Home Building 101: Real Estate Glossary

Abstract of Title: A history of a particular piece of land, recording liens, restrictions, easements, etc. to be examined by an attorney.
Appraisal: The process through which conclusion of the property's value is obtained; also refers to the report seeting forth the process of estimation and conclusion of value.
Balloon Payment: The final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amoritized.
Closing Costs and Prepaids: Costs paid in addition to the down payment on closing day. These items can include attorney's fees, loan origination fees (usually 1 percent of the loan amount), appraisal fees, credit report, document preparation, escrow fee, survey and recording fees, tax escrow, hazard insurance, two months of private mortgage insurance (if down payment is less than 20 percent) and sometimes the entire first year's private mortgage insurance premium.
Deed Quit Claim: This deed conveys only such interest as the seller may have in the property at the time the deed is executed and delivered to the buyer.
Down Payment: A specified percentage of a home's value paid at closing. Usually a down payment is 5 percent, 10 percent, 20 percent or 25 percent of the house price. Private mortgage insurance is required at amounts less than 20 percent.
First Mortgage: A legal document pledging collateral for a loan that has first priorities over all other claims against the property except taxes and boded indebtedness.
Joint Tenancy: Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon a death of a joint tenant, his or her interest passes to the surviving joint tenant oor tenants by right of survivorship.
Mortgage: An instrument which sets up the conditions of payment for a piece of property already transferred to the buyer.
Negative Amoritzation: The principal balance of the loan actually grows due to payments that are not enough to cover all of the interest due. Often negative amoritization accrues during the years of a variable rate or graduated payment mortgage when the payments are less than market rate.
Origination Fee: A fee or charge for the work involved in the evaluation, preparation and submission of a proposed mortgage loan.
PITI: (Principal, Interest, Taxes, and Insurance) The principal and interest payments of most loans are fixed. The tax and insurance portion may be adjusted to reflect changes.
Points: Usually paid by the seller, a point is 1 percent of the loan balance and is changed by the lender to issue a loan. Points can be a negotiable item between a buyer and seller or a buyer and lender and usually range from 1 up to 7 or 8. Commonly 1 to 4 points are paid on a conventional loan.
Title: An instrument that shows the buyer has a clear ownership. A loan does not usually close until the title company has assured the lender that there are no hidden problems with a title.
Warranty Deed: A deed in which the grantor fully warrants good clear title to the premises. Used in most transfers, it offers the greatest protection of any deed.