Golf Escrow Corporation > What is Escrow?

Terms listed alphabetically.

Annual Percentage Rate (APR) - The actual cost of borrowing money. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points and other credit costs paid to the lender.

Appraisal - A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

Assignment - When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment

Bankruptcy - Proceedings under federal statutes to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt entity's property and other assets are distributed by the court to creditors as full satisfaction for the debt.

Broker - Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.

Closing - In most states a real estate transaction is not considered "closed" until the documents record at the local recorders office and money changes hands.

Closing Costs - Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

Deed - A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property

Deed of Trust - An instrument used in place of a mortgage by which real property is transferred to a trustee to secure repayment of a debt

Down Payment - The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage

Earnest Money - The monetary advance of part of the purchase price to indicate the intention and ability of the buyer to carry out the contract

Encumbrance - Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.

Escrow - Route this one to our "What is Escrow Page"

FHA Mortgage - A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.

Grantee - The person to whom an interest in real property is conveyed

Grantor - The person conveying an interest in real property

Hazard Insurance (Homeowner's Insurance) - Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards

Home Equity Line of Credit (HELOC) - A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.

Homeowner's Warranty - A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.

HUD-1 Settlement Statement - A document that provides an itemized listing of the funds that were paid at closing. Some of the items that appear on the statement include real estate commissions; loan fees, points, and initial escrow (impound) amounts. Each type of expense goes on a specific numbered line on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. It is called a HUD1 because the form is prepared by the Department of Housing and Urban Development (HUD). The HUD1 statement is also known as the "closing statement" or "settlement statement."

ID Affidavit - An Identification Affidavit, commonly called an ID Affidavit, is sometimes needed to clear a potential cloud on the title. When Title Insurance is ordered, the title company searches the public records of the county in which the property is located. Judgments are sometimes found in names very similar to the parties of our transaction. After completion of an ID Affidavit, the title company is able to research and determine whether the judgment is for our party. The title company will remove the judgment from our party's title report if it finds that the judgment is for someone else.

Impound Account - Portion of the borrower's monthly mortgage payment that is held by the lender to pay for property taxes, hazard insurance, mortgage insurance, ground rent, and other items as they become due. Also called escrow or reserve account.

Interest - The price paid for the use of capital

Judgment - A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor

Legal Description - A geographical description identifying a parcel by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion that is subject to an easement or reservation

Lender - A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders."

Lien - A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien

Negative Amortization - Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essence, the borrower is deferring the interest payment, which is why this is called "deferred interest." The deferred interest is added to the balance of the loan and the loan balance grows larger instead of smaller, which is called negative amortization.

Promissory Note - A written promise to repay a specified amount over a specified period of time

Power of Attorney - A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time

Prepayment - Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized. Sometimes the lender may assess a prepayment penalty if any of the mortgage is prepaid.

Quit Claim Deed - A deed operating as a release that is intended to pass any title, interest or claim that the grantor may have in the property, but not guaranteeing such title is valid

Real Estate Settlement Procedures Act (RESPA) - A federal statute requiring disclosure of certain costs in the sale of residential improved property which is to be financed by a federally insured lender

Real Property - Land and generally whatever is erected or affixed to the land that would be personal property if not attached

Recording - The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Settlement Statement - See HUD-1 (Link back to HUD-1)

Title - A legal document evidencing a person's right to or ownership of a property

Title Insurance - Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

Truth-in-Lending - A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

Warranty Deed - A deed used in many states to convey fee title to real property

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