Definitions and Information

Agency: A legal relationship in which someone (principal) hires someone else (agent) to represent them to a third party.

Application Fee: A fee to cover some of the charges of the loan process.

Appraisal Fee: A fee charged by the lender for an appraisal.

Assessed Value: The value placed on property by the Central Appraisal District as a basis for taxation.

Attorney's Fees: Charges by an independent attorney chosen by the lender to draw the legal documents, i.e. Note, Deed of Trust, etc.

Balloon Payment: An instance in which the final installation payment on a note is greater than the preceeding payments and pays the note in full.

Chain of Title: A history of conveyances and encumbrances affecting the title (ownership) of real property.

Conventional Mortgage: A mortgage securing a loan made by investors without government underwrting - that is, not FHA insured or VA guaranteed.

Convey or Conveyance: Process of transferring ownership of a property from one person to another.

Courier Fee: Charges for Federal Express or a runner.

Credit Report Fee: Assessed by the lender for a required credit report from a cerdit bureau.

Deed: A document which, when properly excised and delivered, conveys (transfers) title (ownership) of real property.

Disclosure: To make known or public. When dealing in real property, all disclosures should be made in writing.

Discount Points: A negotiable fee paid to the lender to secure financing for the buyer. Discount points are up-front interest charges to reduce the interest rate over the life, or a portion, of the loan's term. One discount point equals one percent of the loan amount, i.e. 3 discount points on a $100,000 loan would be $3,000.

Earnest Money: Money deposited by a buyer to indicate and evidence good faith.

Encumbrance: Anything that affects or limits ownership of real propertry - such as, mortages, liens, easements, or restrictions of any kind.

Escrow Fee: Charged by the title company to service the transaction and to escrow (hold and disburse) money and documents. Usually split between buyer and seller.

Escrow: The deposit of documents and funds with instructions to a neutral third party to carry out the provisions of an agreement or contract.

Exclusive Right to Sell Listing: A written agreement between owner and agent giving the agent the right to sell a property and collect a fee for a set term.

Fair Market Value: The price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure.

Loan Organization Fee: Normally 1% of the loan amount, and charged by the lender to the buyer.

Mortgage: A legal document that provides security for repayment of a promissory note.

Mortgagee's Title Policy: Required by lender to ensure that lender has a valid lien. It does not protect the buyer. Also required for second mortgages.

Owner's Title Policy: Insures the buyer against loss due to any defect in the title not excepted to or excluded from the policy.

Points: Payed by the buyer or seller. One point is equal to one percent of the loan amount.

Principal: The employer of an agent in an agency relationship.

Recording Fee: Charged by the County Clerk to record documents in the public records. Charges are based on the number of pages recorded.

Seller Agency: See TREC Disclosure Form "If the Broker Represents the Owner"

Septic Well Inspection: The septic system must have a certificate by the city or county Health Department.

Survey: Survey of property required by lender; shows lot size, easements, any encroachments, locations of improvements, etc.

Tax Certificate: Charged by taxing authorities to present certification showing that the current year's taxes were paid.

Tax Service Fee: Required by the lender for collection and disbursement of tax escrow by a servicing company. Termite Inspection: Required by the lender to show property free and clear of active termites.

Time Is Of The Essence: Demands punctual performance in a binding contract.

Title Policy: Insurance policy on the ownership of real property against defects in title.

Title: In dealing with Real Property, "title" means ownership.

Underwriting Fee: Charge by a lender to underwrite the loan.

VA Funding Fee: Veteran's Administration fee for originating a VA loan.

Warehouse Fee: Charged by the lender to hold the loan locally before selling it in the secondary mortgage to an investor.

Zoning: Act of city authorities specifying type of use for which property may be used.