferring the title.

Credit An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
Alternatively, on a closing statement an amount entered in a person's favor.

Credit History A record of an individual's repayment of debt. Credit histories are reviewed by lenders as one of the criteria in determining credit risk.

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Debit On a closing statement, an amount charged to a person.

Deed The legal document conveying title to a property.

Deed of Trust A written document that grants a trustee, in the event of foreclosure, the full power to sell, mortgage and subdivide the property in question.

Deed Restriction A clause in a Deed that limits the uses of the property. Some examples include limiting types of structures, sizes of structures, minimum lot sizes, and materials which may be used.

Default The failure to meet the legal obligations in a contract; in real estate, failure to pay mortgage payments as scheduled or to comply with other stipulations of the mortgage.

Disclosure A statement made by the buyer about the condition of property being sold and its surrounding area.

Discount Points A term is usually used in only in reference to FHA and VA loans. A "point" is one percent of the loan amount - payment of points usually results in a reduced interest rate.

Down Payment The part of the purchase price thatt the buyer pays in cash and does not finance with a mortgage.

Dual Agency Representation of the buyer and seller in a transaction by the same agency. Requires consent of both parties.

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Earnest Money A deposit made by the potential home buyer to show that he or she is serious about buying the house; typically presented with the offer to purchase.

Easement A right of way giving persons other than the owner access to or over a property. Examples include easements for buried utility lines or access to property with no road frontage.

Eminent Domain The right of the government to take over private property upon payment of its fair market value as determined by law.

Encroachment An improvement that intrudes illegally on another’s property. A fence located over the property line is a common example.

Encumbrance Anything that affects or limits the title to a property, such as mortgages, leins, easements, or restrictions.

Equity Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.

Escrow Something held by a third party to be delivered upon the fulfillment of a condition. For example, earnest money deposit is held in escrow until delivered to the seller at closing.

Eviction The lawful removal of an occupant from real property.

Exclusive-Right-to-Sell-Listing A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

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Fair Housing Act A federal law which prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.

Fair Market Value The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

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

Farmer's Home Administration (FmHA) A federal agency that provides credit assistance to farmers and other individuals residing in rural areas of the U.S.

Federal Deposit Insurance Corporation (FDIC) An independent federal agency that insures deposits in banks.

Federal Housing Administration (FHA) An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is insuring residential mortgages made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

Fee Simple The maximum possible right of ownership for real property, continuing forever.

FHA Mortgage A mortgage that is insured by the Federal Housing Administration (FHA); sometimes referred to as a government loan.

First Mortgage The mortgage that is in first among any loans recorded against a property. Usually determined by the date in which loans are recorded, but there are exceptions.

Fixed-Rate Mortgage A mortgage in which the interest rate is constant during the term of the loan.

Fixture Personal property that becomes real property when attached in a permanent manner to real estate.

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

Foreclosure The legal process by which a borrower in default is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property with the proceeds of the sale being applied to the mortgage.

Freddie Mac (FHLMC) The Federal Home Loan Mortgage Corporation, which is a congressionally chartered, shareholder-owned company. Purchases and sells mortgage loans; a major player in the secondary market, along with Fannie Mae (FNMA).

Front Ratio or Front-End Ratio The ratio of a borrower's monthly housing costs to their gross monthly income, used by lenders to qualify an applicant for a loan. The range varies by lender and by creditworthiness of the buyer, but is typically 28-40%.

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General warranty deed A deed in which the grantor warrants the title against all claims, offering the greatest guarantee of protection of any type of deed, and which is used in most real estate deed transfers of title.

Government Loan / Mortgage A mortgage insured by the Federal Housing Administration (FHA), guaranteed by the Department of Veterans Affairs (VA), or by the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.

Ginnie Mae The Government National Mortgage Association (GNMA), a government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Guarantees privately issued securities backed by pools of mortgages insured by the Federal Housing Administration, the Farmers Home Administration, or the Veterans Administration.

Graduated-Payment Mortgage (GPM) A flexible-payment mortgage with monthly principal and interest payments that increase by a certain amount each year for a certain number of years, and then level off for the remainder of the term.

