CapSource Trust Deed Glossary

 

 

Appraisal:

A written professional opinion (certified) of the market value of a property or business whose market price is not easily determined. Usually required and requested by lending institutions when a property is financed.

Balloon Payment:

The scheduled payment at the end of the loan term that is significantly larger than the previous payments.

Broker:

An individual who acts as an intermediary between a buyer and seller for a fee or commission.

Clear Title:

A title that is free of liens and legal questions of ownership of the property. Required to fund a loan.

Closing Costs:

Fees and expenses over and above the price of the property incurred by the buyer and/or seller and usually include points, lender fees, attorney fees, title fees, escrow charges, etc.

Deed:

A legal document conveying title to a property.

Deed of Trust:

The document used in some states instead of a mortgage. Title is conveyed to a trustee rather than to the borrower.

Escrow Account:

A trust account held in the borrower’s name to pay obligations incurred during the loan funding process, such as property taxes, insurance, etc. Escrow agent is the neutral third party between the buyer, seller, realtor and lender.

Equity:

The difference between what a property is worth (market value, appraised value) and what is owed against that property (loan amount).

Fees:

A defined amount charged the borrower by a Lender for a privilege of obtaining a loan.

First Trust Deed (Lien Position):

The highest priority debt in the case of default. If a property or other type of collateral is used to back a debt, first lien debts are paid before all other debt holders.

Guarantor:

A person or entity that agrees to be responsible for another’s debt or performance under a contract, if the other fails to pay or perform.

Hard Money:

It is financing commonly available from non bank sources. Sometimes known as “equity loans” and refers to non-conventional real estate loans. They are usually funded by private money sources and investors and typically not transferred to anyone else. This is often short term financing and available at higher rates with points normally charged up front.

Interest Only Payment:

A non-amortized loan payment in which interest is due at regular intervals until maturity, when the full principal on the loan is due.

Lien:

A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold.

Loan to Value (LTV):

The ratio of the fair market value of an asset (property) to the value of the loan that will finance the purchase. LTV tells the lender if potential losses due to nonpayment may be recouped by selling the asset.

Margin:

The face value of a loan minus the value of the pledged collateral.

Market Value:

The price as determined dynamically by buyers and sellers in an open market.

Points:

The commission fee charged by a lender. Each point equates to 1% of the loan amount.

Rollover:

Generally, a movement of funds from one investment to another.

Term - A period of time to which loan limits are set. The shorter the term, the higher the yield. For example, 120 days, 12 months, and 2 years.

Yield:

The annual rate of return on an investment, expressed as a percentage.