House Terms

Question 1

Amortization

Answer 1

A plan that allows you to make regular payments to gradually reduce the principal amount of debt.

Question 2

Appraisal

Answer 2

An estimate on the value of property. Professional appraisers, who are familiar with values in the area, provide this service.

Question 3

Certificate Of Title

Answer 3

A written statement prepared by an attorney who has searched official records to determine clear ownership of the property. A certificate is issued to show that the title is clear.

Question 4

Closing

Answer 4

The date when the title passes from seller to the buyer. The formalities of the sale are settled with the signing of papers and paying of closing costs.

Question 5

Closing Costs

Answer 5

Fees in addition to the price of the property. They include payments for the title search, insurance, appraisal, surveys, attorney, and document preparation. The buyer must pay some fees; the seller pays others, Such fees are paid at the time of closing.

Question 6

Commission

Answer 6

Money paid to the real estate agent by the seller for finding a buyer and completing a sale. A percentage of the sale price is usually paid.

Question 7

Deed

Answer 7

A formal document that transfers the title on property from one owner to another. It contains a detailed legal description of the property.

Question 8

Default

Answer 8

Failure by the buyer to make the payments on the property as agreed. Not meeting other conditions of the contract may result in default also. In such situations the lender may take legal steps to get the money due.

Question 9

Depreciation

Answer 9

The amount that a house has declined in value due to wear and tear or other conditions of the area.

Question 10

Down Payment

Answer 10

Money paid by the buyer to the seller at the time that they sign an agreement to sell.

Question 11

Earnest Money

Answer 11

A deposit given to the seller by the potential buyer to show that he or she is serious about buying the property. This is applied to the down payment when the deal goes through. This money can be lost if the deal does not go through unless other legal provisions have been made.

Question 12

Equity

Answer 12

The amount of property value that totally belongs to the homeowner. This figure is determined by subtracting the unpaid amount of the mortgage loan from the current value of the property. When the loan has been fully paid, the owner has 100 percent equity in the property.

Question 13

Escrow Funds

Answer 13

Money or papers which represent unsettled financial transactions. These are given to a third party to keep until all conditions in a contract are fulfilled.

Question 14

Foreclosure

Answer 14

The taking and selling of mortgaged property in order to obtain payment on the loan when they buyer is in default.

Question 15

Interest

Answer 15

A charge paid for borrowing money

Question 16

Lien

Answer 16

A legal claim placed on property by someone who wants payment for money due him or her by the owner. Liens maybe be placed on property for unpaid taxes, nonpayment of material or labor costs, as well as other claims.

Question 17

Mortgage

Answer 17

A claim against property given to the lender by the buyer as security for the money borrowed. When mortgage payments are not made, the lender has a legal right to claim the property for sale and payment of the loan.

Question 18

Mortgage Note

Answer 18

A written agreement to repay a loan.

Question 19

Mortgagor

Answer 19

The borrower of mortgage funds

Question 20

Plat

Answer 20

A map or chart made by a surveyor to show the exact boundaries of a piece of property

Question 21

Point

Answer 21

Fees charged by the lender in addition to the amount of the mortgage. A point is one percent of the amount of the mortgage loan. For example, a loan of 50,000 would require 500 to be paid for each point

Question 22

Principal

Answer 22

The basic amount of the mortgage loan, not counting interests and any other additional fees. The amount of interest paid is calculated according to the amount of principal.

Question 23

Title

Answer 23

Indicates the right of ownership of property and may refer to the document(s) that establish this right.

Question 24

Title Insurance

Answer 24

Special insurance which usually protects lender against loss of their interests in property due to unforeseen occurrences that might be traced to legal flaws in previous ownerships. An owner can protect his interest by purchasing separate coverage

Question 25

Title Search

Answer 25

A check of legal records to make sure you are buying the house from legal owner and that there are no liens, overdue special assessments, or other outstanding claims against the property.