Documentary Stamps
A State tax, in the forms of stamps, required on deeds and mortgages
when real estate title passes from one owner to another. The amount of
stamps required varies with each State.
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Downpayment
The amount of money to be paid by the purchaser to the seller upon the
signing of the agreement of sale. The agreement of sale will refer to the
downpayment amount and will acknowledge receipt of the downpayment.
Downpayment is the difference between the sales price and maximum mortgage
amount. The downpayment may not be refundable if the purchaser fails to buy
the property without good cause. If the purchaser wants the downpayment to
be refundable, he should insert a clause in the agreement of sale
specifying the conditions under which the deposit will be refunded, if the
agreement does not already contain such clause. If the seller cannot
deliver good title, the agreement of sale usually requires the seller to
return the downpayment and to pay interest and expenses incurred by the
purchaser.
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Earnest Money
The deposit money given to the seller or his agent by the potential
buyer upon the signing of the agreement of sale to show that he is serious
about buying the house. If the sale goes through, the earnest money is
applied against the downpayment. If the sale does not go through, the
earnest money will be forfeited or lost unless the binder or offer to
purchase expressly provides that it is refundable.
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Easement Rights
A right-of-way granted to a person or company authorizing access to or
over the owner's land. An electric company obtaining a right-of-way across
private property is a common example.
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Encroachment
An obstruction, building, or part of a building that intrudes beyond a
legal boundary onto neighboring private or public land, or a building
extending beyond the building line.
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Encumbrance
A legal right or interest in land that affects a good or clear title,
and diminishes the land's value. It can take numerous forms, such as zoning
ordinances, easement rights, claims, mortgages, liens, charges, a pending
legal action, unpaid taxes, or restrictive covenants. An encumbrance does
not legally prevent transfer of the property to another. A title search is
all that is usually done to reveal the existence of such encumbrances, and
it is up to the buyer to determine whether he wants to purchase with the
encumbrance, or what can be done to remove it.
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Equity
The value of a homeowner's unencumbered interest in real estate.
Equity is computed by subtracting from the property's fair market value the
total of the unpaid mortgage balance and any outstanding liens or other
debts against the property. A homeowner's equity increases as he pays off
his mortgage or as the property appreciates in value. When the mortgage and
all other debts against the property are paid in full the homeowner has
100% equity in his property.
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Escrow
Funds paid by one party to another (the escrow agent) to hold until
the occurrence of a specified event, after which the funds are released to
a designated individual. In FHA mortgage transactions an escrow account
usually refers to the funds a mortgagor pays the lender at the time of the
periodic mortgage payments. The money is held in a trust fund, provided by
the lender for the buyer. Such funds should be adequate to cover yearly
anticipated expenditures for mortgage insurance premiums, taxes, hazard
insurance premiums, and special assessments.
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Foreclosure
A legal term applied to any of the various methods of enforcing
payment of the debt secured by a mortgage, or deed of trust, by taking and
selling the mortgaged property, and depriving the mortgagor of possession.
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General Warranty Deed
A deed which conveys not only all the grantor's interests in and title
to the property to the grantee, but also warrants that if the title is
defective or has a "cloud" on it (such as mortgage claims, tax liens, title
claims, judgments, or mechanic's liens against it) the grantee may hold the
grantor liable.
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Grantee
That party in the deed who is the buyer or recipient.
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Grantor
That party in the deed who is the seller or giver.
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Hazard Insurance
Protects against damages caused to property by fire, windstorms, and
other common hazards.
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Home Types
Detached: Any home that is not connected to another.
Town Home: Any home that is connected side-by-side to another.
Apartment: Any multiple family dwelling with apartment homes on more than one level.
Condominium: Any home with a condominium association which owns the land and does some degree of maintenance/insurance.
Co-op: Any home which is owned by a corporation in which the residents own shares.
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Home Styles
Colonial: Any two story home, traditional, contemporary, Tudor, cape cod or other.
Cape Cod: Any two story home with a front slanting roof, with or without dormer windows.
Tudor: Any colonial with distinctive stucco exterior with wooden trim.
Contemporary: Any home, on story or two usually designed with some vaulted, cathedral ceilings, wooden trim and/or siding.
Split Level: Any home with three or more levels with steps in the center of the home.
Split Foyer: Any home with a foyer entrance with steps leading up and/or down.
Ranch/Rambler: Any one level home with or without a basement finished or unfinished.
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HUD
U.S. Department of Housing and Urban Development. Office of
Housing/Federal Housing Administration within HUD insures home mortgage
loans made by lenders.
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Interest
A charge paid for borrowing money. (See mortgage note.)
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Lien
A claim by one person on the property of another as security for money
owed. Such claims may include obligations not met or satisfied, judgments,
unpaid taxes, materials, or labor. (See also special lien.)
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Marketable Title
A title that is free and clear of objectionable liens, clouds, or
other title defects. A title which enables an owner to sell his property
freely to others and which others will accept without objection.
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Mortgage
A lien or claim against real property given by the buyer to the lender
as security for money borrowed. Under government insured or loan-guarantee
provisions, the payments may include escrow amounts covering taxes, hazard
insurance, water charges, and special assessments. Mortgages generally run
from 10 to 30 years, during which the loan is to be paid off.
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Mortgage Commitment
A written notice from the bank or other lending institution saying it
will advance mortgage funds in a specified amount to enable a buyer to
purchase a house.
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Mortgage Note
A written agreement to repay a loan. The agreement is secured by a
mortgage, serves as proof of an indebtedness, and states the manner in
which it shall be paid. The note states the actual amount of the debt that
the mortgage secures and renders the mortgagor personally responsible for
repayment.
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Mortgage (Open-End)
A mortgage with a provision that permits borrowing additional money in
the future without refinancing the loan or paying additional financing
charges. Open-end provisions often limit such borrowing to no more than
would raise the balance to the original loan figure.
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Mortgagee
The lender in a mortgage agreement.
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Mortgagor
The borrower in a mortgage agreement.
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Plat
A map or chart of a lot, subdivision or community drawn by a surveyor
showing boundary lines, buildings, improvements on the land, and easements.
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