Grantee The person to whom an interest in real property is conveyed, usually the buyer.

Grantor The person conveying an interest in real property, usually the seller.

Growing-Equity Mortgage (GEM) A fixed-rate loan for which the monthly payments increase over a period of time, with the increased amount being applied to the principal balance, shortening the term of the loan.

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Hazard Insurance Insurance coverage to protect in the event of damage to a property from fire, wind, vandalism, or other hazards.

Home Equity Conversion Mortgage (HECM) Usually referred to as a reverse annuity mortgage, where instead of making payments to a lender, the lender makes payments to the borrower. It enables home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property.

Home Equity Loan / Home Equity Line of Credit A mortgage loan, usually in second position, that allows the borrower to draw cash against the equity of the home, up to a predetermined amount.

Home Inspection A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. An acceptable home inspection is often included as a contingency by the purchaser.

Homeowners' Association 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.

Homeowner's Insurance An insurance policy that combines personal liability insurance and hazard insurance coverage for a property and its contents.

Homeowner's Warranty Insurance often purchased by buyers that covers repairs to certain items, such as heating or air conditioning, if they need repair within the coverage period. Either the buyer or seller can purchase this type of insurance.

HUD-1 Settlement Statement A document that provides an itemized listing of the funds that were paid at closing. Items that appear on the statement include commissions, loan fees, points, pre-paid taxes, and escrow amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD1 because the form is printed by the Department of Housing and Urban Development (HUD). The HUD1 statement is also called the closing or settlement statement.

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Index A published interest rate used by lenders to compare the interest rate for an adjustable-rate mortgage (ARM) with that earned by other investments (e.g., the yield on Treasury bills, interest rate on loans from savings and loans institution, etc.), as a result of which the ARM interest rate is adjusted.

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Joint Tenancy A form of ownership where each party owns the whole property and ownership is not separate. In the event of the death of one party, the survivor(s) owns the property in its entirety.

Judgment A decision or decree made by a court of law.

Judgment Lien A claim against the real property of a debtor, as decreed a court.

Jumbo Loan A loan that exceeds Fannie Mae’s and Freddie Mac’s loan limit of $227,150. Also called a nonconforming loan as opposed to Freddie Mac and Fannie Mae loans which are referred to as conforming loans.

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Lease An agreement between an owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.

Lease Option A lease that gives the tenant the right to purchase the property, either during the lease or at the end.

Lender's Title Insurance An insurance policy covering a lender for the loan amount; the coverage declines in amount as the loan is paid off. Coverage ends when the loan is paid completely; does not cover the owner.

Legal Description A property description, recognized by law, that is complete enough for an independent surveyor to locate and identify it.

Lessee The individual or party who takes property upon a lease - the tenant.

Lessor The individual or party who grants property upon a lease - the landlord.

Liability Insurance Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage. Typically part of a homeowner’s insurance policy.

Lien A legal claim property that must be paid off when the property is sold. A mortgage is considered a lien.

Life Cap For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can change over the term of the mortgage.

Life estate The right to use, occupy and own property, for the life of the individual.

Line of Credit An agreement by a bank or other institution to extend credit up to a certain amount for a certain time to a specified borrower.

Liquidated Damages The compensation predetermined by both parties to a contract to be paid to the injured party, should the other party breach the contract.

Lis Pendens A legal document filed in court indicating that a suit is pending against property located in the county where the notice is recorded.

Listing Agreement A contract by which a broker is employed by the seller to find a buyer for which the broker is paid a commission.

Loan Origination Fee The fee charged a lender to the borrower for setting up a mortgage, usually a percentage of the loan amount.

Loan-to-Value (LTV) The ratio between the amount of the loan and the appraised value or sales price (whichever is lower).

Lock-in An agreement in which the lender guarantees a specific interest rate for a for a specific loan term at a certain cost.

Lock-in Period The time period during which the lender has guaranteed an interest rate to a borrower.

