"Over the many years that I have been selling real estate and attending settlements, Sandy Hazelwood has impressed me with the way she handles the closing of real estate transactions. She is very professional and on top of the case from the day she receives the contract until the day we sign the papers."
Sue Graham ~ ERA Teachers, Inc.
Home Buyers and Sellers
- Buyers/Sellers Services
- Title/Settlement Glossary
- Title Insurance
- Checklist for Home Buyers
- Checklist for Home Sellers
- What Happens at Closing
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4443 Brookfield Corporate Drive
Chantilly, VA 20151
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Glossary of Title and Settlement Terms
Adjustable Rate Mortgages
Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan.
To reduce a debit by means of regular payments which include amounts to be applied to both principal and interest.
Annual Percentage Rate on a mortgage.
An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
The value placed on land and improvements for taxation purposes.
A scheduled payment due at the end of a loan term that is substantially greater than the regular monthly payments.
The person or financial institution that you name in a life insurance policy to receive the proceeds.
Blanket Mortgage/Trust Deed
A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance from the blanket mortgage is obtained.
Bona Fide Purchaser
One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.
Broker Compensation or Fee
The amount of money the broker will receive for finding a loan for a borrower. This may be an amount paid by the borrower, an amount paid by the lender or a combination of the two.
A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate usually for the first one to five years of the loan.
Cash-out Refinancing Loan
A loan that refinances a prior mortgage and that provides additional cash to the borrower.
CC&R - Declaration of Covenants, Conditions and Restrictions
The CC&R declarations are a set of rules designed to protect the value of your property and that of your neighbors. Also known as deed restrictions, CC&R declarations are contractual limitations of your rights as a property owner. These restrictions were placed on your property deed, filed with County, and made a condition of the purchase of your lot by the original developer. These restrictions are passed on to any new owner, because they are attached to the property deed.
Certificate of Title
In areas where attorneys examine abstracts or chains of title, a written opinion, executed by the examining attorney, stating that title is vested as stated in the abstract.
Close of Escrow
The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.
The final procedure in the real estate sales process, where the sale and loan are completed by the execution of documents for recording. In some areas, this procedure is known as the closing of escrow.
A general term to describe the fees that a borrower will pay at closing. Sometimes called "settlement fees."
Cloud on Title
An irregularity, claim, or encumbrance which could adversely affect or impair the title.
A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. The commitment contains all information included in the preliminary title report, plus a list of the title company's requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.
Comparative Market Analysis (CMA) or "Comps"
Sales that have similar characteristics as the subject property, used for analysis in the appraisal. An appraiser uses CMA to assess a properties worth and a realtor uses it to help a buyer make the best offer to a seller.
Loans which conform to Fannie Mae guidelines.
Dependent upon conditions or events specified. Property may be sold contingent upon the seller or buyer meeting a predetermined condition.
An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.
(1) A formal agreement or contract between two parties in which one party gives the other certain promises and assurances. (2) Agreements or promises contained in deeds and other instruments for performance or nonperformance of certain acts, or use or nonuse of property in a certain manner.
Credit Score/FICO Score/Beacon Score
This is a number that is supposed to show the lender how likely you are to repay a loan--whether you are a good or poor credit risk. The score is generated by a mathematical formula that considers your credit reports and other factors.
Deed of Trust or Trust Deed
A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the “trustor.” The party to whom the legal title is conveyed (and who may be called on to conduct a sale if the loan is not paid) is the “trustee.” The lender is the “beneficiary.”
(1) Title to a negotiable instrument obtained by fraud.
(2) Title to real property which lacks some of the elements necessary to transfer good title.
Money given by the buyer with an offer to purchase to show good faith.
Document Preparation Fee
An amount of money that you may be charged for the preparation of mortgage loan documents. This charge will be shown on the HUD-1 Settlement Statement.
A provision in a mortgage or deed of trust which requires the loan to be paid in full if a property is sold or transferred.
Down payment or deposit made by a purchaser of real estate as evidence of good faith.
A right or interest in the use of the land which entitles the holder to some use or privilege, such as to place pole lines, pipe lines or roads on the property.
The presence of an improvement such as a building, wall, fence or other fixture which overlaps onto the property of an adjoining owner.
Addition to or modification of a title insurance policy which expands or changes coverage of the policy, fulfilling specific requirements of the insured.
The interest or value which an owner has in real estate over and above the debts against it.
1) A procedure whereby an independent third party handles legal documents and funds on behalf of a seller and buyer. 2) Money that is kept by the mortgage company to ensure that taxes can be paid in full when due. This is paid up front at settlement and is added to the mortgage payment monthly over the principal and interest.
The Federal National Mortgage Association, a federally sponsored private corporation which provides a secondary market for housing mortgages.
FHA - The Federal Housing Administration
A federal government agency which insures private loans for financing of new and existing housing and for home repairs under government approved programs.
FHLMC (Freddie Mac) - Federal Home Loan Mortgage Corporation
Creates a secondary market in conventional residential loan and FHA and VA loans by purchasing mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.
