Glossary

Adjustable Rate Mortgage – a loan that has a fluctuating interest rate that changes at pre-set intervals and is usually tied to a pre-determined index, such as the U.S. Treasury Bill auction rates.

Assumption of a Mortgage – an agreement by the buyer to assume the payments under an existing note secured by a mortgage.

Conventional Loan – a loan made in which real estate serves as the security without any government agency either insuring (FHA) or guaranteeing (VA) the loan.

Credit Report – a report of the past ability of the loan applicant to make on-time installment payments.

Discount Point – Pre-paid interest charged by the lender at settlement to increase the borrowers mortgage note rate. One discount point equals 1% of the loan amount.

Earnest Money Deposit – money paid by the buyer at the time he or she enters into a contract to indicate the ability and intent of carrying out the contract.

FHA Loan – A loan made by an approved lender and insured by the Federal Housing Administration in accordance with FHA regulations.

Fixed Rate Mortgage  – a loan carrying a constant interest rate over the full life of the mortgage. Regular payments of principal and interest are made so that the entire loan will be completely paid off at the end of term, typically 30 or 15 years.

Loan Origination Fee – a charge incurred by the buyer to cover the lender’s administrative costs in making the loan. The loan origination fee is typically 1% of the loan amount.

Marketable Title – a title that is free and clear of objectionable liens and encumbrances.

Personal Property – things which are movable and not annexed to or part of the land.

Real Property – land, man-made improvements and all interest, benefits and rights included in the ownership of that land.

Title Insurance – an insurance policy paid at settlement that protects the named insured against loss or damage due to defects in the property’s title.

Title Search – a review of all recorded documents affecting a specific piece of real property to determine the marketability of title.

VA Loan – a mortgage loan made on approved property to a qualified veteran by an authorized lender and guaranteed by the Dept. of Veterans Affairs.