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Manufactured HousingOnce known as 'mobile homes' or 'trailers', manufactured housing is any building which has been constructed off site, then moved onto a piece of real property. Typically has a metal chasis with wheels which may be removed when the home is set in place.

Margin The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.

Market Value The most probable price a property will bring under normal conditions on the open market.

Merged Credit Report A credit report which reports data pulled from two or more of the major credit repositories.

Metes and Bounds A way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to the point of origin.

Mill One tenth of one cent; used to describe tax rates. For example, 78 mils would be $0.078 in tax per dollar of assessed value.

Misrepresentation A statement by one party in a transaction that is incorrect or misleading. MSome misrepresentations are intentional and may constitute fraud. Others, however, are rendered through simple mistakes, oversights or negligence.

Mortgage A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.

Mortgage Banker A financial institution that provides primary and secondary mortgages to home buyers.

Mortgage Broker A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

Mortgage Insurance Premium (MIP) An fee that is often included in mortgage payments that pays for mortgage insurance coverage. Typically required for no or low down payment loans.

Mortgagee The lender.

Mortgagor The one who owes the money!

Mulitple Listing Service (MLS) A marketing service made up of member brokers who agree to share listing information. Use of this service increases exposure of listings. Our office lists our properties with the Sanford, Triangle, and Fayetteville MLS services, increasing exposure of our listings.

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Negative Amortization When the payment made is less than the interest for the period. This causes the balance of the loan to increase. The borrower is deferring the interest payment, which is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

No Cash-out Refinance A refinance that does not put cash in the hand of the borrower. The new balance is caculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a "rate and term refinance."

No-cost Loan Many lenders offer loans at "no cost." Inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than a loan that has costs associated with it.

Non-conforming Use The use of land for purposes contrary to zoning specifications. Often occurs when zoning changes after a property is in use.

Non-liquid Asset Any asset which can not be quickly converted into cash at without losing some of the value.

Note A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Note Rate The interest rate stated on a mortgage note.

No-point Loan Almost all lenders offer loans at "no points." The interest rate on a "no points" loan is approximately a quarter percent higher than on a loan with one point.

Notice of Default A formal written notice to a borrower that a default has occurred and that legal action may be taken.

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Obsolescence The process of an asset diminishing in value due to the development of more desirable alternatives or because of the degradation of its capabilities.

Open Space Any land which has not had any significant buildings or structures erected on it. Most often used to describe desirable neighborhood features like parks.

Original Principal Balance The total amount owed on a mortgage loan at the time of closing. The purchase price minus down payment plus closing costs.

Origination Fee Refers to the total number of points paid by a borrower at closing. Each point is 1% of the loan amount.

Owner Financing A property purchase transaction in which the property seller provides all or part of the financing.

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Periodic Payment Cap For an adjustable-rate mortgage this is a limit on the amount that payments can increase or decrease during any one adjustment period.

Periodic Rate Cap For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.

Personal Property Owned items which are not permanently affixed to the land or home. A plant in a pot would be personal property but a plant planted in the ground would be real property. Real property normally transfers with the land but personal property does not.

PITI This stands for principal, interest, taxes and insurance. If you have an "impounded" loan or "escrow account", then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio.

PITI ReservesA cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD) A coordinated, real estate development where common areas are shared and maintained by a homeowner's association or other entity.

Plat A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.

PointA point is 1 percent of the amount of the mortgage.

Power of Attorney 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.

prepaid item or prepays On a closing statement, an item that has been paid in advance by the seller, such as an insurance payment or property tax, for which he is reimbursed by the buyer.

Pre-approval A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification. Having a pre-approval letter often helps a buyer know that an offer is serious.

Prepayment Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

Prepayment Penalty A fee that may be charged to a borrower who pays off a loan before it is due.

Pre-qualification This usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower. Not as strong an endorsement as a pre-approval.

Prime Rate The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit. Changes in the prime rate do not directly affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.

Principal The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

Principal balance The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges.

Principal, interest, taxes, and insurance see (PITI), above

Private Mortgage Insurance (MI) Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for no or low downpayment loans.

