Arbor Financial Group Marketing Engines, Inc.

Glossary of Terms

Mortgage. Real Estate & Insurance

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ABSTRACT OF JUDGMENT
A summary of the essential provisions of a court judgment which, when recorded in the county recorder's office, creates a lien upon the property of the debtor in that county, both presently owned or after acquired.
ABSTRACT OF TITLE
A history of a property's title record used in some states to prepare the Preliminary or Title Commitment report. An Abstract of Title lists anyone who's ever had a claim to the property, past and present. Some states require mortgage lenders to obtain a complete Abstract of Title. However, most states condense the abstract into a document called either the Preliminary or Title Commitment which lists only current claims to the property.
ACCEPTANCE
Offeree's consent to enter into a contract and be bound by the terms of the offer.
ACCEPTED FEE APPRAISER PANEL
Panel of authorized fee appraisers that complete property appraisals for Data Mortgage Company loans.
ACCESS RIGHTS
Right to come and go.
ACCRUED INTEREST
Interest on a note, bond, etc., which has been earned but not yet paid.
ACKNOWLEDGMENT
Formal declaration, attached to or a part of an instrument, made before a duly authorized officer (usually a notary public) by the person who has executed that instrument, the execution being a free act and deed.
ACRE
Measure of land: [ 1acre = 43,560 square feet ].
ACQUISITION COST/MORTGAGE BASIS
Total cost to the buyer for the real estate securing the mortgage, including the sales price, cost of any required repairs paid for by the buyer, plus Allowable Closing Costs. Total acquisition does not include non-realty items, prepaid expenses (i.e., taxes, assessments, and insurance premiums), or seller concessions.
ACTIVE DUTY
Because of Public Law 97-66, service in the armed forces, for the purpose of Eligibility for Entitlement, does not commence until entry into actual active duty status, regardless of any reserve duty prior to that date OR enlistment under the Delayed Entry Program (considered in the reserves until reporting for active duty).
ADDENDUM
An attachment to a contract, deed or other document that incorporates additional terms of information to the original.
ADDENDUM TO DEED/MORTGAGE
Attachment to Deed Of Trust or Mortgage that governs the loan transaction during the construction phase of an OTC loan. This document is removed from the Deed Of Trust/Mortgage at permanent loan commencement.
ADDENDUM TO NOTE
This addendum governs the loan during the construction phase of an OTC loan, stating the start date and completion date of the construction phase as well as the interest rate and payment parameters of the construction phase.
ADJUSTABLE-RATE MORTGAGE (ARM)
A mortgage loan where the interest rate is not fixed for the entire term of the loan, and can change during the life of the loan in line with movements of an index rate. So, it Is a mortgage in which the interest rate is adjusted periodically based on a pre-selected index. Also sometimes known as the re negotiable rate mortgage, the variable rate mortgage or the Canadian rollover mortgage.
ADJUSTABLE-RATE RIDER
A rider is an addition to a security instrument. The adjustable-rate rider outlines terms and conditions specific to an adjustable-rate loan. It must be recorded along with the security instrument at the county recorder's office. See also SECURITY INSTRUMENT.
ADJUSTMENT DATE
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
ADJUSTMENT PERIOD
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
ADJUSTMENT CAP
The adjustment cap limits the degree of interest rate changes during a specific period, during the life of the loan.
AGREEMENT FOR SALE
Written document in which the purchaser agrees to buy, and the seller agrees to sell, certain real estate (or personal property) under stated terms and conditions. Also, known as sales contract, binder, or earnest money contract.
ALL-INCLUSIVE TRUST DEED (AITD)
Refinancing technique in which a new trust deed is created, which includes the balance due on the existing Note plus the new funds advanced. Also known as a wraparound mortgage.
ALLOWABLE CLOSING COSTS
Nonrecurring closing costs that are customary and reasonable charges common to the area and normally paid for by the borrower.
ALIMONY
Periodic payments made under a divorce decree or a written separation agreement toward the support of a former spouse. Alimony may be taken as a deduction from adjusted gross income by the person who pays it, while the person who receives it must claim it as a taxable income.
ALTA
An acronym for American Land Title Association. Commonly used in reference to a particular type of Title policy. See AMERICAN LAND TITLE ASSOCIATION.
AMENITY
