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GLOSSARY OF TERMS
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA):
Also known as
“Fannie Mae.” A U.S. government sponsored corporation
dealing in the purchase of first mortgages for the secondary
market.
FEE SIMPLE DEED:
The absolute ownership of a parcel of land.
The highest degree of ownership that a person can have in real
estate, which gives the owner unqualified ownership and full
power disposition.
JOINT TENANCY:
An equal undivided ownership of property by two
or more persons. Upon death of any owner, the survivors take
the decedent’s interest in the property.
LIEN:
A claim upon a piece of property for the payment or
satisfaction of a debt or obligation.
LOAN-TO-VALUE RATIO:
The relationship between the amount of
the mortgage loan and the appraised value of the property
expressed as a percentage.
MORTGAGE:
A conditioned pledge of property to a creditor as
security for the payment of a debt.
NEGATIVE AMORTIZATION:
Occurs when your monthly payments are
not large enough to pay all the interest due on the loan. This
unpaid interest is added to the unpaid balance of the loan. The
danger of negative amortization is that the home buyer ends up
owing more than the original amount of the loan.
PERSONAL PROPERTY:
Any property which is not real property, e.g.,
money, savings accounts, appliances, cars, boats, etc.
POINTS (ALSO CALLED “COMMISSION OR DISCOUNT” POINTS”):
Each point is
equal to 1% of the loan amount (e.g., two points on a $100,000
mortgage would cost $2000).
PRINCIPAL, INTEREST, TAXES AND INSURANCE (PITI):
Also called monthly
housing expense.
PRIVATE MORTGAGE INSURANCE (PMI):
In the event that a buyer does
not have a 20% down payment, lenders will allow a smaller
down payment—as low as 3% in some cases. With the smaller
down payment loans, however, borrowers are usually required
to carry private mortgage insurance. Private mortgage insurance
will usually require an initial premium payment and may
require an additional monthly fee, depending on the loan’s
structure.
REALTOR®:
A real estate broker or an associate holding active
membership in a local real estate board affiliated with the
National Association of Realtors®.
SUBDIVISION:
A tract of land surveyed and divided into lots for
purposes of sale.
TENANCY IN COMMON:
An undivided ownership in real estate
by two or more persons, without right of survivorship –
interests need not be equal.
TRUST ACCOUNT:
An account separate and apart and physically
segregated from the broker’s own, in which the broker is
required by law to deposit all funds collected for clients.
TRUSTEE:
The neutral third party in the deed of trust with
limited powers. When the loan is paid in full, the property
is reconveyed by the trustee back to the person or persons
legally entitled to the land, or if delinquent, the property
will be conveyed pursuant to non judicial foreclosure
proceedings, to the highest bidder in a public sale.
TRUSTOR:
The borrower, owner and guarantor of the property
conveyed in a deed of trust.
VETERANS ADMINISTRATION LOAN (VA LOAN):
Housing loan to
veterans by banks, savings and loans, or other lenders that
are guaranteed by the Veterans Administration, enabling
veterans to buy a residence with little or no down payment.
WARRANTY:
In a broad sense, an agreement or undertaking
by a seller to be responsible for present or future losses
of the purchaser occasioned by deficiency or defect in the
quality, condition or quantity of the thing sold. In a stricter
sense, the provision or provisions in a deed, lease or other
instrument conveying or transferring an estate or interest
in real estate under which the seller becomes liable to the
purchaser for defect in or encumbrances on the title.




