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Terminology
Here Are Some Helpful Terms Used Throughout The Real Estate,
Mortgage, and Title Processes.
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Earnest Money |
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The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the downpayment. If the sale does not go through, the earnest money will be forfeited or lost unless the binder or offer to purchase expressly provides that it is refundable. |
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Earnest Money Deposit |
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A deposit made by the potential home buyer to show that he or she is serious about buying the house. |
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Easement |
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A right of way giving persons other than the owner access to or over a property. |
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Easement Rights |
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A right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example. |
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Effective Age |
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An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age. |
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Eminent Domain |
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The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings. |
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Encroachment |
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An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line. |
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Encumbrance |
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A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it. |
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Equal Credit Opportunity Act |
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Prohibits discrimination in any aspect of a credit transaction on the basis of race, religion, age, color, national origin, receipt of public assistance funds, sex, or marital status. |
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Equity |
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The value of a homeowner's unencumbered interest in real estate. Equity is computed by subtracting from the property's fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property. A homeowner's equity increases as he pays off his mortgage or as the property appreciates in value. When the mortgage and all other debts against the property are paid in full the homeowner has 100% equity in his property. |
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Escrow |
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Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual. In FHA mortgage transactions an escrow account usually refers to the funds a mortgagor pays the lender at the time of the periodic mortgage payments. The money is held in a trust fund, provided by the lender for the buyer. Such funds should be adequate to cover yearly anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, and special assessments. See also Escrow Account. |
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Escrow Account |
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Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner's insurance when they come due. The lender pays them with your money instead of you paying them yourself. |
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Escrow Analysis |
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Once each year your lender will perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures. |
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Escrow Disbursements |
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The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due. |
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Escrows |
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Lenders often set up an account, called an escrow or impound account, to hold the tax and insurance portions of your monthly mortgage payment. At closing, the lender collects sufficient money to establish the necessary reserves in this account. The reserves plus the monthly deposits are then held until such time they are used by the lender to pay the tax and insurance bills. |
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Estate |
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The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death. |
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Estimated Closing Fees |
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An estimate of the fees that must be paid on or before the closing date by the buyer and/or seller for services, taxes and items necessary to obtain mortgage. These fees will average between 2% and 5% of the loan amount and vary by lender, property location, and type of mortgage. |
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Eviction |
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The lawful expulsion of an occupant from real property. |
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Examination of Title |
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The report on the title of a property from the public records or an abstract of the title. |
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Exclusive Listing |
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A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time. |
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Executor |
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A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form. |
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Express/Courier Fee |
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On refinance transactions, an overnight courier is typically used to expedite the payoff of your existing loan. This fee covers the cost of the courier. |
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