Glossary of Terms

Appraisal
An estimate of a property’s value determined by a qualified professional appraiser. The value may be based on replacement cost, the sales of comparable properties or the property’s ability to produce income.
Buyer
One who purchases or acquires property.
Closing
Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.
Closing Date
The date that the transaction closes. The closing date is negotiated between the buyer and seller at the beginning of the transaction, but the actual date can be influenced by a lot of factors. Issues with the loan process and/or problems with the preparation of documents often delay the actual closing date.
Closing Documents
Documents required to be signed at the closing to evidence and finalize the making of the mortgage loan, including the mortgage note, mortgage deed, and other related documents that may be required by the lender.
Credit Report
A report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness. See merged credit report.
Escrow Agent
A third party who acts for both the seller of property and you, the buyer. He holds any pertinent documents and/or funds for safekeeping, and sees that the terms of the agreement are carried out. The escrow agent may be an individual trusted by both you and the seller; or a law firm, bank or other financial institution.
Fannie Mae
In 1938, the Federal government established Fannie Mae to expand the flow of mortgage money by creating a secondary market. Fannie Mae was authorized to buy Federal Housing Administration (FHA)-insured mortgages, thereby replenishing the supply of lendable money. In 1968, Fannie Mae became a private company operating with private capital on a self-sustaining basis. Its role was expanded to buy mortgages beyond traditional government loan limits, reaching out to a broader cross-section of Americans.
FHA
Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.
Lender
The individual, party or financial institution from whom money is borrowed. Also known as the mortgagee, in the case of a mortgage loan.
Lien
The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.
Lienable Utilities
Any utility bills (water, electricity, etc.) that are left unpaid can be applied as a lien against a piece of property. These liens must be resolved before a real estate transaction can close.
Loan Processor
Person responsible for gathering all information necessary to determine the qualifications for the loan requested.
Purchase and Sale Agreement
Sometimes called an Earnest Money Agreement. It is a legally binding Contract of sale and purchase of real estate in Washington State. It is in this contract that the buyer and seller come to final agreement on the terms of price, payment, prorations, date of closing, and all other matters pertinent to the sale.
Real Estate Agent
A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Seller
Entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property.
Signing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called “settlement.”
Title Insurance
Insurance which protects the lender (lender’s policy) or the buyer (owner’s policy) against loss due to disputes over ownership of a property.
Title Report
A document indicating the current state of title. The report includes information on the current ownership, outstanding deeds of trust or mortgages, liens, easements, covenants, restrictions, and any defects.
Underwriter
A professional who approves or denies a loan to a potential homebuyer based on the homebuyer’s credit history, employment history, assets, debts and other factors such as loan guidelines.
VA Loan
A loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans are made to honorably discharged veterans or their unremarried widows or widowers. Such loans require a minimal or no down payment and offer lower interest rates.