Notary Loan Signing Agent Definitions, Complete Solution
Borrower (Mortgagor)
An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.
Title
Document that gives evidence of ownership of a property. Also indic...
Notary Loan Signing Agent
Definitions, Complete Solution
Borrower (Mortgagor)
An individual who applies for and receives funds in the form of a loan and is obligated to
repay the loan in full under the terms of the loan.
Title
Document that gives evidence of ownership of a property. Also indicates the rights of
ownership and possession of the property. Individuals who will have legal ownership in
the property are considered "on title" and will sign the mortgage and other
documentation
Refinancing
The process of paying off one loan with the proceeds from a new loan secured by the
same property.
Escrow Company
A licensed neutral third party that distributes legal documents and funds on behalf of a
buyer and seller. The authority to ensure that the seller, lender, and borrower all follow
through on their agreed upon terms. Escrow coordinates and keeps records of what is
going on between all the parties--seller, borrower, lender and title company.
Escrow Agent
A person with fiduciary responsibility to the buyer and seller, or the borrower and lender,
to ensure that the terms of the purchase/sale or loan are carried out.
Title Company
The title company ensures that a piece of real estate is legitimate, then issues title
insurance for that property that protects both the lender and the owner from lawsuits as
a result of title disputes. Their main responsibility in a mortgage transaction is to
accurately record liens, lien holders and ownership to the property in a transaction--
anything that is being recorded against the property. They ensure that all liens, lien
holders and ownership is recorded with the county the property resides in.
Title Insurance
Insurance that protects a lender against any title dispute that may arise over a particular
property. It is required to close on a residence. A homeowner may also purchase
owner's title insurance.
Lender
The lender is the bank that is lending the money. The lender has the biggest role in the
process, because without them lending the money, there would be no need for a title or
escrow company. This is the reason why the majority of the documents in your loan
signings are lender documents.
Deed of Trust
The deed of trust, also known as the mortgage in some states, has 5 main functions: 1)
It records who actually owns the property: e.g. Jane Doe and John Doe, husband and
wife as joint tenants; 2) It records the amount the borrower is borrowing (the lien
amount); 3) It records who is lending the money (the lien holder); 4) It records the legal
description of the property (how the county recognizes the property location via lot
,boundaries and lot location within the county); 5) It states the rules and regulations
which the property owner must abide by.
Rider (to deed of trust)
Amendments to the deed of trust that are recorded with the deed. Something the lender
wants to add to the deed. Examples include VA riders, condo riders, adjustable rate
riders, or PUD riders.
Principal
The amount of debt, not counting interest, left on a loan.
Note
Document outlining the terms of the loan. For example, the note would specify that the
borrower is borrowing $300,000 at a 4% interest rate, and will have a certain fixed
payment for 30 years. Also called the contract.
Interest Rate
The cost to the borrower for the money the bank lends to them.
Fixed Rate Note
Phrase indicating the interest rate will not change for the duration of the loan. This
allows the payment to stay the same for the full amount of the term.
Adjustable Rate Mortgage (ARM)
A loan with an adjustable interest rate that will change during it's term, often after a set
amount of years of fixed payments. The payment may be low initially because it is
based on payment that is 30 years, but the rate will change/adjust after "X" years. The
most common adjustable rate terms are 3, 5, 7, or 10 years. After the fixed term is up,
the interest rate will change on a yearly basis until it is completely paid off. Also called
5/1, 7/1 or 10/1; ex: fixed for 5 years and changes every year thereafter. After the initial
term is up, the rate will change via an index (usually the treasury bill or the LIBOR) plus
a margin set by the lender. The margin never changes but the index will go up or down.
Home Equity Line of Credit (HELOC)
A line of credit that is tied to the equity of the borrower's residence. Ex, the home is
worth $500,000 and there is a first loan for $200,000, that means there is $300,000 of
equity. In this example, a bank may approve the borrower for a line of credit for
$100,000. The line of credit works like credit card. The borrower makes payments on
the amount they have borrowed on the HELOC line of credit.
Reverse Mortgage
Enables older homeowners (62+) to convert part of the equity in their homes into tax-
free income without having to sell the home, give up title, or take on a new monthly
mortgage payment. The reverse mortgage is aptly named because the payment stream
is "reversed." Instead of making monthly payments to a lender, as with a regular
mortgage, a lender makes payments to the owner, based off the equity in the residence.
Discount Points/Buy Down
Points are an up-front fee paid to the lender at the time the loan is initiated. A borrower
can lower (buy down) the interest rate they qualified for by paying a fee. The borrower
can literally buy down an interest rate.
Default
When the borrower has not lived up to the agreed upon terms of repayment on the loan.
Foreclosure
, The process initiated by the lender when the borrower has not made the agreed upon
repayments. The bank can take the property away from the borrower. The lender will
then own the property. Most lenders start the foreclosure process after 3 consecutive
missed payments.
Lien
A form of security interest granted over a property to secure the payment of a debt.
Anyone can put a lien against a property as long as they have the owners' consent. In
term of mortgages, when the bank lends money to a borrower, they guarantee
repayment by recording a lien against the property. The lien recorded equals what they
have lent the borrower. If the borrower fails to live up to the agreed upon repayment
terms, the lender has the right to sell the property and recoup the lien amount.
Property tax
Taxes that are due to the county where the property resides. Usually due twice a year.
Impound Account/Escrow Account
An account established to collect property tax and hazard/fire insurance on the property.
Sometimes required by the lender as a term of the loan. The impound account and
escrow account are the same thing. As the taxes and insurance come due, the lender
will make the payments for the borrower. Not all borrowers are required to have an
impound account, but they may prefer it.
Amortization
Repayment of a loan with periodic payments of both principal and interest calculated to
pay off the loan at the end of a fixed period of time.
Hazard Insurance
Protects the insured against loss due to fire or other natural disaster in exchange for a
premium paid to the insurer.
PITI
Abbreviation for Principal, Interest, Taxes and Insurance; the components of a monthly
mortgage payment.
FHA Loans
Fixed- or adjustable-rate loans insured by the U.S. Department of Housing and Urban
Development. FHA loans are designed to make housing more affordable, particularly for
first-time home buyers. FHA loans typically permit borrowers to buy a home with a lower
down payment than conventional loans. With FHA insurance, eligible buyers can
purchase a home with a down payment of as little as 3% of the appraised value or the
purchase price, whichever is lower.
VA Loans
Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are
designed to make housing affordable for eligible U.S. veterans. VA loans are available
to veterans, reservists, active-duty personnel, and surviving spouses of veterans with
100% entitlement. Eligible veterans may be able to purchase a home with no down
payment, no cash reserve, no application fee, and lower closing costs than other
financing options.
Escrow Instructions
Document that describes escrow's role and responsibility during the transaction to the
borrower.
Escrow Amendment
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