Abstract Of Title: The Abstract
of Title is a historical summary of all of the recorded
transactions that affect the title to the property.
An attorney or a title company will review an abstract
of title to determine if there are any problems affecting
the title to the property. All such problems must
be cleared before the buyer can be issued a clear
and insurable title.
Acceleration Clause: A loan provision
giving the lender the power to declare all sums owing
lender immediately due and payable upon the violation
of a specific loan provision, such as the sale of
the property, or the failure to make loan payments
on time.
Accretion: The addition to land through
natural forces like wind or water.
Agreement of Sale: A written signed
agreement between the seller and the purchaser in
which the purchaser agrees to buy certain real estate
and the seller agrees to sell upon terms of the agreement.
Also known as contract of purchase, purchase agreement,
offer and acceptance, earnest money contract or sales
agreement.
Acknowledgment: Formal declaration
before a public official (typically a Notary Public)
that one has signed a document. Required before recording
real estate legal documents, such as a deeds of trust.
Acre: A measure of land equal to
43,560 square feet or a square 208 feet to a side.
Adjustable Rate Mortgage: Also known
as a variable rate mortgage. The interest rate on
these mortgages changes periodically, typically adjusting
once every year, or once a month. The mortgages are
typically fixed for a period of years (1, 3, and 5
years is common) and then starts adjusting after that
period expires.
Adjustment Period: This is the length
of time for which the interest rate is fixed on an
adjustable. Therefore if the adjustment period is
six months, then the interest rate will remain fixed
for six months, after which time it will adjust.
Amortization: A gradual paying off
of a debt by periodic installments which pay principal
and interest.
Annual Percentage Rate (APR): The
effective rate of interest for a loan per year. This
rate is typically higher than the note rate because
it takes into account closing costs. This is one way
to compare loan programs offered by different lenders.
Caution : the APR is sometimes computed differently
by different lenders and can be misleading.
Appraisal: An opinion or estimate
of the value of a property at a given date. This is
done by examining the property and comparing it to
other similar properties in the same neighborhood.
The person doing the appraisal is known as the appraiser.
Arm's Length Transaction: A transaction
among parties who are each acting in their own best
interests, without taking the interests of the other
party into account.
Assessment: A local tax levied against
a property for a specific purpose such as street lights,
sidewalks, street repairs or improvements among other
things.
Assumable Mortgage: A mortgage loan
which allows a new home buyer to take over the obligation
of making loan payments with no change in the terms
of the loan. Assumable loans do not have a due-on-sale
clause. The lender has to be notified and agree to
the assumption. The lender may require the buyer to
qualify for the loan and may charge an assumption
fee. The seller should obtain a written release from
the lender stating clearly that he/she is no longer
liable to make mortgage payments. See also "Subject
To".
Attorney In Fact: One who is authorized
to act for another under a power of attorney which
may be general or limited in scope.
