Page 38 - English CA Buyer Seller Guide
P. 38
Glossary of Terms
The following is a short glossary of commonly used terms during your escrow transaction.
For a more complete glossary, please visit www.ChicagoTitle.com
Adjustable Rate Mortgage (ARM): A mortgage Conventional Mortgage: A mortgage securing a loan
in which the interest rate is adjusted periodically in made by investors without governmental underwriting,
accordance with a market indicator, to more closely i.e., a loan which is not FHA insured or VA guaranteed.
coincide with the current rates. Also sometimes known
as renegotiable rate mortgage, the variable rate mortgage, Deed: Written instrument which, when properly executed
or the graduated rate mortgage. and delivered, conveys title.
Amortization: Reduction of the principal of a debt in Discount Point: An additional charge made by a lender
regular, periodic installments. at the time a loan is made. Points are measured as a
percent of the loan, with each point equal to one percent.
Annual Percentage Rate (APR): An interest rate
reflecting the cost of a mortgage as a yearly rate. This Earnest Money: A deposit of funds made by a buyer of
rate is likely to be higher than the stated note rate or real estate as evidence of good faith.
advertised rate on the mortgage, because it takes into
account point and other credit cost. The APR allows Easement: A non-possessory right to use all or part of
home buyers to compare different types of mortgages the land owned by another for a specific purpose.
based on the annual cost for each loan.
Equity: The difference between the fair market value and
Assumption of Mortgage: An obligation undertaken by current indebtedness, also referred to as the owner’s
a new purchaser of land to be liable for payment of an interest. The value an owner has in real estate over and
existing note secured by a mortgage. above the obligation against the property.
Caps: Consumer safeguards that limit the amount the Federal Housing Administration Loan (FHA Loan):
interest rate on an adjustable rate mortgage can change at A loan insured by the Federal Housing Administration,
each adjustment or over the life of the loan. open to all qualified home purchasers.
Conditions, Covenants & Restrictions (CC&R’s): A Farmers Home Administration Loan (FMHA Loan):
document that controls the use, requirements and A loan insured by the federal government similar to FHA
restrictions of a property. loan, but usually used for residential properties in rural
areas.
Certificate of Reasonable Value (CRV): An appraisal
issued by the Veterans Administration showing the Federal National Mortgage Association (FNMA):
property’s current market value. Also known as “Fannie Mae.” A U.S. government
sponsored corporation dealing in the purchase of first
Closing (also called “settlement”): The completion of mortgages for the secondary market.
a real estate transfer, where the title passes from seller to
buyer, or a mortgage lien is given to secure debt. Fee Simple Deed: The absolute ownership of a parcel of
land. The highest degree of ownership that a person can
Condominium: A statutory form of real estate development have in real estate, which gives the owner unqualified
of separately- owned units and jointly-owned common ownership and full power disposition.
elements in a multi-unit project.
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The following is a short glossary of commonly used terms during your escrow transaction.
For a more complete glossary, please visit www.ChicagoTitle.com
Adjustable Rate Mortgage (ARM): A mortgage Conventional Mortgage: A mortgage securing a loan
in which the interest rate is adjusted periodically in made by investors without governmental underwriting,
accordance with a market indicator, to more closely i.e., a loan which is not FHA insured or VA guaranteed.
coincide with the current rates. Also sometimes known
as renegotiable rate mortgage, the variable rate mortgage, Deed: Written instrument which, when properly executed
or the graduated rate mortgage. and delivered, conveys title.
Amortization: Reduction of the principal of a debt in Discount Point: An additional charge made by a lender
regular, periodic installments. at the time a loan is made. Points are measured as a
percent of the loan, with each point equal to one percent.
Annual Percentage Rate (APR): An interest rate
reflecting the cost of a mortgage as a yearly rate. This Earnest Money: A deposit of funds made by a buyer of
rate is likely to be higher than the stated note rate or real estate as evidence of good faith.
advertised rate on the mortgage, because it takes into
account point and other credit cost. The APR allows Easement: A non-possessory right to use all or part of
home buyers to compare different types of mortgages the land owned by another for a specific purpose.
based on the annual cost for each loan.
Equity: The difference between the fair market value and
Assumption of Mortgage: An obligation undertaken by current indebtedness, also referred to as the owner’s
a new purchaser of land to be liable for payment of an interest. The value an owner has in real estate over and
existing note secured by a mortgage. above the obligation against the property.
Caps: Consumer safeguards that limit the amount the Federal Housing Administration Loan (FHA Loan):
interest rate on an adjustable rate mortgage can change at A loan insured by the Federal Housing Administration,
each adjustment or over the life of the loan. open to all qualified home purchasers.
Conditions, Covenants & Restrictions (CC&R’s): A Farmers Home Administration Loan (FMHA Loan):
document that controls the use, requirements and A loan insured by the federal government similar to FHA
restrictions of a property. loan, but usually used for residential properties in rural
areas.
Certificate of Reasonable Value (CRV): An appraisal
issued by the Veterans Administration showing the Federal National Mortgage Association (FNMA):
property’s current market value. Also known as “Fannie Mae.” A U.S. government
sponsored corporation dealing in the purchase of first
Closing (also called “settlement”): The completion of mortgages for the secondary market.
a real estate transfer, where the title passes from seller to
buyer, or a mortgage lien is given to secure debt. Fee Simple Deed: The absolute ownership of a parcel of
land. The highest degree of ownership that a person can
Condominium: A statutory form of real estate development have in real estate, which gives the owner unqualified
of separately- owned units and jointly-owned common ownership and full power disposition.
elements in a multi-unit project.
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