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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.