Abstract of Title A written history of ownership of a parcel of land, summarizing the material parts of any occurrence affecting the title of said land

Adjustable Rate Mortgage An ARM is a mortgage with an interest rate that changes at pre-determined intervals, which rises or drops in relation to changes in a specified financial index.

Adjustment Period The amount of time between interest rate adjustments in an adjustable rate mortgage. Typical adjustment intervals are 6-months, 1-year, 3-year, 5-year and 7-year.

Amortization Schedule A table showing the amounts of principal and interest due at regular intervals and the unpaid mortgage balance after each payment is made.

Annual Percentage Rate (APR) The cost of a loan expressed as a yearly rate on the balance of the loan. APR includes a combination of interest rate, points and other fees paid to acquire the mortgage

APPRAISAL Most loans still require a physical inspection and formal valuation of the property. The cost may range from $250 to $550 depending on location, owner occupied or non-owner occupied, and type of property. This fee is usually paid directly to the appraiser or appraisal company.

Balloon Mortgage/Loan A scheduled payment on a mortgage that is larger than other, periodic payments, usually the unamortized final payment of principal. (Citibank does not offer Balloon Mortgages.)

Blanket Mortgage A mortgage that covers more than one property owned by the same borrower.

Buy-down Mortgage A home loan in which the lender receives a premium as an inducement to reduce the interest rate during the early years of the mortgage.

Cap A limit on the amount the interest rate or monthly payment can increase in an adjustable rate mortgage.

Cash-out Refinance The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan. The borrower can use the extra funds in any manner.

Chain of Title The official record that details the ownership history of a piece of property.

Closing Costs This is a competitive number that should be compared and includes loan fees, discount points, mortgage broker fees, appraisal, title, escrow, underwriting, processing fees and any other fees required to close your loan. You will be provided with a Good Faith Estimate (GFE) when you apply. Most lenders offer a ZERO closing cost option as well but realize that nothing is free in life and you will be paying a higher interest rate for this option. Depending on the time you expect to be in the property, we can show you which option is save you the most money.

Closing Statement A financial disclosure giving an account of all funds received and expected at closing, including escrow deposits for taxes, hazard insurance and mortgage insurance. Most conventionally financed loans use a uniform settlement statement called the HUD-1.

Combined Loan To Value (CLTV) The total of all mortgage's on a property divided by the value of a property. CLTV is usually used when there is both a first and a second mortgage involved in a transaction.

Commitment A promise by a lender to make a loan with specific terms for a specified period.

Conforming Mortgage Loan (Conventional) Any loan that meets the qualifications to be purchased by Fannie Mae or Freddie Mac. The current conforming loan limit is $300,700.

Contingency A condition specified in a purchase contract such as a satisfactory home inspection.

Convertible ARM A mortgage, which starts as an adjustable rate loan, but allows the borrower to convert the loan to a fixed rate mortgage during a specified period of time.

Credit Report A report that shows a loan applicant's history of payments made on previous debts. Several companies issue credit reports, but the three largest are Trans Union Corp., Equifax and Experian (formerly TRW).

Deed The legal document that transfers ownership of a piece of property.

Discount Points A fee that a borrower pays at the time the lender makes the loan. A point equals 1% of the total loan amount. Often called points.

Down Payment The amount of money a buyer agrees to give the seller when a sales agreement is signed. Complete financing is later secured with a lender. The remainder of the purchase price comes from the mortgage loan.

Due-on-sale Provision/Clause Standard language in a mortgage which states that the loan must be paid when a house is sold.

Earnest Money Deposit Money buyer gives with an offer to purchase a property. Also referred to as the deposit.

Equal Credit Opportunity Act (ECOA) Federal law prohibits a lender or other creditors from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age, or because the applicant receives public assistance.

Escrow A neutral third party that holds documents and money for a real estate transaction and ensures that all conditions of a sale are met. Also refers to a special account that a lender uses to hold a borrower's monthly payments on property taxes and insurance.

Escrow Account An account that a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowner's insurance and property taxes.

Fannie Mae The official name of the Federal National Mortgage Association (FNMA), it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Fee Simple This type of ownership is the maximum interest a person can have in a piece of real estate. It entitles the owner to use the property in any manner they see fit, in accordance with state and local laws.

FHA Loans Mortgages that are insured by the Federal Housing Administration (FHA). The FHA provides low-rate mortgages to buyers who make a down payment as small as 3%, and operates loan plans for investors and purchasers of rural property. Its most popular is the Sec. 203(b) program, which provides low-rate mortgages to buyers who make a down payment as small as 3%. Also, the 203(k) program allows borrower to borrow enough to make home improvements. To learn more see FHA Info.

Fixed Rate Mortgage A home loan with an interest rate that will remain at a specific rate for the term of the loan.

