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Abstract of Title: A
summary of the public records relating to the ownership of a particular piece of
land. It represents a short legal
history of an individual piece of property, and traces the ownership of that
property from the time of the first recorded transfer to present.
Acceptance:
Consent to an offer to enter in contract.
Adjustable-rate mortgage (ARM):
A mortgage that allows the interest rate to be changed periodically.
Agency: a legal
relationship in which an owner-principal engages a broker-agent in the sale of
property or a buyer-principal engages a broker-agent in the purchase of
property.
American Society of Home Inspectors (ASHI):
A professional trade association that provides training and education in
home inspections. Members must meet qualification requirements to join.
Amortization: The
gradual repayment of a mortgage by periodic installments.
Annual percentage rate (APR):
The total finance charge (interest, loan fees, points) expressed as a
percentage of the mortgage amount.
Appraisal: an
evaluation of a piece of property to determine its value.
Appreciation:
Increase in value due to any cause.
Asbestos:
A mineral
fiber used in some building materials such as flooring, siding, insulation and
roofing. It is presently banned for
most uses in real property.
Assessed value: The
valuation placed on property by a public tax assessor as the basis of property
taxes.
Assumption of mortgage:
An agreement whereby the buyer assumes responsibility for a mortgage owed
by the Seller; the Seller remains liable to the lender and agrees to release the
Seller from the liability.
Balloon mortgage: A
mortgage where the amount financed is not fully amortized over the period of the
loan. When the loan becomes due, a
large sum or “balloon” payment is required to satisfy the mortgage.
Bridge loan: A
short-term mortgage made until a longer-term loan can be made; it is sometimes
used when a person needs money to build or purchase a home before the present
one has been sold.
Broker: A person
licensed by a state real estate commission to act independently in conducting a
real estate brokerage business.
Although requirements vary from state to state, an individual must usually have
at least one year of experience in the industry and pass an examination to earn
a broker’s license.
Building codes:
State and local laws that regulate the construction of new property and the
rehabilitation of existing property.
Cap: The
maximum amount an interest rate or monthly payment can change, either at
adjustment time or over the life of the mortgage.
Closing: The final
step in the sale and transfer of ownership of a property.
The title is transferred from the seller to the Buyer; the Buyer signs
the mortgage and pay costs of settlement; any money due the Seller and Purchaser
are paid.
Closing costs: Fees and expenses, not including the price of
the home, payable by the Seller and the Buyer at the closing (e.g., brokerage
commissions, title insurance premiums, and inspection, appraisal recording, and
attorney fees).
Closing statement: A financial statement rendered to the Buyer and
Seller at the time of transfer of ownership, giving an account of all funds
received or expended.
Cloud on the title: Any
condition which affects the clear title to real property.
Commercial bank: A
financial institution authorized to provide a variety of financial services,
including consumer and business loans (generally short-term), checking services,
credit cards, and savings accounts.
Comparables:
Properties similar in size and character to the one being bought or sold.
Condominium:
Ownership of a unit only, rather than of the entire building with the land.
Consideration:
Anything of value to induce another to enter into a contract (i.e., money,
services, a promise).
Contingency: A
condition that must be satisfied before a contract is binding.
Contract: An
agreement to do or not to do a certain thing.
Conventional mortgage:
A fixed rate, fixed-term mortgage not insured by the federal government.
Deed: A legal
document conveying title to a property.
Deed (quit claim): A
deed that transfers only that title or right to a property that the holder of
that title has at the time of the transfer.
It does not warrant or guarantee a clear title.
Department of Housing and Urban Development (HUD):
A U.S. government agency established to implement certain federal housing
and community development programs.
Disclosure laws:
state and federal regulations which require Sellers to disclose such conditions
as whether a house is located in a flood plain or whether there are known
defects in or affecting the property.
Earnest money: A
portion of a down payment given to the Seller by a potential Buyer indicating
the Buyer’s intent to complete the purchase of the property.
Easement: A right to
use the land of another.
Encroachment: A
condition that limits the interest in a title to property such as a mortgage,
deed restrictions, easements, unpaid taxes, etc.
Equity: the value
of real estate over and above the liens against it.
It is obtained by subtracting the total liens from the value.
Equity mortgage: A
mortgage based on the borrowers’ equity in their home rather than on their
credit worthiness.
Escrow: The
placement of money or documents with a third party for safekeeping pending the
fulfillment or performance of a specified act or condition.
Federal Housing Administration (FHA):
an agency within the Department of Housing and Urban Development (HUD)
that administers loan guarantee programs and loan insurance programs to make
more housing available.
Graduated-payment mortgage:
a mortgage that starts with low monthly payments and increases at a
predetermined rate.
Fannie-Mae:
Nickname for Federal National Mortgage Association (FNMA), a tax paying
association created by Congress to support the secondary mortgages insured by
FHA or guaranteed by VA, as well as conventional home mortgages.
