Mortgage Calculator

	Purchase price: $ Down payment: % Mortgage term: years Interest rate: % Property tax: $ per year Property insurance: $ per year PMI: % First payment date: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Loan amount: $ Loan term: years Interest rate: % First payment date: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Glossary Of Common Lending Terms

A

Abstract of Title – A summary of recorded transactions concerning a property. (An attorney or title insurance company examines an
abstract of title for any title defects that must be cleared before a buyer can purchase clear, marketable, and insurable title.)

Acceleration Clause – Condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if
regular mortgage payments are not made, or for breach of other conditions of the mortgage.

Adjustable Rate Mortgage (ARM) – A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
Sometimes known as a re-negotiable rate mortgage or a variable rate mortgage.

Amortization – A loan repayment schedule.

Annual Percentage Rate (APR) – An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher
than the note rate on the mortgage because it takes into account points and other credit costs.

Appraisal – An opinion of value that is objective, unbiased, and is supported by research and data.

Appraised Value – An opinion of value reached by an appraiser based upon study of pertinent data.

Appreciation – An increase in value due to a greater demand, improved economic conditions, increase in reproduction costs, and
other factors.

Assignment – The transfer of property rights by one person, the assignor, to another, the assignee.

Assumability – A loan feature that allows the loan to be transferred to the purchaser of a home.

B

Balloon Payment – Usually a short-term fixed rate loan that involves small payments for a certain period of time and one large
payment for the remaining amount of the principal at a time specified in the contract.

Bankruptcy – Proclamation by a court of an Individual’s (or organization’s) state of insolvency, or inability to pay debts. Petition may
be brought by an individual or creditors, with a goal of orderly and equitable settlement of obligations.

Beneficiary – (1) One entitled to the benefit of a trust; (2) One who receives profit from an estate; the title of which is vested in a
trustee; (3) the lender on the security of a not and deed of trust.

Borrower (Mortgagor) – An individual who applies for and receives a loan in the form of a mortgage with the intention of repaying
the loan in full.

Broker – An individual who assists in arranging funding or negotiating contracts for a client of behalf of a lender.

Buy-down – The seller or borrower contributes funds to the lender, allowing the lender to give the buyer a lower rate and payment.

C

Caps – Limits on changes in ARM interest rates or monthly payments.

Cash Out – Money received by the borrower out of equity in the subject property. Cash out can be in the form of cash in hand or
funds used to pay non-mortgage debts (i.e. credit cards, auto loans, etc.)

CC&Rs – The covenants, conditions, and restrictions, which are private limitations affection the use of real property. Typically found
in condominium projects and PUD’s.

Ceiling – The maximum allowable interest rate of an adjustable rate mortgage.

Certificate of Occupancy – Document issued by local government agency stating that a property meets the requirement of health
and building codes.

Chain of Title – A history of conveyances and encumbrances affecting the title from the time it passed form government ownership,
or as far back as records are available.

Clear Title – See Marketable title.

Closing (or Settlement) – A meeting between the buyer, seller and lender or their agents where property and funds legally change
hands.

Closing Costs – Fees paid in conjunction with obtaining a mortgage loan including origination fees, tax service, mortgage insurance,
prepaid interest, attorney’s fees, escrow fees, title insurance fees and other fees. Costs that are paid on a regular basis after title is
transferred are referred to as “recurring costs.” Examples of recurring costs include principal and interest payments and property
taxes. Costs paid only once at the close of escrow (transfer of title) are referred to as “non-recurring closing costs.

Cloud on Title – An outstanding claim or encumbrance that, if valid, would affect or impair the owners title.

COFI – See Cost of Funds Index.

Collateral – Assets that back a mortgage loan (real property in this case of a mortgage loan).

Co-Mortgagor – One who signs a mortgage contract with another party or parties and is thereby jointly obligate to repay the loan.
Generally a co-mortgagor provides some assistance in meeting the requirement s of the loan and receives a share of ownership in
the encumbered property.

Combined Loan To Value (CLTV) – The sum of all liens on the property divided by the value (or purchase price, if applicable) of the
property. Example: You have a property with a 1st mortgage for 75,000 and a 2nd mortgage for 20,000 on the title and the value of
the house is 100,000 75,000 + 20,000 = 95,000 divided by 100,000 = CLTV 95%

Comparables – An appraisal term for properties similar to the property being valued and which may be utilized in the sales
comparisons analysis.

