Glossary Of Terms
A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.
Condition in a mortgage that may require the balance of the loan to become due immediately. This may occur if regular mortgage payments are not made or for breach of other conditions of the mortgage.
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically six months, one, three, or five years, depending on the mortgage terms.
The cost of credit expressed as an annual rate. It must be calculated by using a formula set by Federal law and disclosed to the borrower to aid in comparing different credit plans.
The cost of credit expressed as an annual rate. It must be calculated by using a formula set by federal law and disclosed to the borrower to aid in comparing different credit plans.
A printed form used by a Mortgage lender to record necessary information concerning a prospective Mortgage.
A sum of money paid towards estimated initial Mortgage processing expenses such as appraisal and credit report.
An expert judgment or estimate of the quality or value of Real Estate as of a given date.
A property’s increase in value due to inflation or economic factors.
Ownership in real property which is to be specifically excluded from community property.
The value that a taxing authority places on real or personal property for the purpose of taxation.
Charges levied against a property for tax purposes or to pay for municipality or association improvements such as curbs, sewers, or grounds maintenance.
A means of transferring a contract right or other asset to another person or entity.
An obligation undertaken by the purchaser of property to be personally liable for payment of an existing Mortgage. In an assumption, the purchaser is substituted for the original mortgagor in the mortgage instrument and the original mortgagor is to be released from further liability in the assumption, the mortgagee’s consent is usually required.
The original mortgagor should always obtain a written release from further liability if he/she desires to be fully released under the assumption. Failure to obtain such a release renders the original mortgagor liable if the person assuming the Mortgage fails to make the monthly payments.
An “Assumption of Mortgage” is often confused with “purchasing subject to a Mortgage .”
When one purchases subject to a mortgage, the purchaser agrees to make the monthly mortgage payments on an existing mortgage, but the original mortgagor remains personally liable if the purchaser fails to make the monthly payments. Since the original mortgagor remains liable in the event of default, the mortgagee’s consent is not required to a sale subject to a mortgage.
Both “Assumption of Mortgage” and “Purchasing Subject to a Mortgage” are used to finance the sale of property. They may also be used when a mortgagor is in financial difficulty and desires to sell the property to avoid foreclosure.