Glossary

Adjustable Rate Mortgage (ARM) — A mortgage with an interest rate that is periodically adjusted up or down depending on a specific financial index.

Amortization —  Payment of principal and interest at stated periods for a stated time until debt is paid off

Annual Percentage Rate ( APR ) — The finance charges for a loan, including points and others loan fees, that are in addition to interest on the loan.

Appraisal — A professional opinion of the market value of a property required by a lender prior to lending.

Appreciation — An increase in the value of a house due to changes in market conditions or others causes.

Assessed Value — The value of property for taxation purposes.

Balloon Payment — Final installment payment larger than preceding installment payments on a promissory note.

Cap Provision — A provision in an adjustable Rate Mortgage limiting how much the interest or mortgage payments may increase.

Closing — Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.

Closing Costs — The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property.

Closing Statement — An accounting of funds made to the buyer and seller separately. Required by law to be made at the completion of every real estate transaction.

Comparable Sales — Sales which have similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called “comparables,” they are recent selling prices of properties similarly situated in a similar market.

Contract of  Sales — An agreement entered into for sale and purchase of real property commonly referred as the purchase agreement.

Convertible ARM — An adjustable rate mortgage that can be converted to a fixed rate mortgage under specific conditions.

Conventional Mortgage — A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association.

Deed — A written document transferring ownership of land from one to another.

Deed of trust — A three-party security document conveying title to land secured by the performance of an obligation such as the repaying of a loan. It is also called a Trust Deed.

Default — Omission or failure to fulfill a duty or promise, discharge an obligation, or perform an agreement such as the loan payment.

Depreciation — A decline in the value of property: the opposite of appreciation.

Discount Points — The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. This amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender for it under market conditions. A point equals one percent of the loan.

Earnest Money — Money, such as a deposit, given as a part of the purchase price to bind a bargain.

Easement — A limited right or interest in the land of another entitling the easement holder to some use, privilege or benefit.

Equity — The interest or value which an owner has in real estate over and above the liens against it.

Encroachment — The extension of an improvement onto the land of another.

Escrow — A transaction in which an impartial third acts as an agent for both seller and buyer, or both the borrower and lender, in carrying out instructions, delivering papers and documents and disbursing funds. Usually handled by a title company.

Fair Market Value — This is the amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under pressure to buy or sell.

Fee simple — Absolute ownership of real property.

FHA — A mortgage that is insured by the the Federal Housing Administration.

Fiduciary — One acting in a relationship of trust regarding financial transactions.

Fixture — Personal property that is considered a part of the real property because it has been affixed in a manner that to remove it would cause damage to the property, such as light fixtures and window treatments.

Foreclosure sale — The sale of real property to obtain performance of an obligation after the obligation has been breach.

Grantee — The person/entity acquiring title to real property by a deed.

Grantor — The person/entity transferring real property by a deed.

Hazard Insurance — Insurance to protect the homeowner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards.

Homeowner’s Warranty — A type of insurance that covers repairs to specific part of a house for a specific period of time.

Interest — The cost of borrowing money, usually expressed as a percentage over time.

Interest Rate Cap — A provision in an Adjustable rate Mortgage limiting how much interest rates may increase per adjustment period and for the life of the loan.

Lien — A charge against real property in order to secure payment or satisfaction of a debt or other obligation. Example — judgments, taxes, mortgages, deeds of trust, etc.

Lis Pendens — A recorded notice of a pending lawsuit.

Loan-to-Value Rate — The percentage of a property’s value that a lender can or may loan to a borrower. For example, if the ratio is 80% this means that a lender may loan 80% of the property’s appraised value to a borrower.

Market Data Approach — One of the three methods in the appraisal process. A means of comparing similar type properties, which have recently sold, to the subject property. Commonly used in comparing residential properties.

Market Price — The price paid regardless of pressures, motives or intelligence.

Market Value — The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.

Multiple Listing Service ( MLS )— A service providing member real estate licensees with information about properties listed for sale or lease.

Narrative Appraisal — A summary of all factual materials, techniques and appraisal methods used by the appraiser in setting forth his or her value conclusion.

Negative Amortization — Monthly payments that are not sufficient to pay principal and interest on a loan each month. Interest not paid is added to the principal balance thereby increasing the principal balance each month.

Notice of Default — A recorded notice of a borrower’s failure to perform the obligations in a deed of trust.

