Real Estate Dictionary

Margin

The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.

Marketable Title

Title which can be readily marketed to a reasonably prudent purchaser aware of the facts and their legal meaning concerning liens and encumbrances.

Mechanics Lien

A lien created by statute for the purpose of securing priority of payment for the price of value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.

Mortgage Broker

One who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. Also known as a loan broker.

Mortgage

To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property.

Mortgagee

The party lending the money and receiving the mortgage.

Mortgagor

The party who borrows the money and gives the mortgage.

Mortgage Insurance

Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price. Usually required for loans with a loan ratio of above 80%.

Mortgage Warehousing

A system whereby a mortgage company will hold loans which would ordinarily be sold, in order to sell later at a better price. These are used as collateral security with a bank to borrow new money to loan.

Negative Amortization

A condition created when a loan payment is less than interest alone. Even though payments are made on time, the amount owing increases.

No Cost Loan

All non-recurring closing costs except transfer tax are paid by the lender. ( Not available in purchases in counties where buyer customarily pays all of title and escrow).

Nonconforming Use

A property which does not conform to the zoning of the area.

Note

A written promise to repay a certain sum of money on specified terms.

Open End Mortgage

A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions, usually as to the assets of the mortgage.

Orginination Fee

A fee or charge made by a lender for making a real estate loan. Usually a percentage of the amount loaned.

Package Mortgage

Mortgage covering both real and personal property.

Paper

A mortgage, deed of trust, or land contract, which is given instead of cash.

Partial Release

A release of a portion of property covered by a mortgage.

Perk Test (Percolation)

The test to determine the capability of the soil to absorb liquid, both for construction and septic systems.

Permanent Mortgage

A mortgage on completed construction for a long period of time.

PMI Private Mortgage Insurance

Insurance similar to FHA or VA insurance, insuring part of the first mortgage or deed of trust, enabling a lender to make a conventional loan of a higher percentage of the property value.

Points

A point is equal to one percent of the loan.

Property Tax

Generally, tax levied on both real and personal property with the amount of the tax dependent on the value of the property.

Prorate

To divide in proportionate shares, such as taxes, insurance, rent, or other items which the buyer and seller share as of the time of closing, or other agreed upon time.

Purchase Money Mortgage

A mortgage given by the buyer to the seller as part of the purchase consideration, as opposed to a hard money mortgage.

Real Estate

Land and anything permanently affixed to the land, and those things attached to the building.

Recital

Setting forth in a deed or other writing some explanation for the transaction.

Recourse

The right of the holder of a note secured by a mortgage or deed of trust to look personally to the borrower or endorser for payment.

Refinancing

The repayment of a debt from the proceeds of a new loan using the same property as security.

Reissue Rate

A charge for a title insurance policy if a previous policy on the same property was issued within a specified period. Reissue is less than the original charge.

REIT (Real Estate Investment Trusts)

A method in investing in real estate in a group, with certain tax advantages.

Release

An instrument releasing property from the lien of the mortgage, judgment, etc.

Recision of Contract

Annulling a contract and placing the parties to it in a position as if there had not been a contract.

RESPA (Real Estate Settlement Procedures Act)

A federal statute requiring disclosure of certain costs in the sale of residential improved property which is to be financed by a federally insured lender.

Secondary Financing

A loan secured by a mortgage or trust deed, which lien is junior to another mortgage or trust deed.

Secondary Mortgage

The buying and selling of first mortgages of trust deeds by banks, insurance companies, government agencies, and other mortgagees.

Security

Real or personal property pledged by a borrower, as additional protection for the lender's interest.

Septic System

A sewage system, whereby waste is drained through pipes and a tile field into a septic tank.

Set Back Ordinance

Regulates the distance from the lot line to the point where improvements may be constructed.

Settlement Statement

A statement prepared by broker, escrow, or lender, giving a complete breakdown of costs involved in a real estate sale.

Sheriff's Deed

Deed given at sheriff's sale in foreclosure of mortgage.

Signed Sealed and Delivered

A phrase indicating that everything necessary to convey has been done by the grantor.

Specific Performance

An action to compel the performance of a contract, when money damages for breach would not be satisfactory.

Statutory Lien

An involuntary lien, includes tax liens, judgment liens, mechanic liens, etc.

Substitute of Trustee

A document which is recorded to change the trustee under the deed of trust.

Tax Lien

Lien for nonpayment of taxes.

Tax Sale

Public sale of property at auction by governmental authority, after a period of nonpayment of property taxes.

Testator

One who dies leaving a testament or will.

Tenancy by the Entirety

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

Title

Often used interchangeably with the work ownership. It indicates the accumulation of all rights in property, the owner and others.

Title Insurance

An insurance policy which protects the insured(purchaser and lender) against loss arising from defects in title

Zero Cost Loan

A loan that pays for all non-recurring closing costs, except for transfer tax. Not applicable in a purchase transaction in a county where the buyer customarily pays title and escrow fees.

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