30/360 Interest Calculation
Interest calculation which treats a month as 30 days and a year as 360 days used for its ease of calculation and ability to keep monthly interest payments consistent.

Appraisal Value
An opinion of the value of property resulting from an analysis of facts affecting market value.

Borrower
A person or company who seeks funding for real property.

Broker
A person licensed to act as an agent for another in negotiating the sale of purchase or real property in return for a fee or commission.

Closing
The process of completing a real estate transaction during which the seller delivers title to the buyer in exchange for payment of the purchase price.

Deed of Trust
A security agreement creating a lien by which title to real property is transferred to a third-party trustee as security for an obligation owed by the borrower to the lender.

Protective Equity
The value of a person’s interest in real property after all liens and charges have been deducted.

Fixed Rate Loan
A loan on which the same rate of interest is charged for the duration of the loan.

Foreclosure
The legal process by which an owner’s right to a property is terminated, usually due to default.

Guarantee / Guarantor
One who guarantees an obligation and has a legal duty to fulfill it.

Joint Tenancy
A means of ownership in which two or more persons own equal shares in real property. Upon the death of one tenant, his/her share passes to the remaining tenant(s) until title is vested in the name of last survivor.

Lien
A recorded document which claims an interest in real property as security for a debt owed. Such liability may be created by contract, such as a deed of trust, or by a court judgment.

Loan-to-Cost Ratio
The ratio of the amount of the loan to the price paid for the asset.

Loan-to-Value Ratio
The ratio of the mortgage loan amount principal to the property’s appraised value.

Market Value
An appraisal term denoting the highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Mortgage
A legal document used to secure the performance of an obligation.

Points
A percentage based fee charged by the lender to fund a loan, in addition to and separate from other fees charged. One point equals one percent of the amount of the loan.

Principal
The sum of money outstanding upon which interest is payable.

Promissory Note
A document signed by a borrower promising to repay a loan under agreed terms. Also called a Note.

Title Insurance
Insurance to protect a lender or owner against loss in the event of a property ownership dispute.

Trustee
A person who holds title in trust for the benefit of another. In a deed of trust, the trustee is the person named to hold title in trust for the benefit of the lenders until the loan is paid off.

Trustor
The borrower under a deed of trust. One who deeds their property to a trustee as security for repayment of a loan.