Offer To Purchase — The proposal made to an owner of property by a potential buyer to purchase the property under stated terms.

Point — One percent of the loan principal charged in part or in multiples to obtain a loan. This fee is in addition to interest and others fees.

Pre-approval — Loan approval based on lender receipt of the following: credit report, income, and verification of assets and liabilities. (The loan is further subject to a property appraisal)

Preliminary Title report — Shows present ownership, liens and easements on a property prior to a sale or loan transaction.

Pre-qualification — The process of determining how much money a prospective home buyer will be eligible to borrow form a given lender.

Pre-Payment clause — A clause in a loan contract which imposes a charg by a lender for payment of a debt before its due date.

Principal — 1) Amount borrowed or remaining unpaid; also that part of the monthly payment that reduces the outstanding balance of a mortgage. 2) Person who gives authority to an agent or attorney.

Private Mortgage Insurance ( PMI )— Insurance provided by non-government insures that protects lenders against loss if a borrower defaults. Usually required with less than 20% down payment.

Promissory Note — Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.

Purchase and sale Agreement — A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Real Property —Immovable property such as land and improvement on it such as buildings.

Real Estate settlement Procedures Act. — A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Reconveyance — A document, executed when obligations in a deed of trust have been met, that removes the lien on the title to a property which was created by a deed of trust.

Recording — The act of filling documents in the office of the County recorder.

Request for Reconveyance — A written instruction by a beneficiary under a deed of trust acknowledging that the obligations in the deed of trust have been met, and directing that the lien on title to the property created by the deed of trust be removed. PITI The amount of principal, interest, taxes and insurance which are the basis for a monthly mortgage payment.

Rescission — The act of canceling the effect of a document.

Settlement Sheet — The computation of cost payable at closing which determines the seller’s net proceeds and the buyer’s net payment.

Survey — The act of measuring and specifying the legal boundaries of a property.

Tenancy In Common (T.I.C)— Co-ownership of property by two or more persons who hold undivided interests, without right of survivorship; interests need not be equal.

Tenant — The party who has legal possession and use of real property belonging to another.

Title — A legal document establishing the right of ownership.

Title Company — One that specializes in insuring title to property, and customarily handles escrows.

Title Insurance — Insurance to protect a real property owner or lender up to a specified amount against certain types of loss, e.g., defective or unmarketable title.

Title Report — A report which discloses condition of the title, made by a title company preliminary to issuance of title insurance policy.

Transfer Tax— State or local tax payable when title passes from owner to another.

Trustee — The entity designated to hold title to real property for the benefit of another.

 Lighthouse Properties  R.E. Services Inc.   I   3121 Washington Blvd., Marina del Rey CA 90292   I   Cell: (310) 310-1295   I   Fax: (310) 823-0102

Los Angeles homes for sale/ Marina del Rey homes for sale/ Venice CA homes for sale/ Los Angeles homes for rent Santa Monica homes for sale/ Beverly Hills homes for sale/ Malibu homes for sale/ Hollywood homes for sale/ Los Angeles homes for lease/ Houses for sell Los Angeles/ Los Angeles real estate listings/ Los Angeles properties for sale/  Apartments for rent in Los Angeles/ Real Estate Agent Santa Monica/ Homes for sale Malibu/ Real Estate Agent Los Angeles/ Houses for sale in Venice/ Investments for sale Santa Monica/  MLS search/ Houses for rent Venice CA/ Homes for rent Santa Monica/ Los Angeles apartments for sale/ LA homes for sale/  California homes for sale/ Real estate Agent Los Angeles/ Luxury homes for sale Los Angeles/ Luxury homes for rent Beverly Hills/ Luxury houses for sale Malibu/ Malibu homes for sale/ LA luxury houses for sale/ California luxury home for sale/ Real estate listing California/ Marina del Rey real estate listings/ Venice homes for sale/ CA homes for sale/ Homes for sale Beverly Hills/ Santa Monica apartments for rent/ Houses for lease LA/ Los Angeles realtor/ Los Angeles homes for sale/ Los Angeles houses for sale/ Santa Monica homes fro sale/ CA homes for sale/ Santa Monica homes for sale/ Venice CA homes for sale/ Beverly Hills homes for sale/ Marina del Rey homes for sale/ Apartments for rent/ houses for rent.