Compensating Factors – Positive factors that work to offset any weaknesses in the credit package. Can include stability in job or
home, low LW, good mortgage payment history, large down payment, good liquid assets, etc. Example: good job stability and good
credit history could offset a high debt ratio.

Condominium – A form of real property ownership in which one owns an individual unit (the space including the interior walls, floors,
and ceilings) and a proportionate interest in certain common areas.

Conventional Loan – A mortgage not insured by the FHA or guaranteed by the VA.

Conversion Clause – A provision in some ARMs that allows changing an ARM to a fixed rate loan, usually after the first adjustment
period.

Convertible ARMs – ARMs with the option of conversion to a fixed loan during a given time period (see “Conversion clause).

Conveyances – The transfer of a deed, lease or mortgage.

Cost of Funds Index (COFI) – An common index used in Adjustable Rate Loans and based on the weighted-average rate paid by a
defined group of savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank District.

Covenants, Conditions and Restrictions (CC&Rs) – A document that defines the use, requirements and restrictions of a property.

Credit Report – A report detailing the credit history of a prospective borrower, used to help determine creditworthiness.

Credit Risk – The possibility that the borrower may default on financial obligations to the investor.

D

Debt-to-Income Ratio – The ratio, expressed as a percentage, which results when a borrower’s monthly payment obligation on long-
term debts id divided by his or her gross monthly income.

Deed – Legal document by which title to a property is transferred from on owner to another. The deed contains a description of the
property, and is signed, witnessed, and delivered to the buyer at closing.

Deed of Trust – Agreement to pledge property as security for a loan, used in may states in place of a mortgage. In such and
arrangement, the borrower transfers legal title to a trustee who holds the property in trust as security for the repayment of the debt.
The deed of trust becomes void if the debt is repaid, but if the borrower defaults on the loan, the trustee may sell the property to pay
the debt.

Default – Failure to meet legal obligations in a contract, including failure to make payments on a loan. A mortgage is generally
considered to be in default when a payment is 30 days past due.

Deferred Interest -Interest added to the balance of a loan when monthly payments are not sufficient to cover it. See negative
amortization

Delinquency – Failure to make required payments on time. Deposit – Cash paid to the seller when a formal sales contract is signed.

Depreciation – Decline in property value.

Discount Points (or Points) – Prepaid interest demanded by lender when loan is made. It is, in essence, a premium paid for the
privilege of borrowing at the stated interest rate. Each point is one percent of the loan amount.

Documentary Stamps – A state, tax in the forms of stamps, required on deeds and mortgages when real estate title passes from one
owner to another.

Down Payment – Money paid for a house from the buyer’s fund at closing. The down payment amount is the difference between the
purchase price and the mortgage amount.
Due-on-Sale Clause – Provision in a mortgage or deed of trust allowing the lender to demand immediate payment of the loan
balance upon sale of the property.

E

Earnest Money – Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure a payment.

Easement – A right, privilege, or interest limited to a specific purpose which one party has in the land of another, such as the right to
cross on parcel to access another.

ECOA – See Equal Credit Opportunity Act.

Effective Interest Rate – The cost of a mortgage expressed as a yearly rate, usually higher than the interest rate on the mortgage,
which includes in the up-front costs of acquiring the loan.

Encroachment – The intrusion of one property upon another.

Encumbrance – A legal right or interest in a property that affects title and lessens the property value. Encumbrances can take the
form of claims, liens, unpaid taxes, etc. These usually must be resolved before a buyer purchase the property.

Equal Credit Opportunity Act (ECOA) – Federal law requiring creditors to make credit equally available without discrimination based
on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity – The percentage of property value held by the owner; the difference between the current market value oaf a property and
the outstanding mortgage balance.

Equity Loan – A loan based on the borrower’s equity in his or her home.

Escrow – Unbiased third party responsible for collecting information and funds, needed to close a loan. In addition, escrow often
handles signing of loan document and hold funds for later disbursement.

Escrow Hold Backs – Money held in escrow account to ensure availability of funds to complete repairs on the subject property after
funding of the loan has occurred. Funds are usually held in an amount equal to 1 ½ times the amount needed to complete repairs.
ALC does not allow escrow holdbacks.

F

Fannie Mae – See Federal national Mortgage Association

Federal Home Loan Bank Board (FHLBB) – Former name for the regulatory and supervisory agency of federally chartered saving
institutions, now called the Office of Thrift Supervision.

Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mack) – Quasi-governmental agency that purchases conventional
mortgages from insured depository institutions and HUD-approved mortgage bankers.

Federal Housing Administration (FHA) – Government agency, division of the Department of the Housing and Urban Development,
which insures residential mortgage loans made by private lenders and stes standars for underwriting mortgage loans.

Federal National Mortgage Association (FNMA, or Fannie Mae) – Corporation created by congress that buys and sell residential
mortgages, providing funds for one in seven mortgages.

Federal Reserve – Central bank of the United States and Major regulatory agency for may commercial banks.

Fee Simple – The most complete form of ownership available on a piece of real estate. Under fee simple ownership, the owner is
entitled to the entire property with unconditional power of disposition during the owner’s life, and upon his death the property
descends to his designated heirs.

FHA Loan – Loan insured the FHA for low to middle income homes, open to all qualified home purchasers.

First Mortgage – A mortgage, which is in first lien position, taking priority over all other liens. In the case of a foreclosure, the first
mortgage will be repaid before any other mortgage.

Fixed Rate – An interest rate that is fixed for the term of the loan.

Fixed Rate Mortgage – A loan with an interest rate that remains unchanged over the term of the loan.

Flood Insurance – A form of hazard insurance required by lenders to cover property damage or loss in fold zones

Floor – The minimum rate of interest payable on a adjustable-rate mortgage.

Forbearance – Grace period given when a lender postpones foreclosure to give the borrower time to catch up on overdue payments.

G

Gift Equity – Equity in a property given to the borrower when the borrower is purchasing a home from a relative. A gift letter is
required and must specify the amount of the gift equity, the relationship of the donor to the recipient, and that no repayment is
required. The purchase contract must reflect the gift equity granted. Gift equity is acceptable from close relative only.

Gift Funds – Money given to a borrower by a close relative as all or part of the down payment on a house. A gift letter is required
and must specify the amount of the gift, the relationship of the donor to the recipient, and that no repayment is required. Gift funds
are acceptable from close relative only.

Good Faith Estimate – Written estimate of costs the borrower must pay at closing, provided by a lender within three days of a loan
application.

Government National Mortgage Association (GNMA, or Ginnie Mae) – Government agency that provides funds for VA and FHA loans.
Graduated Payment Mortgage (GPM) – Mortgage in which initial low payments (with potential negative amortization) increase
regularly for several years and then level off.

Grace Period – Period of time during which a loan payment may be made after its due date without incurring a late penalty.

Gross Income – Total income before taxes or expenses are deducted.

Gross Monthly Income – The total amount earned by the borrower each month.

Guarantee or Guaranty – A promise by one party to pay a debt or perform an obligation contracted by another in the event of that
persons default.

H

Hazard Insurance – A policy that protects the insured against loss due to fire or other natural disaster in exchange for a premium
paid to the insurer.

Highest and Best Use – The utilization of a property for a reasonable and probable use that supports the highest present value. This
use should be legal, physically possible, and financially feasible.

HOA Letter (Homeowners Association Letter) – A letter or form which must be filled out by a representative of the association giving
detailed information on the subject property. This information is used by lenders to determine if the subject property/project meets
their guidelines or if there may be potential risk involved in extending financing secured by a unit in a complex.

Home Equity Loan – A loan secured by the equity in a home and sought for a variety of purposes, including home improvements,
major purchases or expenses, or debt consolidation. A portion or all of the interest paid may be tax-deductible.

Homeowners’ Warranty – A type of insurance that covers repairs to specified parts of a house for a specific period of time.

Housing and Urban Development (HUD) – A U.S. government agency established to implement federal housing and community
development programs; oversees the Federal Housing Administration.

Housing Code – Local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings.

Housing Expense-to-Income Ratio – The ratio, expressed as a percentage, the result of dividing a borrower’s housing expenses by
his/her gross monthly income.

I

Impounds – A trust account established by lenders for the accumulation of funds to meet certain expenses such as taxes, insurance,
and homeowner association fees.

Impound Account – Savings account for accumulating that portion of a borrowers monthly payment designated for future payments of
taxes and insurance. (Required by lenders for certain types of financing.)

Index – A published rate used by lenders to calculate interest adjustments on ARMs (Index + Margin = Interest Rate). Some indexes
are more volatile than others. Common indexes include: 1 year Treasury bills, COFI (cost of Funds Index) and 6-month LIBOR
(London Interbank Offered Rate).

