Borrower (Mortgagor)
An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.
Title
The document that gives evidence of ownership of a property. It also indicates the rights of ownership and possession of the property.
Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the same property.
Escrow Company
A licensed neutral third party that distributes legal documents and funds on behalf of a buyer and seller.
Escrow Agent
A person with fiduciary responsibility to the buyer and seller, or the borrower and lender, to ensure that the terms of the purchase/sale or loan are carried out.
Title Company
Makes sure that a piece of real estate is legitimate, then issues title insurance for that property which protects both the lender and the owner from lawsuits as a result of title disputes.
Title Insurance
Protects a lender against any title dispute that may arise regarding a particular property.
Lender
Bank that is lending the money.
Deed of Trust & Rider
It records who actually owns the property: e.g. Jane Doe and John Doe, husband and wife as joint tenantsIt records the amount the borrower is borrowing from the bank, also known as the lien amount It records who is lending the money, also known as the lien holderIt records the legal description of the property. We all know the street address to a property - e.g. 123 Springdale Avenue. The legal description is how the county recognizes the property location via the lot boundaries and lot location within the county. Last but not least, it states the rules and regulations to which the new property owner has to abide. Simply amendments to the deed of trust - something the lender wants to add to the deed.
Principal
The amount of debt, not counting interest, left on a loan.
Note
Fancy way of saying "contract".
Interest Rate
What the borrower agrees to pay back on the money that is borrowed from the bank.
Fixed Rate Note
This means the interest rates will not change for the duration of the loan.
Adjustable Rate Mortgage Loans (ARM)
The payment may be low initially because it is based on a schedule that is 30 years long but the rate will change/adjust after "x" years.
Home Equity Line of Credit (HELOC)
Line of credit is a line of credit that is tied to the equity of your house.
Reverse Mortgage
Enables older homeowners (62+) to convert part of their equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment.
Discount Points/Buy Down
Are an up-front fee paid to the lender at the time that you get your loan to lower the interest rate you qualified for. You can literally buy down an interest rate.
Default
Lenders only lend on a house if they have the right to take the house from the borrower if the borrower fails to pay back the loan on the terms that were agreed upon.
Foreclosure
If the borrower has not lived up to the terms of their loan, the bank can foreclose on the house. Meaning, the home can be taken away from the borrower. The bank then owns the house, not the borrower.
Lien
A form of security interest granted over a property to secure the payment of a debt.
Property Tax
Taxes that are due to the county in which the property resides. They are typically due for payment twice a year.
Impound Account/Escrow Account
Savings account for taxes and insurance".
Amortization
Repayment of a loan with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time.
Accrued Interest
Interest earned but not yet paid.
Hazard Insurance
Protects the insured against loss due to fire or other natural disaster in exchange for a premium paid to the insurer
PITI
Principal, Interest, Taxes, and Insurance, the components of a monthly mortgage payment.
FHA Loans
Fixed- or adjustable-rate loans insured by the U.S. Department of Housing and Urban Development.
VA Loans
Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are designed to make housing affordable for eligible U.S. veterans.