The Highland Title + Escrow team created this list of the top ten title terms everyone should know based on our experiences. This is a resource you might find useful. Buying or selling a home isn’t an everyday experience for most, so this would be a great starting point for those entering the housing market.
- ALTA Settlement Statement – Buyers and sellers receive an ALTA Settlement Statement on closing day. It breaks down the entire real estate transaction in great detail, with all the important numbers itemized into credit and debit columns.
- Closing Disclosure – Lenders provide Closing Disclosures to buyers three business days before closing. This form reports all aspects of the mortgage loan, including purchase price, loan fees, interest rate, real estate taxes, insurance, closing costs and other expenses.
- Earnest Money Deposit – Earnest money is given at the time of the signing of the contract. It’s essentially money that the buyer puts in escrow to show their interest in the property (also referred to as a good faith deposit).
- Contract – A contract is a legally binding document between the parties participating in purchasing, selling, exchanging or transferring real estate. The contract spells out the rights and responsibilities of the parties.
- Deed – A deed is a legal document used in real estate that transfers ownership of real property from a grantor (seller) to a grantee (buyer).
- Note – The note sets out all the mortgage terms between a borrower and their lending institution and is the promise by the borrower to repay the loan.
- Deed of Trust – A Deed of Trust is the document signed by the borrower and recorded at the courthouse giving the lender a secured interest in the property. If the borrower fails to keep the promise to repay the loan they made in the note, then the Deed of Trust gives the lender the right to foreclose on the property.
- Escrow Account – This account established by the lender at closing is used to hold part of the monthly loan payment to cover the costs of real estate taxes and insurance premiums.
- Power of Attorney – A Power of Attorney (POA) is a legal document that permits another person (the agent ) to act on behalf and sign documents for either the buyer or the seller in a real estate transaction. This is often used when one of the parties cannot attend settlement.
- Title Insurance Policy – This policy protects home buyers and mortgage lenders from damages or financial losses from title defects. Policies typically cover all the common claims filed against a title, including outstanding liens, back taxes and conflicting wills.
Share this list with a future buyer or seller, or use it to brush up on some common title terms. If you have any questions, please contact us here.