Home Buyers Handbook by Rob Jensen Company

Home Buyers Handbook

Keller Williams Realty 3090 S. Durango Dr., #100 Las Vegas, NV 89117 Tel: (702) 605-7482 www.thejensongroup.com

TABLE OF CONTENTS

Page 1. Page 2. Page 3. Page 4. Page 5. Page 6. Page 7. