Sell Your Home: Definitions
Selling your home is all about financial
transactions and legalities. Bottom line,
you need to understand the lingo. Here
is an abbreviated list of terms you should know.
- acceleration clause
- A clause in your mortgage that allows your lender to demand payment of the remaining balance of your loan. A lender may accelerate your loan if you default on your payments or if you transfer title to someone else without properly informing the lender.
- The process of paying off a loan over a predetermined period of time. It refers to the reduction of the outstanding principal balance of the loan.
- appraised value
- An estimate of a property’s fair market value at a specific time, based on a professional analysis that includes examples of sales of similar properties.
- assessed value
- The value placed on property by a public tax assessor for purposes of taxation.
- Transfer of ownership of your mortgage from one company or individual to another.
- assumable mortgage
- An existing mortgage loan that can be taken over by a new buyer when the home is sold.
- A way of managing debt by filing for relief in federal court. Under the court’s supervision, individuals can restructure or eliminate debts and liabilities. Two types of bankruptcy are most common for individuals: Chapter 7 bankruptcy relieves a borrower with no assets of most types of debts. Under Chapter 13, for individuals with a regular income, the court approves a plan for repayment of debts over a three-to-five-year period; this may allow the borrower to keep such property as a mortgaged house or car.
- Anyone who earns a fee for bringing two parties together for any type of transaction; an agent.
- chain of title
- The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
- clear title
- A title that has no liens or legal questions as to ownership of the property.
- The point when buyer and seller sign all documents legally required to complete the sales transaction and transfer ownership of a property, including mortgage loan and title or deed transfers and payment of closing costs. In some states, a real estate transaction is not considered to be closed until the documents are recorded at the local government recorder’s office. In others, the transaction is closed when all documents are signed and money has changed hands.
- closing costs
- Fees, in addition to the sale price of the property, that are required to complete the real estate transaction. They include points, taxes, financing costs (including the appraisal and credit report) and items that must be escrowed. Buyers and sellers both usually pay some of these costs.
- cloud on title
- Any condition that adversely affects the title to a property. Usually, such clouds cannot be removed, except by deed, release, or court action.
- Property pledged for the repayment of a loan. For a home loan, the home itself is the collateral. If the loan is not repaid according to the terms of the mortgage or deed of trust, the lender can take possession of the property.
- If a borrower falls behind on payments, the lender tries to collect the amount due. As part of the collection effort, the lender must mail and record certain documents, in case they are eventually required to legally foreclose on the property.
- A fee for services rendered, based on a percentage of the amount received or agreed to be paid. Real estate agents, mortgage brokers, loan officers, title representatives, attorneys, escrow representatives, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more, all receive commissions when a house is sold. The commissions are paid by the seller or the buyer in the purchase transaction.
- comparable sales, “comps”
- Recent sales of similar properties in nearby areas. These are used to help determine the market value of a property.
- A condition that must be met for a real estate sale to proceed or a contract to become legally binding. For example, a potential buyer may state in an offer to purchase that his own property must be sold before he is able to purchase the new property, or the buyer may stipulate that the contract is not binding until a satisfactory home-inspection report is obtained from a qualified home inspector.
- An oral or written agreement to do or not to do a certain thing.
- conventional mortgage
- A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the US Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).