Initial Rate – The rate charged during the first interval of an ARM.

Installment Debt – Debt made with the agreement for goods or services to be repaid in fixed fractional amounts over a specified
period of time that allows for full payment of debt.

Interest – Charge paid for borrowing money.

Interest Rate – The periodic charge, generally expressed as a percentage per annum of the outstanding balance, for use of credit.

Interest Rate Cap – A safeguard built into ARMs to prevent drastic changes in interest rates.
J

Joint Liability – Liability shared among tow or more people, each of whom is liable for the full debt.

Joint Tenancy – The ownership of property by tow or more persons with the survivor taking the share of the deceased.

Jumbo Loan – A mortgage larger that the limits set by the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation (currently 333,700 for a single-family home in most areas).

Junior Lien – Second mortgage lien which is subordinate to the lien in first position.

L

Late Charge – Penalty paid by a borrower when a payment is made after the due date.

Lease Option – A lease that gives the lessee (tenant) the right to purchase the property at an agreed-upon price under certain
conditions. A portion of each monthly rent payment is often credited toward the down payment.

Leasehold/Leased Land – 1. The right of use and occupancy of real property that is subject to terms and conditions set forth in a
lease. 2. An estate or interest in real property held by virtue of a lease that has a specific duration.

Lenders – The bank, mortgagecompany, or mortgage broker offering the loan.

LIBOR (London Interbank Offered Rate) – The interest rate charged among banks for short-term Eurodollar loans, and a common
index for ARMs.

Lien – A claim by one person on the property of another for payment of a debt.

Life Estate – An interest in real property, which is held for the duration of the life of some certain person; it may be limited by the life
of the person holding it or by the life of some other person.

LIS Pendens – A notice recorded on a property giving constructive notice of legal action involving that property.

Loan Application – Document required by lenders prior to loan approval containing detailed information about the borrower and
property.

Loan Origination Fee – Fee charged by a lender that compensates for the work in evaluating and processing the loan.

Loan Servicing (or Loan Administration) – The collection of mortgage payments from borrowers and related responsibilities (such as
handling escrows for property tax and insurance, foreclosing on defaulted loans and remitting payments to investors).

Loan to Value Ratio (LTV) – The percentage of the property value borrowed. (Loan amount/Property value = LTV)

Lock or Lock In – A lender’s guarantee of an interest rate and related points of a set period of time, usually between loan application
and loan closing. Protects borrower against rate increases during that time.

M

Margin – The number or percentage points added to an index to calculate the interest rate on an ARM at each adjustment.

Marketable Title – A title that is free and clear of liens, clouds, or other defects, which would prevent the sale of the property.

Market Value – The price of a property would bring in a competitive and open market under all conditions requisite to a fair sale.

Mechanic’s Lien – A lien in favor of persons who have performed work or furnished materials for the improvement of the property.

MLS (Multiple Listing Service) – A realtor organization offering compensation to its members for the purpose of marketing real
property under certain terms and conditions via contracts referred to as listing agreements.

Monthly Housing Expense – Total monthly expense of principal, interest, taxes, and insurance.

Mortgagee – An entity that originates and funds, then sells and services mortgage loans.

Mortgage Broker – A person or entity that arranges financing for borrower’s through lenders. Mortgage brokers do not have their
own funds to lend.

Mortgage Insurance – Insurance purchased by a buyer to cover the lenders risk of loss. Mortgage Insurance is generally requi9red
by lenders when the down payment is less than 20 percent of the purchase price.

MIP (Mortgage Insurance Premium) – Insurance purchased by borrower to insure against default on government (FHA or VA) loans.

Mortgage Loan – Legal document obligating a borrower to repay a local at a stated interest rate during a specified period of time.
The agreement is secured by mortgage.

Mortgagor – The borrower or homeowner who borrows on his or her property and gives a mortgage as security.

N

Negative Amortization – Increase in principal balance that occurs when monthly payments are not large enough to pay all interest
due on a loan, usually caused when payment caps prevent sufficient payment increases. Unpaid deferred interest is added to the
loan balance, resulting in the borrower owing more than the original amount of the loan.

Non-Assumption Clause – A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower
without the prior approval of the lender.

Non-dischargeable Debt – Debt, such as taxes, that cannot be forgiven in bankruptcy liquidation.

