52
© Ticor Title Company
GLOSSARY OF TERMS
ADJUSTABLE RATE MORTGAGE (ARM):
A mortgage in which the interest
rate is adjusted periodically in accordance with a market
indicator, to more closely coincide with the current rates. Also
sometimes known as renegotiable rate mortgage, the variable
rate mortgage, or the graduated rate mortgage.
AMORTIZATION:
Reduction of the principal of a debt in regular,
periodic installments.
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 stated note rate or advertised rate on the mortgage,
because it takes into account point and other credit cost.
The APR allows home buyers to compare different types of
mortgages based on the annual cost for each loan.
ASSUMPTION OF MORTGAGE:
An obligation undertaken by a new
purchaser of land to be liable for payment of an existing note
secured by a mortgage.
CAPS:
Consumer safeguards that limit the amount the interest
rate on an adjustable rate mortgage can change at each
adjustment or over the life of the loan.
CONDITIONS, COVENANTS & RESTRICTIONS (CC&R’S):
A document
that controls the use, requirements and restrictions of a
property.
CERTIFICATE OF REASONABLE VALUE (CRV):
An appraisal issued by
the Veterans Administration showing the property’s current
market value.
CLOSING (ALSO CALLED “SETTLEMENT”):
The completion of a real
estate transfer, where the title passes from seller to buyer, or
a mortgage lien is given to secure debt.
CONDOMINIUM:
A statutory form of real estate development
of separately- owned units and jointly-owned common
elements in a multi-unit project.
CONVENTIONAL MORTGAGE:
A mortgage securing a loan made by
investors without governmental underwriting, i.e., a loan
which is not FHA insured or VA guaranteed.
DEED:
Written instrument which, when properly executed
and delivered, conveys title.
DISCOUNT POINT:
An additional charge made by a lender at the
time a loan is made. Points are measured as a percent of the
loan, with each point equal to one percent.
EARNEST MONEY:
A deposit of funds made by a buyer of real
estate as evidence of good faith.
EASEMENT:
A non-possessory right to use all or part of the land
owned by another for a specific purpose.
EQUITY:
The difference between the fair market value and
current indebtedness, also referred to as the owner’s
interest. The value an owner has in real estate over and
above the obligation against the property.
FEDERAL HOUSING ADMINISTRATION LOAN (FHA LOAN):
A loan insured
by the Federal Housing Administration, open to all qualified
home purchasers.
FARMERS HOME ADMINISTRATION LOAN (FMHA LOAN):
A loan insured by
the federal government similar to FHA loan, but usually used
for residential properties in rural areas.




