Title Insurance Glossary

Abstract of Title – A condensed history or summary of all
transactions affecting a particular tract of land.

Adjustable Rate Mortgages – Mortgages with an interest rate
that may change up or down depending on an indicator. These are usually based
something like the current Treasury bill rate.

Affidavit – A sworn statement in writing.

Amortize – To reduce a debt by means of regular periodic
payments which include amounts applicable to both principal and interest.

APR – Annual percentage rate. On some mortgages the APR is
higher than your actual mortgage rate.

Assumption – A mortgage that allows a new owner to take over
payments. The original borrower remains liable on the mortgage note.

Deed – A written document by which the ownership of land is transferred
from one person to another.

Deed of Trust – Instrument used to secure a loan on real
estate. Like a mortgage, generally used in the South. The major difference is in
how foreclosures are handled. Foreclosures are much faster with a Deed of Trust
than with a Mortgage.

Deposit or Earnest Money – Advance payment of part of the
purchase price to bind a contract for property.

Due-on-Sale Clause – A provision in a mortgage or deed of
trust which requires the loan to be paid in full if a property is sold or transferred.

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

Escrow – (1) A procedure whereby a disinterested third party
handles legal documents and funds on behalf of a seller and buyer. (2) Money
that is kept by the mortgage company to ensure that taxes can be paid in full
when due. This is paid up front on settlement sheet lines 1001 – 1006 and is
added to the mortgage payment monthly over the principal and interest figure.

FNMA (Fannie-Mae) – The Federal National Mortgage
Association, a federally sponsored private corporation which provides a
secondary market for housing mortgages.

Fixed Rate Mortgages – Mortgages with a fixed interest rate.
You payment for principal and interest will not change for the life of the loan.
Your monthly payment may change if taxes or insurance rates change.

FHA – The Federal Housing Administration. An agency of the
federal government which insures private loans for financing of new and existing
housing and for home repairs under government approved programs.

FHLMC (Freddie Mac) – Federal Home Loan Mortgage Corporation.
An affiliate of the Federal Home Loan Bank, which creates a secondary market in
conventional residential loan and FHA and VA loans by purchasing mortgages from
members of the Federal Reserve System and the Federal Home Loan Bank System.

Foreclosure – Legal process by which a mortgagor of real
property is deprived of his interest in that property due to failure to comply
with terms and conditions of the mortgage.

Grantee – A person who acquires an interest in land by deed,
grant or other written instrument.

Grantor – A person who, by a written instrument, transfers
to another interest in land.

Hazard insurance – The homeowner’s insurance policy.

Heir – One who might inherit or succeed to an interest in
lands under the rules of law applicable where an individual dies without leaving
a will.

In personam – Directed at specific persons rather than
against property or generally for all people.

In rem – Pertaining to property or people in general.

Interest only payments – A mortgage where only the interest
is paid on a monthly basis. This means that the buyer gets no equity. This is
only used on some purchase money mortgages where the buyer is responsible for
paying the seller the entire amount of the second mortgage at some time in the

Instrument – A written document.

Loan origination fees – Money required by the lender to be
paid to start the work of approving a mortgage.

Judgment – A decree of a court.

Lien – A hold, a claim or charge allowed a creditor upon the
lands of a debtor.

Mortgage Note – An instrument used to encumber land as
security for a debt. This document gives the mortgage company “in rem”
jurisdiction over the mortgagor.

Mortgagee – A designation for the mortgage lender on lands.

Mortgagor – A designation for the mortgage borrower on

MIP – Mortgage insurance protection

Note – A written promise to pay a certain amount of money,
at a certain time, or in a certain number of installments. It usually provides
for payment of interest and its payment is at times secured by a mortgage.

  • The mortgage note document gives the mortgage company “in rem”
    jurisdiction over the mortgagor.
  • The promisory note document gives the mortgage company “in
    personam” jurisdiction over the mortgagor.

P.O.C. – Paid outside of closing. Sometimes the lender
requests this money before settlement. If you pay any charges before settlement
they should be written on the settlement sheet. They are written on the proper
line outside of your column. They should also be marked P.O.C.

Point – a percentage point. Equal to one percent of the loan

Power of Attorney – An instrument authorizing another to act
on one’s behalf as his agent or attorney.

PMI – Private mortgage insurance.

PMM – Purchase money mortgage. A mortgage given by the
seller simultaneously with the purchase of real estate to secure the unpaid
balance of the purchase price.

Pro-Rate – To allocate between seller and buyer their
proportionate share of an obligation paid or due.

Promissory Note A promise to pay. The promissory note
document gives the mortgage company “in personam” jurisdiction over
the mortgagor.

Real Property – Land and that which is affixed to it.

Reissue Rate – A reduced rate of title insurance premium
applicable in cases where the owner of the land has been previously insured in
an owner’s policy by the insurer within a certain time.

Second Mortgage – A mortgage, the lien of which is
subordinate to that of another mortgage.

Survey – The process of measuring land to determine its
size, location and physical description and the resulting drawing or map.

Tax Service Fee – A fee paid to the mortgage company to
verify that they actually pay the real estate taxes.

Title – The evidence or right a person has to the ownership
and possession of land.

Title Insurance – Insurance against loss or damage resulting
in defects or failure of title to a particular parcel of real property.

Title Insurance Binder or Commitment – A report issued by a
title insurance company binding or committing the title insurance company to
issue the form of policy designated in the commitment or binder upon compliance
with and satisfaction of requirements set forth in the commitment or binder.

Title Search – An examination of public records and court
decisions to disclose the current facts regarding ownership of real estate.

Transfer taxes – Money paid to the county and or state when
property is sold.

VA – The Veterans Administration. They insure mortgages.

Will – A written document properly witnessed, providing for
the distribution of property owned by the deceased

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