Adjustable Rate Loan or Adjustable Rate Mortgage (ARM)
A loan with an interest rate that changes during the term of the loan. The payments generally increase or decrease with the interest rate. Rate is based on one of several “index” options.
A required Truth in Lending Act disclosure for consumer loans. It is calculated by starting with the full amount borrowed (principal) and subtracting out the dollar amount of prepaid finance charges (finance charges the borrower is paying in advance).
The process of paying off a debt in installments over a given period of time without a final balloon payment.
Annual Percentage Rate (APR)
An expression of the percentage relationship of the total finance charges to the total amount to be financed, as required under the federal Truth-in-Lending Act.
A fee charged by the lender or broker for the loan application.
An opinion of the value of property resulting from an analysis of facts affecting market value.
A mortgage loan which can be transferred to another person without a change in the terms of the loan.
A scheduled payment due at the end of a loan term that is substantially greater than the regular monthly payments. This may be a very large payment. It is designed to occur when the regular payments do not pay off all interest and principal owing (not fully amortizing) on the loan over the term of the loan.
Bill of Sale
An instrument by which title personal property is transferred or conveyed.
Bona Fide Purchaser (BFP)
One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.
A person who receives funds in the form of a loan with the obligation to repay the loan in full.
Broker (Real Estate)
A person licensed to act as an agent for another in negotiating the sale or purchase or real property in return for a fee or commission.
Chain of Title
A chronological list of recorded instruments tracing title to land, from the original owner to the present owner.
The process of completing a real estate transaction during which the seller delivers title to the buyer in exchange for payment of the purchase price. Called a “settlement” in some areas.
Expenses, beyond the selling price, such as loan fees, title fees, etc. Paid when documents are executed and/or recorded and the sale is complete.
A summary, in the form of a balance sheet, showing the amounts of debits and credits to which each party to a real estate transaction is entitled upon closing.
Compensation due a real estate broker for acting on behalf of the principal.
This is a fee that may be charged to send documents or payments by courier, messenger or overnight mail service to various parties involved in the transaction.
Documentary Transfer Tax
The tax, based on sales price, less loans which are being assumed, which is charged by the county and/or state on the transfer of real property
The monetary deposit paid by a prospective buyer as evidence of good faith to bind a sale of real estate.
The process in which a disinterested third party holds money and/or documents for delivery to the respective parties in a transaction on performance of established conditions.
A report to determine if the property lies in a flood zone and whether flood insurance is required.
The legal procedure by which a lender holding a mortgage on your house forces a sale of your house to obtain repayment of your loan. Foreclosure proceedings are typically started by a lender when you do not pay your loan on time. It might also be started if you fail to pay property taxes.
Good Faith Estimate
This document lists the estimated fees you will have to pay to get the loan. It also identifies who is expected to provide services and receive fees in connection with your loan, such as credit bureaus, appraisers, and closing agents.