Real Estate Terms

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ABSTRACT OF TITLE

Back 1

A SUMMARY OF THE PUBLIC RECORDS RELATING TO THE TITLE TO A PARTICULAR PIECE OF LAND

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ADJUSTABLE-RATE MORTGAGE
also referred as
AML (adjustable mortgage loans) VRM (varible-rate mortgage)

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A MORTGAGE WHERE THE INTEREST RATE IS NOT FIXED, BUY CHANGES DURING THE LIFE OF THE LOAN IN LINE WITH MOVEMENTS IN AN INDEX RATE.

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ADJUSTMENT PERIOD

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LENGTH OF TIME FOR WHICH THE INTEREST RATE IS FIXED ON AN ADJUSTABLE RATE MORTGAGE.
TYPICALLY ONCE OR TWICE A YEAR DEPENDING ON THE INDEX.

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AGREEMENT OF SALE
also referred as
PURCHASE, PURCHASE AGREEMENT, OR SALES AGREEMENT

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A CONTRACT IN WHICH THE SELLER AGREES TO SELL AND THE BUYER AGREES TO BUY.

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AMORTIZATION

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A PAYMENT PLAN WHICH ENALBES THE BORROWER TO REDUCE HIS DEBT GRADUALLY THROUGH MONTHLY PAYMENTS OF PRINCIPAL.

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ANNUAL PERCENTAGE RATE
(APR)

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A MEASURE OF THE COST OF CREDIT, EXPRESSED AS A YEARLY RATE.

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APPRAISAL

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AN EXPERT JUDGEMENT OR ESTIMATE OF THE QUALITY OR VALUE OF REAL ESTATE.

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ASSUMABILITY

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WHEN A HOME IS SOLD, THE SELLER MAY BE ABLE TO TRANSFER THE MORTGAGE TO THE NEW BUYER.

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ASSUMPTION OF MORTGAGE

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AS OBLIGATION UNDERTAKEN BY THE PURCHASER OF PROPERTY TO BE PERSONALLY LIABLE FOR PAYMENT OF AN EXISTING MORTGAGE.

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BALLOON MORTGAGE

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A SHORT-TERM FIXED-RATE LOAN WITH SMALLER PAYMENTS FOR A CERTAIN PERIOD OF TIME AND ONE LARGE PAYMENT FOR THE ENTIRE AMOUNT OF THE BALANCE. 3,5,7 TERMS

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BIWEEKLY MORTGAGE

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A MORTGAGE WHICH REQUIRES A PAYMENT FOR HALF THE MONTHLY AMOUNT EVERY TWO WEEKS. LOAN AMORTIZES FASTER THAN A LOAN WITH MONTHLY PAYMENTS.

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BLANKET MORTAGE

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A MORTAGE COVERING AT LEAST TWO PIECES OF REAL ESTATE AS SECURITY FOR THE SAME MORTGAGE

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BRIDGE LOAN

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AN INTERIM LOAN IS MADE TO FINANCE A BUYERS NEW RESIDENCE OF THE BUYER IS UNALBE TO SELL THEIR CURRENT RESIDENCE BUT NEEDS TO CLOSE THE TRANSACTION.

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BUYDOWN

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WITH A BUYDOWN, THE SELLER PAYS AN AMOUNT TO THE LENDER SO THAT THE LENDER CAN GIVE YOU A LOWER RATE AND LOWER PAYMENTS,CAN OCCUR IN ANY TYPE OF MORTGAGE.

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CAPS

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A LIMIT ON HOW MUCH THE INTEREST RATE OR THE MONTHLY PAYMENT CAN CHANGE.

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CAPITAL GAINS

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PROFIT EARNED FROM THE SALE OF REAL ESTATE.

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CERTIFICATE OF OCCUPANCY

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DOCUMENT ISSUED BY LOCAL GOVERNMENTAL AGENCY THAT STATES A PROPERTY MEETS THE LOCAL BUILDING STANDARDS FOR OCCUPANCY.

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CERTIFICATE OF REASONABLE VALUE

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AS APPRAISAL ISSUED BY THE VA APPROVED APPRAISER WHICH ESTABLISHES THE PROPERTY'S CURRENT MARKET VALUE

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CERTIFICATE OF TITLE

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A CERTIFICATE ISSUED BY A TITLE COMPANY OR A WRITTEN OPINION RENDERED BY AN ATTORNEY THAT THE SELLER HAS GOOD MARKETABLE AND INSURABLE TITLE TO THE PROPERTY WHICH HE IS OFFERING FOR SALE.

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CLEAR TITLE

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A TITLE FREE OF CLOUDS AND DISPUTED INTERESTS.

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CLOSING COSTS

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THE EXPENSES WHICH BUYERS AND SELLERS NORMALLY INCUR TO COMPLETE A TRANSACTION IN THE TRANSFER OF OWNERSHIP OF REAL ESTATE.

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CLOSING DAY

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THE DAY ON WHICH THE FORMALITIES OF A REAL ESTATE SALE ARE CONCLUDED.

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CLOUD (ON TITLE)

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AN OUTSTANDING CLAIM OR ENCUMBRANCE WHCIH ADVERSELY AFFECTS THE MARKETABILITY OF TITLE.

