Escrow
Closing a
real estate transaction when all required documents and funds are placed with
a third party for processing and disbursement. This term is also used for the
account in which parties place these funds prior to distribution at closing. Fidelity
Bonds
An insurance bond taken by a business or employer on designated
employees. The bond provides insurance coverage in case of employee theft, fraud
or misrepresentation. Back to top Homeowner’s
Insurance
Real estate insurance protecting against loss caused by
fire, some natural causes, vandalism, etc., depending on the terms of the policy.
Also includes coverage such as personal liability and theft away from home. HUD-1
A document that provides an itemized listing of the funds to be paid, or that
were paid at closing. Items that appear on the statement include real estate commissions,
loan fees, points and initial escrow amounts. Each type of expense goes on a specific
numbered line on the sheet. The totals at the bottom of the HUD-1 statement define
the seller’s net proceeds and the buyer’s net payment at closing.
It is called a HUD-1 because the form is printed by the Department of Housing
and Urban Development (HUD). The HUD-1 statement is also known as the “closing
statement” or “settlement sheet.” Inspection
An investigation and analysis of a property by a qualified property inspector
or engineer. Such inspections are typically optional but highly recommended for
homebuyers. Back to top Judgment
The decision of a court regarding the rights of parties in an action. A judgment
often involves an award, which may be rights to a property or a specific monetary
amount, that if recorded can become a lien on the property. Lender
The person or institution who provides money to a borrower for a limited period
in exchange for full repayment of the original principal loan balance plus loan
costs and interest. Mortgage documents often refer to the lender as the mortgagee
and the borrower as the mortgagor, trustor or beneficiary. Lender’s
Policy
A title insurance policy insuring the lender financing a parcel
of real estate against loss caused by defects in the borrower’s title. Back
to top Lien
A monetary charge imposed on a property, usually arising from some debt or obligation. Loan
Origination Fee
A charge imposed by the lender, payable at closing,
for processing the loan. Mechanic’s
Lien
A lien on real estate that secures the payment of debts owed
to persons who perform labor or services or furnish materials related to the construction
of buildings and improvements on the real estate. Back
to top Mortgage
A conditional
conveyance of property as collateral for a debt; to offer a property as a security
for a loan. With a mortgage loan, the borrower will still own the property; the
mortgage merely gives the lender the right to foreclose and obtain ownership if
the borrower defaults on the loan. In some states, the term “deed of trust”
is used to refer to the mortgage. Owner’s
Policy
A title insurance policy insuring an owner of real estate
against loss caused by defects or unmarketability of the owner’s title. Points
(Also called “Discount Points”) A unit of measure for charges on loans;
one point is 1 (one) percent of the loan amount. For example, if the borrower
is assessed a two-point discount fee on a $150,000 loan, that borrower must pay
$3,000 ($150,000 x 2.00 percent) as the discount fee. Often, paying points up-front
relates to a lower interest rate on a loan. Back
to top Private Mortgage Insurance (PMI)
Required on virtually all conventional loans with less than 20 percent down payment.
The premiums for PMI are included in your mortgage payment, and protect the lender
should you default on the loan. On Federal Housing Authority (FHA) loans, you
will pay a MIP (Mortgage Insurance Premium) which accomplishes the same purpose. Property
Tax
(Also called “Real Estate Tax.”) Property taxes are
government assessments on real estate property. With mortgage financing, the local,
county or state tax assessment on real estate property is considered part of the
monthly housing obligation and typically collected and set aside by the lender
in an escrow account for payment to the appropriate government entity at the required
time. REALTOR®
A real estate
agent, broker or an associate who holds active membership in a local real estate
board that is affiliated with the National Association of REALTORS®. Registry
of Deeds
The records of land title documents kept by the County Recorder
or Recorder of Deeds. These are public information, but may require assistance
of an employee to locate. Back to top Sales
Agent
Any person employed by or on behalf of an agency to perform
real estate brokerage services and licensed by the commission as a sales agent. Settlement
(Also called “Closing.”) The completion of a real estate transfer,
where the title passes from seller to buyer, or a mortgage lien is given to secure
debt undertaken to purchase the home. Settlement
Agent
(Also called a “closing agent,” “closer”
or “escrow officer.”) The person responsible for facilitating a closing.
The settlement agent is usually either an attorney or a representative of the
title company. Back to top Survey
A drawing or map showing the precise legal boundaries of a property, the location
of improvements, easements, rights of way, encroachments and other physical features. Title
A combination of all the elements that constitute the highest legal right to own,
possess, use, control, enjoy, and dispose of real estate or an inheritable right
or interest therein. Title Insurance
A contract of title insurance under which a title insurance company, in keeping
with the terms of the policy, agrees to indemnify the insured (the homeowner)
against loss arising from claims against the insured interest (the property). Back
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