ABSTRACT OF TITLE: It’s the history of the legal chain of title to the property showing changes of ownership, liens and encumbrances of the subject property. (Iowa is the only state that has abstracts.. other states have Title Guarantee insurance.

ASSUMABLE MORTGAGE: A loan that can be transferred from the existing owner to a new owner.

CLOSING COSTS: The charges paid at settlement to obtain a mortgage loan and transfer the real estate title. They costs are usually in addition to the price of the home. Be sure it is stated on your purchase agreement who will be paying which closing costs and what they will be.

CLOSING: The day or date on which the title of the property passes from the Seller to the Buyer and/or the date on which the Borrower signs the mortgage loan agreement and pays the Seller. Your moving day!!

EARNEST MONEY:  A sum paid to a Seller by a potential Buyer to show that the Buyer is serious.  If a contract is executed, the earnest money is cashed and applied to the purchase price of the home.

EASEMENTS:  Rights of way granted to persons or companies authorizing access to or over the owner’s land. For example: driveway or utility companies may have easement rights to install wire or pipes on or over your land.

EQUITY:  The value in excess of all indebtedness against the property.

ESCROW: A system or document transfer in which a Third Party or holding Company  holds a document, funds, or bond until all conditions in a contract are fulfilled.

INTEREST: The cost paid by a borrower for use of money borrowed to purchase a home,  boat, car, etc.

MLS: Multiple Listing Service enabling all Realtors in an area to put all their homes and listing together and show each others. Letting you work with only with the Realtor of your choice!

MORTGAGE:  A Pledge of property as security for the payment of a debt. 

MORTGAGE COMMITMENT:  A written communication by a lender, agreeing to make a mortgage on a specific property, stating the loan’s amount, length of time and conditions.

POINTS:  One percent of the mortgage value charged as a point to secure or reduce the interest rate. It may be required by the lender to make the loan.

PRINCIPAL:  Amount of money borrowed in a mortgage loan, excluding interest or other charges.

SALES CONTRACT: The Offer to Purchase is the contract between the Buyer and Seller. The contract should explain exactly what your purchase includes, who is responsible for providing it, what guarantees there are, when you can move in, what the “closing cost” are and what “outs” parties have if the contract is not fulfilled or if you cannot get a financing commitment at the agreed upon terms.

SETTLEMENT EXPENSES:  This is different from closing costs, but also involves charges that a Buyer or Seller must pay in closing a transaction on a house.  Settlement costs include insurance, tax payments, special assessments for improvements or association fees and sales commissions.

SURVEY:  On site measurement of lot lines, dimensions and position of a house on a lot, including determination of possible encroachments or easements etc.

TITLE INSURANCE:  A Contract to make good a property owner’s loss resulting from defect in a title, title insurance usually calls for the insurer to defend the property owner’s title at no cost if the title is challenged in court.

TITLE:  Evidence (usually in the form of a certificate or deed) of a person’s legal right to ownership of property.

TITLE SEARCH:  Detailed review of title records to assure that the property is bought form the legal owner and to determine if any liens, special assessments or other claims or outstanding restrictive covenants are on record.