Abstract of Title: The summary or history of the legal title or owners of the property. It will show changes in ownership, records of liens, judgments and other encumbrances.

Appraisal: This is a report compiled by an independent appraiser. This report takes into account location, condition, comparable sales and replacement cost of the property which they have inspected to create a report that provides their opinion of value of a property.

Closing Costs: These are charges paid by both buyer(s) and seller(s) at the closing of the sale. The charges relate to costs associated with the transfer of property as well as costs associated with obtaining mortgage financing. The costs will be split between the two parties according to terms of the purchase contract and respective costs of the buyer(s) and seller(s).

Earnest Money: The funds paid by the buyer(s) to the seller(s) as a show of “good faith” to perform, in the transaction.

Easements: A right of access granted by a property owner to their property. This access is typically given to another person(s) or companies to perform services for the general use of the land, i.e. utility companies may have the right to install pipes or lines in a certain area of the property.

Equity: The amount of value which a property owner may have that is the difference between sales price and the amount of any indebtedness against the property.

Escrow: A process by which something of value is held by a third party until such time as a contract or terms of a contract have been satisfied. Also used to describe a process that mortgage holders will require of a borrower to pay on a monthly basis that monthly portion of property taxes and insurance into a separate fund so that the mortgage servicer will pay the owner’s taxes and insurance as they come due for payment.

Interest: A factor that is the cost to borrower money by a buyer from a lender when purchasing real estate.

Mortgage: An instrument that is executed by a borrower as security in a loan transaction. This instrument will take as security an interest in real property as collateral for the loan. (In some cases this mortgage instrument may be assumable by a new buyer(s) if certain terms and conditions are satisfied by the buyer(s))

Point(s): This is the fee a lender may charge to a borrower, which will increase the effective yield to the lender. One point is equal to 1% of the loan amount the lender has committed to the borrower. This fee may increase the marketability of the loan which will allow the lender to sell the loan and offer the loan term fixed rate instrument to the borrower.

Principal: The dollar value borrowed by the buyer in a mortgage transaction. This amount excludes the interest and any other charges.

Purchase Agreement: The document which is executed between the seller and buyer that states the terms and conditions involved in the real estate transaction. This contract covers all items that may affect the purchase/sale of a property. It will also state if there are other documents which may be involved in the completion of the transaction.

Settlement Charges: The costs which are assessed to the buyer(s) and seller(s) in order to get the loan closed and enable the real estate transaction to be completed. These costs include insurance and tax payments, special assessments, sales commissions as well as costs associated with completion of a loan/mortgage. The purchase agreement may address who is responsible for these costs.

Title Insurance: A policy put in place to make good a property owner’s or a lender’s loss resulting from any defects in the title of the real property. Title insurance will allow for a property owner to be defended at no cost if their right to title of the property is challenged in court.

Title: Evidence or proof of a party’s legal right of ownership. This will usually come in the form of a certificate or a deed.

Title Search: The review of records showing the chain of title to a property. This review will assure that the title to the property has been properly transferred from one owner to another through time. It will also show if there are any outstanding or unresolved claims against the property. Likewise it will show any restrictions or covenants that may be of record