Promissory Note A written promise to repay a specified amount over a specified period of time.

Public Auction A meeting in an announced public location to sell property to the highest bidder. Frequently used to settle estates or sell foreclosed property.

PUD see Planned Unit Development, above.

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

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Qualifying Ratios Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. See front-end ratio and back-end ratio for details.

Quitclaim Deed A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

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Rate Cap See periodic rate cap, above. Canl also establish the lifetime maximum rate on an adjustable loan.

Ready, willing, and Able Buyer One who is prepared to buy property on the seller's terms, has the financial means, and is ready to take the required step to close the sale.

Rate Lock A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time at a specific cost.

Real Estate Agent A person licensed to negotiate and transact the sale of real estate.

Real Estate Settlement Procedures Act (RESPA) A consumer protection law that requires lenders to give borrowers advance notice of closing costs, often called a good faith estimate.

Real Property Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Realtor® A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors (NAR).

Recording The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Refinancing Paying off one loan with the proceeds from a new loan using the same property as security.

Remaining Balance See principal balance.

Remaining Term The amount of time or number of payments left on a loan.

Replacement Cost The construction cost at current prices of a property that is not necessarily an exact copy of the original but serves the same purpose or function.

Restricitve Covenant A clause in a deed that limits the way property may be used. A covenant may prevent placing a manufactured home on a property or may prohibit fences, etc.

Revenue Stamps see transfer tax.

Right of First Refusal A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of Ingress or Egress The right to enter or leave designated premises.

Right of Survivorship In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant. Typically when a husband and wife own property jointly, when one dies the rights to the property transfer to the surviving spouse.

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Sale-leaseback A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Satisfaction of Mortgage a document acknowledging that the mortgage has been paid in full.

Second Mortgage A mortgage that has a lien position subordinate to the first mortgage.

Secondary Market The buying and selling of existing mortgages, usually as part of a "pool" of mortgages.

Secured Loan A loan that is backed by collateral.

Security The property that will be pledged as collateral for a loan.

Servicer An organization that collects principal and interest payments from borrowers and manages borrowers’ escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Servicing The collection of mortgage payments from borrowers and related responsibilities, such as escrow dispursements for taxes, etc. of a loan servicer.

Settlement Statement See HUD1 Settlement Statement

Subdivision A housing development that is created by dividing a tract of land into individual lots for sale or lease.

Subordinate Financing Any mortgage or other lien that has a priority that is lower than that of the first mortgage.

Survey A drawing, plat, or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

Subject Property A term which indicates the property which is being appraised.

Sweat Equity Work done on the construction or rehabilitation of a property by the owner or buyer in the form of labor or services rather than cash.

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Tenancy The right to occupy a building or unit.

Tenancy in Common When there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death, as opposed to joint tenancy.

Third-party Origination A process by which a lender uses another party to originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

Title A legal document evidencing a person's right to or ownership of a property.

Title Company A company that specializes in examining and insuring real estate titles.

Title Insurance Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

Title Search A check of the title records to ensure that the seller is the legal owner of the property and that there are no outstanding liens or other claims.

Transfer of Ownership Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

Transfer Tax Tax payable when title passes from one owner to another.

Trustee A fiduciary who holds or controls property for the benefit of another.

Truth-in-Lending A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

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Unencumbered Property Property which has no outstanding claims or liens against it.

Useful Life The span of time over which a property can be used or can provide benefits to its owner.

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

Variance An exception to municipal zoning regulations granted for a non-conforming use of the land, somtimes for a limited period of time.

Vested Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund.

Veterans Administration (VA) An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.

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Walk-Through Inspection The process of inspecting a property for any damage prior to that property being bought or sold.

Wear and Tear A term used to indicate the normal damage inflicted on a property through every-day use.

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Zero Lot Line A zoning category wherein a building or other fixture may abut the property line.

Zoning A specific area within a municipality or other jurisdiction which has certain guidelines regarding the use of property in the zone. Typical zoning include single-family, multi-family, industrial, commercial and mixed-use.