On Good Terms: Common Real Estate, Mortgage and Closing Terminology to Know

How to get the mostWhether you’re on the hunt for a new home, considering a refinancing option or casually browsing the current real estate market, it’s good to have a sound understanding of what certain words or phrases relative to your efforts actually mean. We’ve compiled a list of terms you’ll likely encounter in such situations.

  1. Land Survey: Instrument that describes, maps and documents boundaries and characteristics of a property.
  2. Closing/Settlement: Finalizes the process of transferring ownership of a property from one party to the next.
  3. Closing Costs: Monies paid by buyers and sellers in the final settlement of a real estate transaction.
  4. CD Form (Closing Disclosure Form): Document that presents mortgage particulars, closing costs and detailed financial responsibility of the home buyer.
  5. Title Insurance: Protects the lender’s financial interests (Lender’s Policy) and homeowner’s rights to the property against loss due to title defects.
  6. Title Search: Process of reviewing the title history of a property for defects.
  7. Loan Discount Points: Also known as pre-paid interest. Allows a home buyer to pre-pay interest to lower the interest rate on a home loan. Each point paid equates to 1% of the loan amount.
  8. Mortgage Pre-Approval: Process of becoming approved by a lender to borrow up to a certain loan amount, after submitting financial documents such as bank statements, employment verification and tax returns, among others.
  9. Contingency: Clause included in a real estate contract that enables one or both parties to cancel the transaction based on certain circumstances.
  10. Buyer’s Agent: Real estate agent representing the home buyer(s) and their interests.
  11. Listing Agent: Real estate agent representing the home seller(s) and their interests.
  12. Adjustable-Rate Mortgage (ARM): Mortgage in which the interest rate fluctuates based on market conditions, causing the monthly loan payments to increase or decrease.
  13. Fixed-Rate Mortgage: Mortgage in which the interest rate is fixed over a specified period of time (typically 15 or 30 years).
  14. Loan Origination: Performed by the lender, and encompasses all phases of the loan process, from initial application to release of funds.
  15. Escrow Agent: Third party responsible for holding and maintaining all funds and documents related to a real estate transaction until closing.
  16. Escrow: Type of account established by the lender. Holds a portion of each monthly mortgage payment, the collective funds of which are used to pay property taxes and homeowner’s insurance on an annual basis, or when due.
  17. Home Appraisal: Professional third-party assessment performed to determine the fair market value of a property.
  18. Home Inspection: Professional third-party service designed to determine the current condition of a home. Finding are produced in a document rendered to the lender and home buyer.
  19. Seller Concessions: Certain closing costs paid by the home seller on behalf of the home buyer.
  20. Private Mortgage Insurance (PMI): Type of insurance often required on conventional loans, when the borrowers put less than a 20 percent down payment on a home. Remains in effect until loan-to-value reaches less than 80 percent.
  21. Short Sale: Real estate sale in which the amount received for a home is less than the loan balance. In this case, the lender agrees to accept less than what is owed on the property.
  22. HOA Fees or Assessment: Monthly, yearly or bi-annual fees or one-time payments assessed by a homeowner association, collected for the purpose to maintain, improve, develop or further modify private residential neighborhoods.
  23. Amortization: Describes the payment of a loan over time, through a series of regular monthly mortgage payments.


Have questions about other real estate, mortgage or closing terms? Contact our friendly team at Linear Title & Escrow today!


What Are the Most Common Problems Found During Title Search?

If you’re in the process of purchasing a home, you’ll likely hear the term “title search” at some point during the settlement procedure. A title search is an investigation into the history of a property. It’s conducted by the title agency handling the real estate closing, to reveal any and all concerns, defects or other issues regarding title to the property in question.

Seller's Closing Costs

What Are Title Defects?

Title defects are clouds or problems surrounding ownership of the property. Ownership must be transferred from one party to the next in a proper, thorough and legal fashion. When this fails to occur, problems arise – problems that could be costly unless Owner’s Title Insurance coverage is in place.

The Four Most Common Problems Identified During Title Search

We’ve been running title searches for over 12 years. And while there are a number of title defects that can arise (see “23 Reasons You Need Owner’s Title Insurance” on our Title Insurance page for more), there are a handful that seem to cause issues more so than others.

  1. Judgments against prior owners is one of most common categories of title defects we see. Judgment liens and bankruptcies affiliated with the property and unresolved by previous owners can stall closing procedures until legally released.


  1. Unreleased deeds of trust are extremely common title problems. An unreleased deed of trust is one that’s still tied to the property, and not yet recorded by the Land Records Department. Fortunately, it’s relatively easy to resolve this type of defect.


  1. Incorrect filing of heirs and/or wills that aren’t probated are other title defects that often arise. These types of clouds take a bit longer to resolve, and may involve time in court.


  1. Clerical errors happen (we’re all human). A common example of this type of title defect involves legal description of the property (erroneous or omitted information). Depending on the nature and extent of the error, it can take anywhere from days to months to correct these types of issues.


Certain title defects may be common, but having an Owner’s Title Insurance policy is the best possible way to protect your home and financial investment. For more on title defects or title insurance questions, contact us today!