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COMMISSION

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MONEY PAID TO A REAL ESTATE AGENT OR BROKER BY THE SELLER AS COMPENSATION FOR FINDING THE BUYER AND COMPLETING THE SALE. USUALLY 6-7 % ON PROPERTY 10% ON LAND

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COMMITMENT

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A WRITTEN AGREEMENT BETWEEN A LENDER AND BORROWER TO LOAN MONEY ON SPECIFIC TERMS OR CONDITIONS.

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CONDOMINIUM

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INDIVIDUAL OWNERSHIP OF A DWELLING UNIT AND AN INDIVIDUAL INTEREST IN THE COMMON AREAS AND FACILITIES WHICH SERVE THE MULTI-UNIT PROJECT.

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CONSTUCTION LOAN

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A SHORT TERM LOAN TO PAY FOR THE CONSTRUCTION OF BUILDINGS OR HOMES.

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CONTINGENCY

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A CONDITION PUT ON AN OFFER TO BUY A HOME.

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CONVENTIONAL MORTGAGE

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A MORTGAGE LOAN NOT INSURED BY HUD OR GUARANTEED BY THE VETERANS' ADMINISTRATION.

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CONVEYANCE

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THE TRANSFER OF TITLE TO THE PROPERTY FROM ONE PARTY TO ANOTHER

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CREDIT REPORT

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A REPORT DOCUMENTING THE HISTORY OF HOW YOU PAID BACK THE COMPANIES YOU HAVE BORROWED MONEY FROM, OR HOW YOU HAVE MET OTHER FINANCIAL OBLIGATIONS

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DEED

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A FORMAL WRITTEN INSTRUMENT BY WHICH TITLE TO REAL PROPERTY IS TRANSFERRED FROM ONE OWNER TO ANOTHER.

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DEED OF TRUST

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A SECURITY INSTRUMENT WHEREBY REAL PROPERTY IS GIVEN AS SECURITY FOR DEBT. IN A DEED OF TRUST THERE ARE THREE PARTIES TO THE INSTRUMENT: BORROWER, TRUSTEE, AND LENDER (OR BENEFICIARY)

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DEFAULT

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FAILURE TO MAKE A MORTAGE PAYMENTS AS AGREED TO IN A COMMITTMENT BASED ON THE TERMS AND AT THE DESIGNATED TIME SET FORTH IN THE MORTGAGE OR DEED OF TRUST.

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DEFERRED INTEREST

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WHEN THE MONTHLY PAYMENTS DO NOT COVER ALL OF THE INTEREST COST, THE UNPAID INTEREST IS DEFERRED BY ADDING IT TO THE LOAN BALANCE.

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DEFICIENCY JUDGEMENT

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PERSONAL CLAIM AGAINST THE DEBTOR WHEN THE SALE OF FORECLOSED PROPERTY DOES NTO YIELD SUFFICIENT PROCEEDS TO PAY OFF THE MORTGAGES.

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DEPRECIATION

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DECLINE IN VALUE OF A HOUSE DUE TO WEAR AND TEAR ADVERSE CHANGES IN THE NEIGHBORHOOD, OR ANY OTHER REASON.

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DISCOUNT

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IN AN ARM WITH AN INITIAL RATE DISCOUNT, THE LENDER GIVES UP A NUMBER OF PERCENTAGE POINTS IN INTEREST TO GIVE YOU A LOWER RATE AND LOWER PAYMENTS FOR PART OF THE MORTGAGE TERM (USUALLY FOR ONE YEAR OR LESS). AFTER THE DISCOUNT PERIOD, THE ARM RATE WILL PROBABLY FO UP DEPENDING ON THE INDEX RATE.

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DOCUMENTARY STAMPS

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A STATE TAX, IN THE FORMS OF STAMPS, REQUIRED ON DEEDS AND MORTGAGES WHN REAL ESTATE TITLE PASSES FROM ONE OWNER TO ANOTHER.

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EARNEST MONEY

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THE DEPOSIT MONEY GIVEN TO THE SELLER OR HIS AGENT BY THE POTENTIAL BUYER UPON THE SIGNING OF THE AGREEMENT OF SALE. SHOWS THAT THE BUYER IS SERIOUS ABOUT BUYING THE PROPERTY

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EASEMENT RIGHTS

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A RIGHT-OF-WAY GRANTED TO A PERSON OR COMPANY AUTHORIZING ACCESS TO OR OVER THE OWNER'S LAND.

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ENCROACHMENT

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AN OBSTRUCTION, BUILDING, OR PART OF A BUILDING THAT INTRUDES BEYOND LEGAL BOUNDARY ONTO NIEGHBORING PRIVATE OR PUBLIC LAND.

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ENCUMBRANCE

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A LEGAL RIGHT OR INTEREST IN LAND THAT AFFECTS A GOOD OR CLEAR TITLE, AND DIMINISHES THE LAND'S VALUE.

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EQUITY

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THE VALUE OF A HOMEOWNER'S UNENCUMBERED INTEREST IN REAL ESTATE.

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ESCROW

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FUNDS PAID BY ONE PARTY TO ANOTHER (THE ESCROW AGENT) TO HOLD UNTIL THE OCCURRENCE OF A SPECIFIED EVENT, AFTER WHICH THE FUNDS ARE RELEASED TO A DESIGNATED INDIVIDUAL.