Amortization Schedule: A schedule that shows how much principal and interest are due at specified intervals and the unpaid balance of the mortgage after each payment.
Assignment of Mortgage: An agreement that transfers mortgage ownership from one party to another.
Assumption of Mortgage: A buyer's agreement to take over the payments on an existing mortgage, agreeing to liability for the balance of the payments.
Adjustable Rate Mortgage: A loan for which the customer's interest rate is "locked in" for a certain period of time. At the end of that period, the interest is adjusted to reflect the bank's current rate of interest. The new monthly payment incorporates that adjustment. (Also called a variable rate mortgage.)
Closing:The final transaction in a real estate purchase. Includes the delivery of a deed, financial adjustments, signing of notes, putting funds in escrow for payment of taxes and insurance, etc.
Deposit or Earnest Money: Money given to either bind a sale or assure payment in loan processing.
Direct Reduction Mortgage: Requires a fixed payment of principal each period.
Easement: A right to the limited use of land owned by someone else. It allows access to a property or enables utility lines to be laid.
Encumbrance: Something that affects or limits title to a property, such as restrictions, mortgages, leases, etc.
Equity: The difference between market value and how much is owed on a property.
Escrow: Provides that a third party, acting for both buyer and seller, handles disbursement of funds for specified purposes.
Foreclosure: The legal process in which mortgaged property is sold to pay a defaulting borrower's debt.
Full Floating Rate Mortgage: Similar to an adjustable rate mortgage, except that the customer's interest rate changes (or "floats") each time the bank's prime rate changes. As with the adjustable rate mortgage, the monthly payment amount remains constant for a designated period of time, but the portions applied to interest and principal can vary with each day, depending on the daily prime rate.
Improved Land: Land with roads, utilities, etc. as opposed to raw land with no physical improvements.
Lien: A claim by one person or institution on the property of another as security for a debt.
Origination Fee: A fee charged by a lender to prepare loan documents, make credit checks, inspect and/or appraise a piece of real estate. Generally, the fee constitutes a percentage of the face value of the loan.
Second Mortgage: A loan with rights secondary to the first mortgage.
Title: Documentary evidence of ownership, specifying the history of its ownership and transfers. Title can be bought, inherited, or obtained via foreclosure of a mortgage.
Variable Rate Mortgage: See "Adjustable Rate Mortgage," above.
Zoning: Restrictions set by municipal or other authorities that specify the use to which property can be put in certain areas. Clearly states conditions under which one can subdivide or build.