GLOSSARY
ABSTRACT OF TITLE
A document that traces the legal history of a property, including transfers of title as well as all recorded liens and encumbrances and their current status.CLEAR TITLE
The occasion where a real estate transaction is finalized. The seller delivers title to the buyer in exchange for payment of the purchase price.DEED
A legal document which conveys title to, or an interest in, a property.DEDUCTIBLE
The dollar amount the home owner must pay for a loss before the home owner's insurance company will provide payment for the remainder of the claim.EASEMENT
The right of someone who is not the owner of a property to use the property for a specific purpose.ENCUMBRANCE
Any claim against the title to a property, such as a mortgage, a lien, an easement, or unpaid taxes.HAZARD INSURANCE
Insurance to protect the home owner and the lender against physical damage to a property from fire, wind, vandalism, or other hazards.HOME OWNER'S INSURANCE
An insurance policy that combines liability coverage and hazard insurance for the property and it's contents.INSURANCE BINDER
The receipt given to the home buyer by the insurance agent which proves that the first year of home owner's insurance has been purchased.LIEN
A claim of money against a property, wherein the value of the property is used as security in repayment of a debt. Examples include a mechanic's lien, which might be for the unpaid cost of building supplies, or a tax lien, for unpaid property taxes. A lien is a defect on the title and needs to be settled before transfer of ownership. A lien release, or satisfaction, is a written report of the settlement of a lien and is recorded in the public record as evidence of payment.MARKETABLE TITLE
Title which is reasonably free of risk of litigation over possible defects.MORTGAGE INSURANCE PREMIUM (MIP)
The payments made by the borrower to the lender for FHA default insurance. The default insurance protects the lender from losses it might suffer if it must foreclose on the mortgage.MORTGAGE NOTE
A legal document which states a borrower's personal obligation to repay a loan at a stated interest rate during a specified period of time.OWNER'S POLICY OF TITLE INSURANCE
Buyers can purchase at the time of closing a policy which protects against financial loss due to hidden title defects. The one time premium provides coverage for as long as you own the property.PRIVATE MORTGAGE INSURANCE
Insurance provided by private, non-government insurance companies to protect lenders against loss if a borrower defaults. PMI is required on most convent ional loans when the borrower has less than a 20% down payment or 80% equity in property.RECORDER'S OFFICE
The county office which maintains records concerning real estate transactions within that county. After the closing, the title company will take the deed and mortgage papers to be filed at the Recorder's Office.SETTLEMENT STATMENT
The computation of costs payable at closing which determines the seller's net proceeds and the buyer's net payment.TITLE
A legal document that establishes the right of ownership.TITLE FEES
A charge for searching public documents to determine previous ownership and what, if any, problems exist, such as unpaid mortgages, tax liens, or easements.TITLE INSURANCE
The insurance the borrower purchases to protect the lender against any claim on the title to the property. Buyers can also take out title insurance to protect themselves against possible claims on the property. Sellers may provide a copy of their owners policy as title history instead of an abstract.
