Title Insurance Glossary

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. To make it easier for consumers to compare mortgage loan interest rates, the federal government developed a standard format called an "Annual Percentage Rate" or APR to provide an effective interest rate for comparison shopping purposes.  Some of the costs that you pay at closing are factored into the APR for ease of comparison.  Your actual monthly payments are based on the periodic interest rate, not the APR.

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. .

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.

Fixed Rate Mortgages - Mortgages with a fixed interest rate. Your 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.

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 fire and casualty 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.

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.

Limited Residential Loan policy -

The following are the exceptions to a Home Equity Policy (Limited Residential Loan Policy)

1.  Those taxes and special assessments which become due and payable subsequent to Date of Policy, or which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public record.  Proceedings by a public agency which may result in taxes or assessments, or notice of such proceedings, whether or not shown by the records of such agency or public record.

2.  Rights of claims of parties in possession not shown of record.

3.  Unrecorded water, mineral and oil rights, unrecorded easements and claims of easement, boundary line disputes not disclosed of record and any matters which would be disclosed by an accurate survey and inspection of the premises.

4.  Mechanic’s liens not of record.

5.  Covenants, conditions and restrictions, if any, appearing in the public record.

6.  Any easements or servitudes appearing in the public records.

7.  Any lease, grant, exception or reservation of mineral or mineral rights appearing in the public record.

The following are the exceptions shown on a with exception policy:

Mortgage - An instrument used to encumber land as security for a debt.

Mortgagee - A designation for the mortgage lender on lands.

Mortgagor - A designation for the mortgage borrower on lands.

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.

Point - A percentage point. Equal to one percent of the loan amount.

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

PMI - Private mortgage insurance.

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

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 the owner actually paid 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 from insured 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 certain public records  to determine the current facts regarding ownership of real estate.

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

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

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