FHA insured mortgage:
A mortgage under which the Federal Housing Administration insures loans
made, according to its regulation, by approved lenders.
Fixed rate mortgage: A
loan that fixes the interest rate a prescribed rate for the duration of the
loan.
Foreclosure:
Procedure whereby property pledged as security for a debt is sold to pay the
debt in the event of default.
Freddie Mac:
Nickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally
controlled and operated corporation to support the secondary mortgage market.
It purchases and sells residential conventional home mortgages.
Growing-equity mortgage:
A mortgage loan in which the monthly payments increase by a specific
amount each year, with the “overpayments” applied to the principal.
Installment debts:
Long-term debts that usually extend for more than one month.
Investor: the holder
of a mortgage or the permanent lender for whom the mortgage maker services the
loan. Any person or institution that
invests in mortgages.
Lease purchase agreement:
Buyer makes a deposit for the future purchase of a property with the
right to lease the property in the interim.
Lien: A legal
claim against a property that must be paid when the property is sold.
Loan-to-value ratio: the
relationship between the amount of a home mortgage and the total value of the
property. Lenders may limit their
maximum mortgage to 80-95 percent of value.
Lock-in-rate: A
commitment made by lenders on a mortgage loan to “lock-in” a civilian rate
pending mortgage approval. Lock-in
periods vary.
Market value: the
highest price a buyer will pay for a property and the lowest price the seller
will accept.
Mortgage: One type
of document used to make property the security for the payment of a loan.
Mortgage broker: An
individual or company that obtains mortgages for others by finding lending
institutions, insurance companies, or private sources to lend the money; may
also make collections and handle disbursements.
Mortgagee: The lender
of money or the receiver of the mortgage.
Mortgagor: The
borrower of money of the giver of the mortgage document.
Negative amortization:
an increase in the outstanding balance of a mortgage resulting from the
failure of periodic debt service payments to cover required interest charges on
the loan.
Note: A written
promise to pay a certain amount of money.
Origination fee: a
fee or charge for work involved in the evaluation, preparation and submission of
a proposed mortgage loan.
Prepayment penalty: a fee paid to the mortgagee for paying the
mortgage before it becomes due. Also
known as prepayment fee or reinvestment fee.
Private mortgage insurance (PMI):
Insurance issued to a lender by a private company to protect the lender
against loss on a defaulted mortgage loan.
Its use is usually limited to loans with high loan-to-value ratios.
The borrower pays the premiums.
Promissory note:
A written contract containing a promise to pay a definite amount of money
at a definite future time.
Radon:
A colorless, odorless gas formed by the breakdown of uranium in subsoils.
It can enter a house through cracks in the foundation or in water and is
considered to be a health hazard.
REALTOR® and REALTOR®-Associate:
Registered collective membership marks that identify real estate
professionals who are members of the National Association of REALTORS® and who
subscribe to its strict Code of Ethics.
Rent
with option: a contract, which
gives one the right to lease property at a certain sum with the option to
purchase at a future date.
Savings and loan association (S&Ls):
Depository institutions that specialize in originating, servicing, and
holding mortgage loans, primarily on owner-occupied residential property.
Saving
bank:
A financial institution organized to hold individual depositors’ funds in
interest-bearing accounts and to make long-term investments, such as home
mortgage loans.
Second
mortgage/Second deed of trust/Junior mortgage or Junior lien:
An additional loan imposed on a property with a first mortgage. Generally
a higher interest rate and shorter term that a “first” mortgage.
Severalty ownership:
Ownership by one person only.
Sole ownership.
Shared
equity mortgage:
A home loan in which an investor is granted a share of the equity,
thereby allowing the investor to participate in the proceeds from resale.
Survey:
The process by which a parcel of land is measured and its area
ascertained.
Tenancy in common:
Ownership by two or more persons who hold an undivided interest without
right of survivorship. (In the event of death of one owner, his/her share will
pass to his/her heirs.)
Title:
A document that is evidence of ownership.
Title
defect:
An outstanding claim or encumbrance on property that affects
marketability.
Title
insurance:
Protection for lenders and homeowners against financial loss resulting
from legal defects in the title.
Veteran’s Administration (VA):
A government agency that provides services for eligible veterans of the
armed forces. Among other programs,
it guarantees mortgage loans by private lenders to veterans.
Variance:
A special suspension of zoning laws to allow the use of property in a
manner not in accord with existing laws.
Zoning restrictions: Local municipal ordinances that classify property according to specific uses such as single family, residential, commercial, industrial, multi-family, etc.
4215 Carmichael Rd.
Montgomery, AL 36106
Buyers Specialist: Betty Cannon,
334-224-8611
Sellers Specialist: Cheryl Ashurst, 334-224-8222