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REAL ESTATE TERMS involved
in buying a home in Maryland or Virginia can be confusing to
some first time home buyers. As terms change, even experienced
home buyers can have questions about specific words or terms
in the Contract of Sale, Mortgage, Deed, Deed of Trust and other
terms.
A quick review of the list below will give you
a working knowledge of terms used in real estate in Maryland
and Virginia. If you have a question, give us a call at 800-711-7988
orsend an e-mail to MAILTO:LENN@LENNHARLEY.COM.
We'll get back to you.
Agreement of Sale
Known by various names, such as contract of purchase, purchase
agreement, or sales agreement according to location or jurisdiction.
A contract in which a seller agrees to sell and a buyer agrees
to buy, under certain specific terms and conditions spelled
out in writing and signed by both parties.
Appraisal
An expert judgment or estimate of the quality or value of real
estate as of a given date.
Basement Styles
Walk-out: A basement with a ground level exit without steps.
Outside Welled Exit: A basement with a steps leading from a
basement door along the house to the ground level. Daylight
Basement: A basement which is only 4-6 feet less than ground
level with 4-6 six feet wide steps leading directly to the ground
level. Usually from a sliding glass or french doors.
In-Ground Basement: A basement with no exit directly to the
outside.
Certificate of Title
A certificate issued by a title company or a written opinion
rendered by an attorney that the seller has good marketable
and insurable title to the property which he is offering for
sale. A certificate of title offers no protection against any
hidden defects in the title which an examination of the records
could not reveal. The issuer of a certificate of title is liable
only for damages due to negligence. The protection offered a
homeowner under a certificate of title is not as great as that
offered in a title insurance policy.
Closing Costs
The numerous expenses which buyers and sellers normally incur
to complete a transaction in the transfer of ownership of real
estate. These costs are in addition to price of the property
and are items prepaid at the closing day. This is a typical
list:
Documentary Stamps on Notes Cost of Abstract
Recording Deed and Mortgage
Documentary Stamps on Deed
Escrow Fees
Real Estate Commission
Attorney's Fee Recording Mortgage
Title Insurance Survey Charge
Appraisal and Inspection
Escrow Fees
Survey Charge Attorney's Fee
The agreement of sale negotiated previously between the buyer
and the seller may state in writing who will pay each of the
above costs.
Closing Day
The day on which the formalities of a real estate sale are
concluded. The certificate of title, abstract, and deed are
generally prepared for the closing by an attorney and this cost
charged to the buyer. The buyer signs the mortgage, and closing
costs are paid. The final closing merely confirms the original
agreement reached in the agreement of sale.
Deed
A formal written instrument by which title to real property
is transferred from one owner to another. The deed should contain
an accurate description of the property being conveyed, should
be signed and witnessed according to the laws of the State where
the property is located, and should be delivered to the purchaser
at closing day. There are two parties to a deed: the grantor
and the grantee.
Deed of Trust
Like a mortgage, a security instrument whereby real property
is given as security for a debt. However, in a deed of trust
there are three parties to the instrument: the borrower, the
trustee, and the lender, (or beneficiary). In such a transaction,
the borrower transfers the legal title for the property to the
trustee who holds the property in trust as security for the
payment of the debt to the lender or beneficiary. If the borrower
pays the debt as agreed, the deed of trust becomes void. If,
however, he defaults in the payment of the debt, the trustee
may sell the property at a public sale, under the terms of the
deed of trust. In most jurisdictions where the deed of trust
is in force, the borrower is subject to having his property
sold without benefit of legal proceedings. A few States have
begun in recent years to treat the deed of trust like a mortgage.
Earnest Money
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.
Equity
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.
Hazard Insurance
Protects against damages caused to property by fire, windstorms,
and other common hazards.
Home Types
Detached: Any home that is not connected to another.
Town Home: Any home that is connected side-by-side to another.
Apartment: Any multiple family dwelling with apartment homes
on more than one level.
Condominium: Any home with a condominium association which owns
the land and does some degree of maintenance/insurance.
Co-op: Any home which is owned by a corporation in which the
residents own shares.
HUD
U.S. Department of Housing and Urban Development. Office of
Housing/Federal Housing Administration within HUD insures home
mortgage loans made by lenders.
Lien
A claim by one person on the property of another as security
for money owed. Such claims may include obligations not met
or satisfied, judgments, unpaid taxes, materials, or labor
Mortgage
A lien or claim against real property given by the buyer to
the lender as security for money borrowed. Under government
insured or loan-guarantee provisions, the payments may include
escrow amounts covering taxes, hazard insurance, water charges,
and special assessments. Mortgages generally run from 10 to
30 years, during which the loan is to be paid off.
Mortgage Note
A written agreement to repay a loan. The agreement is secured
by a mortgage, serves as proof of an indebtedness, and states
the manner in which it shall be paid. The note states the actual
amount of the debt that the mortgage secures and renders the
mortgagor personally responsible for repayment.
Points
Sometimes called "discount points." A point is one
percent of the amount of the mortgage loan. For example, if
a loan is for $25,000, one point is $250. Points are charged
by a lender to raise the yield on his loan at a time when money
is tight, interest rates are high, and there is a legal limit
to the interest rate that can be charged on a mortgage. Buyers
are prohibited from paying points on Department of Veterans
Affairs guaranteed loans (sellers can pay, however). On a conventional
mortgage, or an FHA insured mortgage, points may be paid by
either buyer or seller or split between them.
Survey
A map or plat made by a licensed surveyor showing the results
of measuring the land with its elevations, improvements, boundaries,
and its relationship to surrounding tracts of land. A survey
is often required by the lender to assure him that a building
is actually sited on the land according to its legal description.
Title
As generally used, the rights of ownership and possession of
particular property. In real estate usage, title may refer to
the instruments or documents by which a right of ownership is
established (title documents), or it may refer to the ownership
interest one has in the real estate.
Title Insurance
Protects lenders or homeowners against loss of their interest
in property due to legal defects in title. Title insurance may
be issued to either the mortgagor, as an " owner's title
policy, " or to the mortgagee, as a "mortgagee's title
policy." Insurance benefits will be paid only to the "named
insured" in the title policy, so it is important that an
owner purchase an "owner's title policy", if he desires
the protection of title insurance.
Title Search or Examination
A check of the title records, generally at the local courthouse,
to make sure the buyer is purchasing a house from the legal
owner and there are no liens, overdue special assessments, or
other claims or outstanding restrictive covenants filed in the
record, which would adversely affect the marketability or value
of title.
Maps for Maryland and Northern Virginia
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