Non-Occupancy Co-Borrower – A co-borrower that will not be living in subject property, but whose income has been used to qualify
for the loan. Although the co-borrower does not occupy the subject property, he/she is jointly responsible (with the primary
borrower) for repaying the loan.

Non-Recurring Closing Cost (NRCC) – Any one-time fee associated with closing a loan or arranging financing for a property.
Example: Loan origination fee (also called points), processing fee, appraisal fee, credit report fee, tax service fee, escrow fee,
association transfer fee, recording fees, title insurance fees.

Note – Legal document stating the terms of a debt and a promise to repay it.

Notice of Default (NOD) – A document that is recorded and delivered to the borrower when a default has occurred under a deed of
trust for the repayment of a mortgage loan. The NOD typically states that the borrowers have a specified period of time in which to
cure the default before the property will be sold to pay off the lien.

O

Origination Fee – Fee charged by a lender for evaluating and processing the loan.

Owner Financing – A purchase in which the seller provides all or part of the financing.

P

Payment Cap – Limit on the amount by which a borrower’s ARM payments may increase, regardless of rise in interest rates. May
result in negative amortization.
Per Diem Interest – Interest calculated per day. Depending on the day of the month on which closing takes place, borrower pays
interest from the date of closing to the end of the month. The first mortgage payment of a loan is generally due the first of the
following month.

PITI – Abbreviation for Principal, Interest, Taxes and Insurance. The components of a monthly mortgage payment; also called
monthly housing expenses.

Planned Unit Development (PUD) – A subdivision consisting of separately owned lots and areas owned in common by the individual
lot owners.

Points (or Discount Points) – Amount paid to the lender at closing in exchange for a reduction in the interest rate (and therefore
monthly payments) on a loan. One point is equal to one percent of the initial loan balance.

Power of Attorney – Legal document authorizing one person to act on behalf of another.

Prepaid Expenses – Taxes, insurance and assessments paid in advance of due dates, including at closing.

Prepaid Interest – Interest charged to a borrower at closing to cover interest on the loan between closing and the end of the month in
which the loan closes.

Prepayment – A privilege in a mortgage permitting the borrower to make payments or pay off a loan in advance of the loan maturity
date.

Prepayment Penalty – A fee paid to the lending institution for repaying a loan prior to the scheduled maturity date.
Note: Prepayment penalties are not allowed in some states.

Prequalification – The process of determining how much money a prospective home buyer will be eligible to borrow prior to
application for a loan.

Prime Rate – Lowest commercial interest rate charged by a bank on short-term loans to its most credit worthy customers.

Principal – The balance owed on a note, not counting interest.

Private Mortgage Insurance (PMI) – See “Mortgage Insurance.”

Privately Held Note – A promissory note that is held by a seller or other individual who is not a mortgage company or financial
institution.

Processing Fee – The fees associated with the processing and document preparation of the application.

Profit and Loss Statement – Financial statement showing sales, expenses and profit over a period of time.

Property Tax – A government tax based on the market value of a property.

Purchase Agreement – Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

Q

Qualifying Ratio – Comparison of a borrower’s expenses (housing or total debt) to income.

Quitclaim Deed – A deed that conveys only the grantor’s rights or interest in real estate, without stating the nature of the rights and
with no warranties of ownership.

R

Rate & Term – A refinance loan where the only items paid at closing are mortgage and closing cost. No cash in hand is received at
closing.

Rate-Lock – The ability of a borrower to lock in a guaranteed rate for a specific period of time prior to loan approval and
disbursement.

Real Estate Broker – A licensed real estate agent who represents a buyer or seller in a real estate transaction.
Real Estate Settlement Procedures Act (RESPA) – Law requiring lenders to give borrowers advance notice of closing costs.

Real Property – Land and everything that is permanently affixed to it.

Realtor – Real estate professional who is a member or the National Association of Realtors

Recision – The cancellation of a mortgage loan, permitted by law within three days of signing when the loan is not used to purchase
a home.

Reclamation – The right of the person with title to a property to recover it from the debtor in event of a bankruptcy.

Reconveyance – The transfer of property back to the owner when a mortgage is fully repaid.

Recording – The act of entering documents concerning title to a property into the public records.

Recording fees – Money paid to an agent for entering the sale of property into the public records.

Refinancing – The process of paying off one loan with the proceeds from a new loan secured by the same property.