The finance charge is a disclosure that appears on the Truth in Lending Act Disclosure Statement. It is intended to show the cost of your loan as a dollar amount. It includes (1) interest that will be charged over the life of the loan and (2) some up front fees (prepaid finance charges).
Fixed Rate Mortgage
A mortgage having a rate of interest which remains the same for the life of the mortgage.
Flood Certification Fee
A fee charged to determine if the property lies in a flood zone and whether flood insurance is required.
Legal process by which a mortgagor of property is deprived of his interest in that property due to a failure to comply with terms and conditions of the mortgage.
Forfeiture of Title
A common penalty for the violation of conditions or restrictions imposed by the seller upon the buyer in a deed or other proper document.
This describes a loan where the balance owed at the scheduled end of the loan is zero if all regular monthly payments are made as scheduled.
A promise by one party to pay a debt or obligation contracted by another if the original party fails to pay or perform according to a contract.
A person who acquires an interest in land by deed, grant or other written instrument.
A homeowner's insurance policy through which an insurance company protects the insured from specified losses, such as fire, windstorm and the like.
A document that provides an itemized list of the funds that are payable at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing.
A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one, three, and five year U.S. Treasury security yields, ), which is then used to adjust the interest rate on an adjustable mortgage up or down.
The fee charged for borrowing money.
Interest Only Payments
A mortgage in which only the interest is paid on a monthly basis. This means that the buyer gets no equity in the property.
Interest Rate Buydown Plan
An arrangement that allows the property seller to deposit money to an account. That money is then released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
A written document.
A decree of a court.
A loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.
Lease-Purchase Mortgage Loan
An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment consists of principal, interest, taxes and insurance (PITI) payments on the first mortgage plus an extra amount that accumulates in a savings account for a down payment.
A claim upon a piece of property for the payment or satisfaction of a debt or obligation.
The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.
The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.
Monthly Fixed Installment
The portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction and doesn't cover all of the interest.
Refers to the lender.
Refers to the borrower or homeowner.
When your monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The home buyer ends up owing more than the original amount of the loan.
Non Assumption Clause
A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender.
A written promise to pay a certain maount of money, at a certain time, or in a certain number of installments. It usually provides for payment of interest and its payment is at times secured by a mortgage.
The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.
In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on your loan's structure.
A percentage point, equal to one percent of the loan amount.
Power of Attorney
A legal document authorizing one person to act on behalf of another. Must be approved prior to closing.
Primary Mortgage Market
Lenders, such as commercial banks, credit unions, and mortgage companies, who make mortgage loans directly to borrowers. These lenders sometimes sell their mortgages to the secondary mortgage markets such as FNMA or GNMA, etc.
Principal, Interest, Taxes and Insurance (PITI)
The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the monthly cost of property taxes and homeowners insurance, whether these amounts are paid into an escrow account each month or not.
Calculations used to determine if a borrower can qualify for a mortgage, consisting of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.
A commitment issued by a lender to a borrower or another mortgage originator guaranteeing a specified interest rate and lender costs for a specified period of time.
Real Estate Settlement Procedures Act (RESPA)
A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
Right of Recission
The cancellation of a contract. With respect to mortgage refinancing, the law that gives the homeowner three days to cancel a contract in some cases once it is signed if the transaction uses equity in the home as security.
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.
Reverse Annuity Mortgage (RAM)
A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as collateral for and repayment of the loan.
A mortgage, the lien of which is subordinate to that of another mortgage.
Secondary Mortgage Market
The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders.
The property that is pledged as collateral for a loan.
See Closing and Closing Costs.
Standard Payment Calculation
The method used to determine the monthly payment required to repay the remaining balance of a mortgage in substantially equal installments over the remaining term of the mortgage at the current interest rate.
The processs of measuring land to determine its size, location and physical description and the resulting drawing or map.
A document that gives evidence of an individual's ownership of property.
A policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests.
Title Insurance Binder or Commitment
A report issued by a title insurance company binding or committing the title insurance company to issue the form of policy designated in the commitment or binder upon compliance with and satisfaction of requirements set forth in the commitment or binder.
An examination of public records and court decisions to determine the legal ownership of property. Usually performed by a title company.
Total Expense Ratio
Total obligations as a percentage of gross monthly income including monthly housing expenses plus other monthly debts.
Money paid to the county and/or state when property is sold.
Truth In Lending (Regulation Z)
A federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan.
The decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.
Interest charged in excess of the legal rate established by law.
A long term, low-or-no down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.
Variable Rate Mortgage
See Adjustable Rate Mortgages
Verification of Deposit
A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.
Verification of Employment
A document signed by the borrower's employer verifying his/her position and salary.
Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.
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Through our convenient Chantilly office located in Fairfax County and two satellite offices in Washington, DC, Hazelwood Title & Escrow serves clients across Northern Virginia, including Fairfax, Chantilly, Centreville, Dulles, Ashburn, Leesburg, Sterling, Tysons, Burke, Manassas, Gainesville, Bristow, Haymarket, Middleburg, Mclean, Reston, and the DC Metro area.