Vocabulary Flashcards
A type of blended mortgage loan which avoids private mortgage insurance (PMI). It consists of an 80% - 30 year first lien at market rates, a 10% - 15 year second lien at a slightly higher interest rate, and a 10% down payment. Instead of having to come up with a 20% down payment, a buyer is able to avoid PMI with only 10% down. While the interest rate on the second note is a bit higher, the total monthly payment is usually lower than a 90% mortgage with PMI. In addition, the extra interest paid for the second lien is tax deductible, whereas PMI is not. It is also possible to payoff just the second lien, thereby lowering the future monthly payments. Some lenders also offer 75-15-10 and 80-15-5 programs. This type of mortgage also gives the consumer the option of having a non-escrowing loan without a 20% down payment.
80-10-10
A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.
Abstract of Title
The joining, reaching or touching of adjoining land. Abutting pieces of land have a common boundary.
Abutting
A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at one.
Acceleration Clause
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
Acceptance
An addition to land through natural causes.
Accretion
A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by him and that it was his free and voluntary act.
Acknowledgment
A measure of land equal to 43,560 square feet.
Acre
Designates an assessment of taxes against property. Literally, according to value.
Ad Valorem
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Additional Principal Payment
A mortgage loan whose interest rate fluctuates according to the movements of an assigned index or a designated market indicator–such as the weekly average of one-year U.S. Treasury Bills–over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary.
Adjustable Rate Mortgage (ARM)
The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.
Adjusted Basis
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Date
The period that elapses between the adjustment dates for an adjustable-rate mortgage.
Adjustment Period
Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.
Adjustments
A man/woman appointed by a court to settle the estate of a deceased person when there is no will. Contrast with executor/executrix.
Administrator/Administratrix
The right of an occupant of land to acquire title against the real owner, where possession has been actual, continuous, hostile, visible, and distinct for the statutory period. The requirements for adversely possessing property vary between states, but usually includes continuous and open use for a period of five or more years and paying taxes on the property in question.
Adverse Possession
Written statement signed and sword to before some person authorized to take an oath.
Affidavit
The legal relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent: however, a buyer represented by a broker (i.e., buyer as principal is a growing trend. In an agency relationship, the principal delegates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has fiduciary relationship with the principal and owes to that principal the duties of accounting, care, loyalty, and obedience. Also see buyer’s broker.
Agency
A person authorized to act for and under the direction of another person when dealing with third parties. The person who appoints an agent is called the principal. An agent can enter into binding agreements on the principal’s behalf and may even create liability for the principal if the agent causes harm while carrying out his or her duties. See also attorney-in-fact.
Agent
A clause in a mortgage that gives the lender the right to call the entire loan balance due if the property is sold; due-on-sale clause.
Alienation Clause
Non monetary benefits and satisfactions derived from property ownership, such as a pleasant view, pride in home ownership, etc.
Amenities
A modification to an existing contract, mutually agreed to by all parties. Examples might include a change in the purchase price due to a low appraisal, or a change in the closing date.
Amendment
The operation of paying off indebtedness, such as a mortgage, by installments. The conventional amortization periods are 15 or 30 years.
Amortization
A mortgage requiring periodic payments that include both interest and principal. Also see self-amortized loan.
Amortized Mortgage
The amount that is charged annually for having a line of credit available Often charged regardless of whether or not you use the line.
Annual Membership
Federal and state laws prohibiting, among other things, monopolies, monopolistic practices, restraint of trade, and price fixing.
Antitrust Laws
