Town Title

Frequently Used Terms

Abstract of Title
A condensed history or summary of all transactions affecting a particular tract of land.

Adjustable Rate Mortgages
Mortgages with an interest rate that may change up or down depending on an indicator. These are usually based something like the current Treasury bill rate.

A sworn statement in writing.

To reduce a debt by means of regular periodic payments that include amounts applicable to both principal and interest.

APR – Annual Percentage Rate
Annual Percentage Rate, a measure of the cost of the credit that must be reported by lenders under Truth in Lending regulations. APR takes into account the interest rate and up-front charges paid by borrower. On some mortgages the APR is higher than your actual mortgage rate.

A mortgage that allows a new owner to take over payments. The original borrower could remain liable for the Note.

Balloon Payment
Final installment payment of a promissory note larger than any single preceding installment payment.

A proceeding in U.S. Bankruptcy Court wherein assets of a debtor (unable or unwilling to pay debts) are applied by an officer of the court in satisfaction of creditor claims.

One for whose benefit a trust is created. A lender secured by a deed of trust.

Bona Fide
In good faith.

Certificate of Approval
A Certificate issued by an association once the buyer has completed the application and interview (if applicable) process with the association. The Certificate is attached to and recorded as part of the Warranty Deed.

The Consumer Financial Protection Bureau was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The purpose of the CFPB is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services.

A written document by which the ownership of land is transferred from one person to another. A Warranty Deed is a type of deed used to guarantee clear title to the buyer of the property.

Deposit or Earnest Money
Advance payment of part of the purchase price to bind a contract for property.

Due-on-Sale Clause
A provision in a mortgage or deed of trust that requires the loan to be paid in full if a property is a sold or transferred tract of land.

A right to cross or otherwise use someone else's land for a specified purpose.

The interest or value that an owner has in real estate over and above the debts against it.

(1) A process in which a disinterested third party handles legal documents and funds on behalf of a seller and buyer.
(2) Money that is kept by the lender to ensure that tax and insurance can be paid in full when due. Escrow reserves are collected in advance at closing. Monthly escrows are added to the monthly mortgage payment in addition to the principal and interest amount.

An estoppel is a document completed by an association or management company to show periodic assessment information for the community in which a home is located. It also provides information regarding Special Assessments, Capital Contributions and if there are any violations of the Association rules on the property.

FNMA (Fannie-Mae)
The Federal National Mortgage Association, a federally sponsored private corporation which provides a secondary market for housing mortgages.

Fixed Rate Mortgages
Mortgages with a fixed interest rate. The payment for principal and interest will not change for the life of the loan, but the monthly payment may change if taxes or insurance rates change.

FHA – The Federal Housing Administration
An agency of the federal government that insures private loans for financing of new and existing housing and for home repairs under government approved programs.

FHLMC (Freddie Mac) – Federal Home Loan Mortgage Corporation
An affiliate of the Federal Home Loan Bank that creates a secondary market in conventional residential loan and FHA and VA loans by purchasing mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.

Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage.

A person who acquires an interest in land by deed, grant or other written instrument.

A person who, by a written instrument, transfers to another interest in land.

Hazard insurance
The homeowner’s insurance policy.

One who might inherit or succeed to an interest in lands under the rules of law applicable where an individual dies without leaving a will.

A written document.

Interest Only Payments
A mortgage where only the interest is being paid on a monthly basis.

A decree of a court.

A hold, a claim or charge allowed a creditor upon the lands of a debtor.

Mortgage Insurance Premium

A designation for the mortgage lender on property.

A designation for the mortgage borrower on property.

A signed document containing a written promise to pay a stated sum to a specified lender or person at a specified date. Also called a Promissory Note.

Paid Outside of Closing. A common P.O.C. item is an appraisal fee. Appraisal fees are usually collected from a borrower prior to closing.

Power of Attorney
An instrument authorizing another to act on one’s behalf as his agent or attorney.

Private Mortgage Insurance. PMI protects the lender from the losses that would occur in the case of foreclosure. It’s a monthly fee which is included in the mortgage payment.

PMM – Purchase Money Mortgage
A mortgage given by the seller simultaneously with the purchase of real estate to secure the unpaid balance of the purchase price.

To allocate between seller and buyer their proportionate share of an obligation paid or due.

Quit Claim Deed
This type of deed conveys any possible interest of the grantor with representations of encumbrances on title arising from liens, easements, etc. It is usually used to convey property between family members, spouses, ex-spouses, etc.

Real Property
Land and that which is affixed to it.

Reissue Rate
A reduced rate of the title insurance premium applicable in cases where the owner of the land has been previously insured with an Owner’s Title Insurance Policy. Also referred to as Reissue Credit. This discount can only be given under certain circumstances.

Second Mortgage
A mortgage, the lien of which is subordinate to that of another mortgage.

The process of measuring land to determine its size, location and physical description and the resulting drawing or map.

The evidence or right a person has to the ownership and possession of land.

Title Insurance
Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property.

Title Insurance Binder or Commitment
A report issued by a title insurance company binding or committing the title insurance company to issue the form of policy designated in the commitment or binder upon compliance with and satisfaction of requirements set forth in the commitment or binder.

Title Search
An examination of public records and court decisions to disclose the current facts regarding ownership of real estate.

Tax Service Fee
A Tax Service Fee is a legitimate closing cost that is assessed and collected by a lender to insure that mortgagors pay their property taxes on time. Tax Service Fees exist because lenders want to protect their access to collateral if a borrower defaults on a loan.

Transfer taxes
Money paid to the county and or state when property is sold.

VA (Veterans Administration)
The Veterans Administration insures mortgages. A VA Mortgage is a mortgage that is guaranteed by the Department of Veterans Affairs (VA). Also known as a government mortgage.

A written document properly witnessed, providing for the distribution of property owned by the deceased.