Feature of real property that enhances its attractiveness and increases the occupant or user's satisfaction, although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Manmade amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
AMERICAN LAND TITLE ASSOCIATION (ALTA)
An organization composed of title insurance companies, which has adopted certain insurance policy forms to standardize title insurance coverage on a national basis. See also TITLE INSURANCE.
AMORTIZATION
Payment of debt in regular, periodic installments of principal and interest, as opposed to interest only payments. Amortization is the process of reducing principal and interest in equal installment payments at specific intervals over a set term. For example, a fully amortized loan payment is a portion of which will be applied to pay the accruing interest on the loan with the remainder being applied to principal. Over time, the interest portion decreases as the loan balance decreases and the amount applied to principal increases so that the loan is paid off in the specified term.
ANNUAL PERCENTAGE RATE
The Annual Percentage Rate ("APR") is a measure of the cost of credit, expressed as a yearly rate. The APR takes into account the amount financed, the finance charge, and the amounts and timing of the payments. Under the Truth in Lending Law, the APR must be disclosed and labeled.
ANNUITY
Fixed payments an individual receives for a lifetime or specified number of years at consistent intervals. For example, a customer may receive an annuity from a pension plan or from an investment.
APPLICATION
Form used to record pertinent information about a prospective borrower and the proposed security.  Standard application forms include FNMA 1003.
APPLICATION FOR COMMITMENT FOR INSURANCE
HUD Form 92900, copy 4 of the URLA Addendum.  Whenever HUD refers to the application, they are referring to this form.
APPRAISAL
Opinion as to the monetary value of the property. For example, an appraisal of property provides an idea of how much money the property is worth in the housing market at a given time.
APPRECIATION
An increase in value. Example: An increased value of property due to either a positive improvement of the area or the elimination of negative factors.
APPURTENANCE
Anything-concrete or abstract-attached to the land and part of the property, such as a ban, garage, or an easement.
APR
Acronym for Annual Percentage Rate.
ARM'S LENGTH TRANSACTION
Transaction in which the parties involved are entirely independent of each other, deal with each other as strangers, and have no reason for collusion.
"AS-BUILT" APPRAISAL
Appraisal that is based on the value of the project assuming all construction has been completed.  Includes land value.  The appraiser utilizes the builder's line item budget and plans and specifications to arrive at the appraised value.
AS IS CONDITION
Premises accepted by a buyer or tenant in the condition existing at the time of the sale or lease, including all physical defects.
ASSESSMENT
Value placed on property for the purpose of taxation.  May also refer to a levy against property for a special purpose, such as a sewer assessment.
ASSESSED VALUE
Value placed upon property for property-tax purposes by the tax assessor.
ASSIGNMENT
Transfer of a right or contract from one person to another.
ASSIGNMENT OF RENTS
Written agreement in which the owner of a property transfers possession, but not ownership, of the property to another party (usually a mortgagee or creditor), including the right to collect rents, manage the property, and apply the net income toward delinquent mortgage payments.
ASSUMPTION
An act that occurs when the buyer of a property assumes the seller's debt or obligation without obtaining new financing. This must be approved by the lender and be permitted under the terms of the note that the seller executed with the lender. So, assumption is a method of selling real estate in which the property purchaser agrees to take over the primary liability for payment of an existing mortgage.  The seller remains secondarily liable unless specifically released by the lender.
ATTACHMENT
A legal process whereby the judgment creditor may obtain a lien against the debtor's property. See also LIEN.
ATTORNEY CLOSINGS
This practice is prevalent in states where attorneys' opinions are used in place of title reports. Closings by attorneys follow much the same procedures as escrow closings. The lender delivers to the attorney the settlement statement and the net loan proceeds, as well as instructions for their use.
ATTORNEY IN FACT
A person given the authority to act on behalf of another under a power of attorney.
ATTORNEY'S OPINION OF TITLE (in absence of a title co.)
A statement issued by an attorney in states that don't use a Preliminary Title Report or Title Commitment. All liens recorded against the property are disclosed in this statement. The attorney also advises on items that require completion to gain a clear title insurance policy before recording our security instrument.