FLOAT VERSES LOCK When you apply for a loan, you should decide whether you wish to lock the rate in at that time or wait until a later date. Rates change daily and sometime more than once in a day. In a rising rate environment it is best to lock in at application as the odds are stacked against you. In a falling rate environment, it is probably better to hold off until closer to closing as you may end up with a better rate. No matter what rate you choose, don't dwell on it. Be happy that the decision is over and you don't have to worry anymore.

Flood Insurance Hazard coverage that is required in designated flood areas.

Freddie Mac The common name for the Federal Home Loan Mortgage Corporation (FHLMC), a congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Good Faith Estimate (GFE) An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.

Homeowner's Insurance This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.

HUD (U.S. Department of Housing and Urban Development) A federal agency that oversees the Federal Housing Administration and a variety of housing and community development programs.

Index A published interest rate, such as the prime rate, LIBOR, T-Bill rate, or the 11th District COFI. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. On adjustable rate mortgages, a predetermined margin is added to the index to compute the interest rate adjustment.

Index Rate Change Indexes generally go up and down with the general movement of interest rates. If the index rate rises, so will your mortgage rate in most cases. If the index rate goes down, generally your mortgage rate will go down as well.

Land Contract Conversions Generally if you have a Land Contract that has been valid for one year or more, the borrower may refinance the property into their own name. The benefits are that the borrower now has a property in their name.

Lease Option Buyouts Generally, Lease options over 1 year may be treated as a refinance transaction. This allows the buyer the benefit of any appreciation that the property may have enjoyed.

Loan to Value (LTV) A term used by lender's to assess their exposure. Simply, this is the amount of 1st Mortgage divided by the value of the property, using the appraised value or the purchase price, whichever is lower. Higher LTV loans are a greater risk and generally require PMI.

Lock-in When interest rates are volatile, many borrowers want to lock-in an interest rate. Many lenders will oblige, setting a limit on the amount of time the lock-in is in effect. Total income of a household before taxes or expenses is subtracted.

Mortgage A legal document specifying a certain amount of money to purchase a home at a certain interest rate, using the property as collateral.

Origination Fee A fee charged by most lenders for processing a loan. Also called points or discount points. A point is 1% of the total loan amount.

PITI (Principal, Interest, Taxes and Insurance) When a buyer applies for a loan, the lender will calculate the principal, interest, taxes and insurance. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.

Points Fees charged by lenders at the time a loan is originated. Also called discount points. A point is 1% of the total loan amount.

Prepayment Penalty Lender's can impose a penalty on a borrower who pays a loan off before its expected end date.

PRE-QUALIFY This is simply a review of the borrower's credit application. This is usually done at the time of application. This will give you an idea of any hurdles you may have to overcome. This type of approval still requires that everything on the application be verified. When looking to purchase a home, this should be your first step.

Private Mortgage Insurance (PMI) A monthly fee you pay if you do not have 20% down on an owner occupied purchase or 20% equity on a refinance. There are some programs that eliminate 'PMI' in return for a higher interest rate.

Quitclaim Deed A deed relinquishing all interest, title, or claim an owner has in a property. A Quitclaim Deed implies no warranty.

REO (Real Estate Owned) Properties Property a lender acquires as the result of a foreclosure. Also referred to as OREO Properties.

RESPA (Real Estate Settlement Procedures Act) A federal statute and regulation promulgated by U.S. Department of Housing and Urban Development (HUD), governing real estate lending practices and disclosures. Its main features pertain to the provision of a good faith estimate of loan settlement costs.

Reverse Mortgage A loan for home owners who have already paid off their mortgage but want to tap into their home's equity.

Right To Rescind On certain refinance transaction, the borrower is allowed a 3 day "cooling off" period in which they can rescind the transaction after they have signed the loan documents. This law only applies to refinances of owner-occupied 1-4 family dwellings. The three (3) day period does not count Sundays or Holidays in which the bank or Lender is closed. Please see you documents for exact dates. If you a concerned and think you might want to cancel, it is best to speak with your loan officer. They may be able to make changes or recommend other programs that better suit your needs.

Settlement Statement (HUD-I) Document outlining the financial transactions that occur at closing.

Survey Map made by a licensed surveyor that measures land and charts its boundaries and modifications.

Tenants-in-common A form of ownership in which two or more owners hold an undivided (not necessarily equal) interest in a property with no right of survivorship.

Termite Infestation Report A report from a qualified termite inspector on the presence of termites in a home. Often required in the sale of a home.

Title The actual legal document conferring ownership of a piece of real estate.

Title Insurance A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property. Also referred to as the Title Policy.

Title Policy A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property. Also referred to as Title Insurance.

Title Search An examination of public title records to determine that the seller is the legal owner and that there are no claims or liens against the property.

Truth-in-lending Act A federal law that allows a consumer to cancel a loan until midnight the third business day after a contract is signed, if the home was pledged as security (except for a first mortgage or trust deed).

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Warranty Deed Grantor guarantees that title transferred is good against the whole world.