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Annual Percentage
Rate (APR) A
figure that represents the cost of the loan over the term
of the loan expressed as a percentage. The APR is disclosed
the Truth In Lending disclosure.
Assessments
Assessments
usually refer to the annual fees levied by homeowners associations.
Many subdivisions have mandatory homeowners associations.
Owners in those subdivisions must pay an annual fee to pay
for the upkeep of the subdivision and its amenities.
Closing
Attorney
The closing attorney handles the closing. This attorney typically
represents the lender, and prepares the documents, which are
signed by the buyer and seller at closing.
Earnest Money
The buyer pays earnest money when the contract is signed.
Earnest money shows the buyer's commitment to go through with
the deal; helps make the contract legally enforceable, and
may provide compensation to the seller if the buyer does not
close. Earnest money is typically held by the real estate
agent or, if there is no agent, by the seller or escrow agent.
The earnest money is applied against the purchase price at
closing.
Encumbrance
A
claim, lien, charge, or liability attached to and binding
real property.
Escrow Account
An
account maintained by the lender, paid into monthly by the
borrower, and used for the payment of property taxes, hazard
insurance, and/or mortgage insurance.
Finance Charge
The
amount of interest, prepaid finance charges and certain insurance
premiums which the borrower will be expected to pay over the
life of the loan.
Good Faith
Estimate An
estimation of the amount of costs associated with financing
a loan. The lender is required to give this estimate to the
borrower within three days of the loan application.
Good Funds
Money
in the form of a cashier's check, Georgia closing attorney's
escrow check or wire transfer.
Grantor
The
person selling the property.
Grantee
The person buying the property.
Hazard Insurance
Hazard
insurance is also known as homeowner's insurance. This is
the insurance you buy to cover fire or other damage to your
home. All lenders require their borrowers to obtain hazard
insurance.
Intangible
Tax A state tax on loans. The amount
of tax is $1.50 for each $500.00 borrowed.
Joint Tenancy
with the Right of Survivorship An undivided
interest in property, taken by two or more people ("joint
tenants"). All joint tenants have an equal interest in the
property and upon the death of a joint tenant, his or her
interest passes immediately to the surviving joint tenant(s),
rather than to the heirs of the deceased.
Legal Owner
The legal owner is usually the lender. The
legal owner has title to the property even though the title
may carry no rights other than a lien. The person who lives
in the home is the equitable owner.
Lender's
Title Insurance Insurance paid for
by the borrower, that protects the lender against claims against
the property that were not discovered during the title examination.
Lien
A claim or encumbrance on property for payment of some debt.
Mortgage
Insurance Insurance
paid for by the borrower that protects the lender against
loss incurred by a mortgage default, thus enabling the lender
to lend a higher percentage of the sales price.
Owner's Title
Insurance An insurance policy, paid
for by the borrower, that protects the owner of the property
against claims against the property that were not discovered
during the title examination.
Planned Unit
Development (PUD) A subdivision of
individually owned lots with one or more common areas that
are typically maintained by a mandatory homeowner's association.
Power of
Attorney An authority by which one
person enables another to act for him or her. A specific power
of attorney is required for real estate transactions. The
powers given may include the power to execute a note, endorse
checks and/or purchase property.
Prepaid Loans
charges paid by the borrower when the loan
is closed. The charges include the homeowners insurance premium,
prepaid interest, up front mortgage insurance premium, initial
escrow deposits for the payment of taxes, homeowners insurance
and/or private mortgage insurance.
Prepaid Interest
At closing, a buyer prepays the interest
on his loan for the rest of the month in which the closing
occurs. If the closing occurs early in the month, a lot of
prepaid interest will be due. Less interest will be due if
the closing occurs at the end of the month.
Promissory
Note A legal document, which sets forth
the terms of the loan and creates an obligation to pay back
the loan. Terms of the loan may include the interest rate,
prepayment terms and late charges.
Purchase
and Sale Contract This is the document
which, when signed, obligates the buyer to buy the home and
the seller to sell the home.
Recording
After closing, the warranty deed and
the security deed and relevant documents such as judgment
affidavits and a power of attorney must be recorded at the
county courthouse. This means that these documents are filed
with the county clerk who indexes them and makes a photocopy
available for public inspection. By doing this, any party
can determine whether you have good title to your home.
Recording
Fees The buyer's warranty deed and
security deed must be recorded at the county courthouse. The
county charges a fee to record these documents. The closing
attorney sends the documents to be recorded.
Rider An
attachment to the security deed or promissory note setting
out additional requirements such as abiding by the covenants
and restrictions of the homeowner's association.
Security
Deed This document giving the lender
a collateral interest in the property. The security deed gives
the lender the right to foreclose if the loan is not paid.
Only the borrower (buyer) signs the security deed.
Settlement
Statement The settlement statement,
or closing statement, is a summary of all funds paid or received
by the buyer and seller at closing. The closing attorney prepares
the settlement statement. At closing, the buyer and seller
must review and sign the settlement statement. Make sure to
keep your copy of the settlement statement in a safe place
after closing.
Survey
A survey is a drawing showing the boundary
lines of a piece of property, and the location of all buildings
and other improvements on the property in relation to the
property lines. A survey will show whether the home encroaches
upon any setback lines or easements.
Taxes
There are several kinds of taxes involved in
a real estate transaction such as Property taxes, intangible
tax, and transfer tax. Property taxes are prorated between
the buyer and seller at closing.
Tenancy In
Common Ownership of property by two
or more tenants ("tenants in common") in which the interest
of each tenant does not have to be equal. Upon the death of
one of the tenants in common, his or her interest in the property
passes to his or her heirs rather than to the other tenants.
Termite Letter
A signed document from a termite company. It
is dated within 30 days of closing and discloses any previous
or present infestation by wood destroying organisms.
Three Day
Right of Rescission In a refinance,
second mortgage or equity line of credit of a principal residence,
the federal government requires a three-day period in which
the borrower may cancel the transaction. This right does not
apply to purchases.
Title Examination
A review of the public records at the courthouse
to verify that the seller owns the property and to determine
if there are any claims that may affect one's ownership of
the property.
Transfer
Tax A state tax on the transfer of
real estate.
Truth
In Lending Disclosure A disclosure required
by the federal government setting forth the costs of the loan.
Warranty Deed The document
that conveys title to real property.
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