TERMS FOR BUYERS AND SELLERS 

Abstract Of Title: Summarized history of the legal title to property, shows changes of title, records or liens and encumbrance.

Assumable Mortgage: A loan that can be transferred from the old owner to the new owner.

Closing Costs: Charges paid at settlement to obtain a mortgage loan and transfer real estate title, usually in addition to the price of the home. Be sure your sales contract clearly states who-buyer or seller-will pay closing costs and what they will be.

Closing Day: The date on which the title for property passes from the seller to the buyer and/or the date on which the borrower signs the mortgage loan agreement.

Earnest Money: A sum paid to a seller by a potential buyer to demonstrate that the buyer is serious about buying. If a contract is executed, the earnest money is returned in whole with deductions for processing charges, paper work, etc. Make sure you know the terms of your contract.

Easements: Rights of way granted to persons or companies authorizing access to or over the owner's land. For example, utility companies may have easements rights to install pipes or wire on or over your land.

Equity: The value in excess of all indebtedness against the property.

Escrow: A system or document transfer in which a deed, bond or funds is delivered to a third party to hold until all conditions in a contract are fulfilled.

FHA: Federal Housing Administration. This federal agency established by Congress in 1934, insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders.

Interest: The cost paid by a borrower for use of money borrowed to purchase a home.

Mortgage: Pledge of property as security for the payment of a debt.

Mortgage Commitment: A formal written communication by a lender, agreeing to make a mortgage on specific property, specifying the loan's amount, length of time and conditions.

Mortgage: The lender who has agreed to lend money to the mortgagor, mortgage loan to the mortgagee.

Points: A point is a charge of one percent of the mortgage value. Points are a onetime charge assessed by the lender to increase the interest yield from the mortgage loan to a position competitive with the interest yield from other types of investments. Government loans, points must be paid by the lender, but these system arrangements vary from stat to state, so check into practices in your area.

Principal: Amount of money borrowed in a mortgage loan, excluding interest and other charges.

Sales Contract: The contract the buyer and seller. The contract should explain, in detail, exactly what your purchase includes, who is responsible for providing it, what guarantees there are, when you can move in what the “closing cost are, and what “outs” parties have in case the contract is not fulfilled or if you cannot get a mortgage commitment at the agreed upon terms.

Settlement Expense: This is different from closing costs, but also involves charges that a buyer or seller must pay in closing a deal on a house. Settlement costs include insurance and tax payments, special assessments for improvements to municipal facilities and sales commissions.

Survey: On-site measurement of lot lines, dimensions and position of house on lot, including determination of possible encroachment or existing easements. A survey is often required by the lender to assure him that a house is actually on the land according to its legal description.

Title Insurance: A contract to make good a property owner's loss resulting from defects in a title. Title insurance usually calls for the insurer to defend the property owner's title at no cost if the title is challenged in court.

Title: Evidence (usually in the form of a certificate or “deed”) of a person's legal right to ownership of property.

Title Search: Detailed review of title records, generally at the local court house, to assure that the property is bought from the legal owner and to determine if any liens, special assessments, other claims or outstanding restrictive covenants are on record.

VA: Veterans' Administration. A federal agency which in 1944 established a loan guaranteed program to encourage private lending agencies to give liberal mortgages to honorably-discharged veterans or their widows. Check your local Veterans' Administration office for information.

Zoning: Classification or real property for varying uses. A municipality has a right to determine and regulate the use of property.