Rent With Option To Buy – See Lease Option

RESPA – See Real Estate Settlement Procedures Act

Revolving Debt – Credit account requiring monthly payments of less than the full amount due. The balance carried forward is
subject to a finance charge. Also, an arrangement whereby credit is extended up to a specified limit and for a specified period of
time with a fee charged for the commitment.
*Note: Also called open-end credit or revolving line of credit. Most credit cards and home equity lines fall into this category.

Right of Rescission – The legal right to void or cancel your mortgage contract in such a way as to treat the contract as if it never
existed. The right of rescission is not applicable to purchase money mortgages or to mortgage on investment properties, but may be
applicable to home equity loans.

Rural Properties – Pertaining to the area outside the larger and moderate-sized cities and surrounding population concentrations.
Generally characterized by farms, ranches, small towns, and unpopulated regions.

S

Sale Agreement – Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

Seasoned Loan – A loan on which several payments have been collected. In most cases, a 12-month payment history is a fully
seasoned loan.

Second Mortgage – A subordinate mortgage made in addition to a first mortgage.

Seller Carry Back – A second mortgage (junior lien) that is a private note held by the seller.

Seller Contributions – Any costs paid by the seller in a purchase transaction

Senior Lien – first mortgage. A mortgage in a senior position to other liens on title.

Servicing (or Loan Administration) – The collection of mortgage payments from borrowers and related responsibilities (such as
handling escrows for property tax and insurance, foreclosing on defaulted loans and remitting payments to investors).

Settlement (or Closing) – Meeting between the buyer, seller and lender or their agents at which property and funds legally change
hands.

Settlement Cost (HUD guide) – Booklet that provides an overview of the lending process, given to consumers after completing their
loan application.

Settlement Sheet – The computation of costs payable at closing which determines the seller’s net proceeds and the buyer’s net
payment.

Simple Interest – Interest computed only on the principal balance.,

Square Foot – A unit of measure utilized by appraisers to determine the size of the property.

Subordination Agreement – An agreement signed by a not holder wherein the not holder agrees that its lien will be subordinate, or
junior, to another lien on title.

Survey – Ameasurement of land, prepared by a licensed surveyor, showing a property’s boundaries, elevations, improvements, and
relationship to surrounding tracts.

T

Tax Impound – Money paid to and held by a lender for annual tax payments. See Impound Account.

Tax Lien – Claim against a property for unpaid taxes.

Tax Sale – A sale of property, usually at auction, for nonpayment of taxes assessed against it.

Term – The number of years it will take to pay off a loan.

Title – Document which gives evidence of ownership of a property and the rights of ownership and possession of that property.

Title Company – A company that insures title to property

Title Insurance – Insurance which protects the lender (lender’s policy) or the buyer (Owner’s Policy) against loss due to disputes over
ownership of a property.

Title Search – Examination of municipal records to ensure that the seller is the legal owner of a property and that all liens or other
claims against the property affecting title are disclosed.

Transfer Tax – Tax paid when title passes from one owner to another.

Trust Account – Account maintained by a broker or escrow company to handle all money collected for clients.

Trustee – Someone given legal responsibility to hold property in the best interest of another.

Truth-in-Lending Act – Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by
a lender to a borrower after a loan application is made.

U

Underwriting – The process of verifying data and evaluating a loan for approval.

V

VA Loan – Home loan available to veterans with little or no down payment and guaranteed by the U.S. Veteran’s Administration.

Variable Rate Mortgage – See Adjustable Rate Mortgagae.

Verification of Deposit (VOD) – Document signed by the borrower’s bank or other financial institution verifying the borrower’s account
balance and history.

Verification of Employment (VOE) – Document signed by the borrower’s employer verifying the borrower’s position and salary.

W

Waiver – Voluntary relinquishment or surrender of some right or privilege.

Walk-through – A final inspection of a home to check for problems that may need to be corrected before closing.

Wrap Around Mortgage – Also called the All-Inclusive trust Deed (AITD). A purchase money mortgage that is subordinate to, but yet
includes, the encumbrance to which it is subordinated.

Z

Zoning Ordinances (or Zoning Regulations) – Local law establishing building codes and usage regulations for properties in a
specified area.

Zoning Variance – Permission granted by a zoning authority to a property owner to allow for a specified violation of the zoning
requirements. A variance is generally granted when a property was built under a zoning code that was subsequently changed. In
such a case, enforcing compliance would render a property virtually unusable.