Frequently Asked Questions

 The total cost a borrower pays for a loan, expressed as a yearly rate. This rate includes both the interest and other fees, making it different from the interest rate alone. 

 An opinion of the value of a property based on an analysis of facts and data. It's an estimate of the property's worth. 

 The party that receives benefits from a financial instrument, like a deed of trust,  typically the lender. 

 The date when a real estate transaction is finalized. The buyer officially becomes the legal owner of the propert,y and the title insurance policy goes into effect. 

 A form given to the borrower three business days before closing. It details all the final costs and terms of the loan and transaction, helping the borrower understand the full financial picture. 

 Sales of properties with similar characteristics to the one being appraised. Appraisers use these sales as a basis for determining a property's value. 

 The point at which a borrower becomes contractually obligated to the lender for the loan. This is a key event and is not the same as the close of escrow or settlement. 

 A legal document used in some states instead of a mortgage to secure a loan with real property. It involves three parties: the borrower, the lender, and a neutral third party (a trustee). 

 Limitations or rules written into a property's deed that dictate how the land can and cannot be used.

 The specific date when funds are officially paid out to the buyer, seller, or other parties involved in the transaction. 

 A right that allows one party to use or access the land of another for a specific purpose, such as for a utility line or a shared driveway. 

 A deposit made by a potential buyer to show their serious intent to purchase a property. This money is part of the down payment and is held in trust until the closing. 

 An addition or attachment to a title insurance policy that either expands or limits the coverage. 

 Insurance that protects a property against damage from events like fire, natural disasters, or vandalism. Buyers often add other types of coverage for personal property and liability. 

 Insurance that protects a property against damage from events like fire, natural disasters, or vandalism. Buyers often add other types of coverage for personal property and liability. 

 A type of trust account set up by lenders to collect funds from the borrower to pay for recurring costs like property taxes and insurance premiums. 

 A detailed, legally recognized description of a specific parcel of land. It defines the exact boundaries of the property so it can't be mistaken for any other. 

 A claim or legal right against a property that secures a debt or obligation. Examples include mortgages, tax liens, or judgments. 

 A form provided to a borrower within three business days of applying for a loan. It gives an estimate of the key features, costs, and risks associated with the mortgage. 

 A legal document that pledges real property as security for a loan. It's the most common way for borrowers to finance a home purchase. 

 An acronym for the four components of a typical mortgage payment: Principal, Interest, Taxes, and Insurance. 

 A legal document that gives one person (the "attorney-in-fact") the authority to act on behalf of another person (the "principal"). 

 The process of officially filing legal documents that affect real property with the appropriate government agency, making them a part of the public record. 

 A document that provides a complete breakdown of all costs and fees involved in a real estate transaction. 

 An acronym for the TILA-RESPA Integrated Disclosures, which are the federal regulations that created forms like the Loan Estimate and Closing Disclosure. 

 Cost for lender’s professional evaluation of the property’s market value based on comparable sales, improvements on the property and location (Fee usually set by the appraiser). 

 Fee paid for processing, approving and facilitating the assumption of an existing mortgage secured by the subject property to new borrower(s). 

 Fee paid for coverage on the subject property for losses or damage due to fire or other named perils; typically required by lender for at least the loan amount. 

 An examination of the property for various reasons such as termite inspections, mechanical inspections and roof inspections. Parties may also require follow up inspections after required repairs are completed. 

 Fee paid to title company for issuance of lender’s title insurance policy that indemnifies the lender in the event that clear ownership of property is challenged by the discovery of faults in the title. 

 Fee paid to the lender at time of application. 

 A form of pre-paid interest, equaling a percentage of the loan amount, paid to reduce the interest rate on a mortgage for the life of the loan. One “point” is usually 1% of the loan amount. 

 May include fees for underwriting, processing, tax service fee, warehousing, etc. Varies with each lender. Check with lender for disclosure and explanation. 

 Fee charged by the lender or broker as compensation for providing origination services associated with the subject loan. 

 Fee paid to title company for issuance of owner’s title insurance policy that indemnifies the owner of real estate in the event that his or her clear ownership of property is challenged by the discovery of faults in the title. 

 Insures lender against loss in the event of default by borrower. Often required by lender if first loan exceeds 80% loan to value ratio (PMI - private mortgage insurance - conventional loans; MIP - mortgage insurance protection - FHA loans). 

 Interest collected at settlement for a part of the month or other period between settlement and the date from which interest will be collected with the first regular monthly payment. 

 A fee charged for early payoff of the seller’s existing mortgage loan. If the penalty applies, it should be stated in the existing mortgage instruments. 

 Contract terms dictate, but taxes are usually prorated between seller and buyer at closing. Figures are usually based on latest available taxes. Any shortages or overages due at the end of the existing year are between buyer and seller per the contract. 

 An amount paid to the brokerage firm representing the consumer (buyer or seller) for real estate services agreed upon in the property listing agreement, buyer representation agreement, or by contract. 

 Fees for recording documents in public records. 

 Fee paid for settlement service provider to conduct the loan settlement and/or real estate closing transaction. Services may include carrying out contract instructions, obtaining execution, disbursing sales proceeds, etc. 

 A statement (drawing) showing the corners, distances, and directions of the boundaries of a tract of land along with easements, encroachments, etc., and the location of all improvements located on the land as may be required in the contract. 

 Certificate obtained to determine any unpaid property taxes or assessments that may constitute liens against the property.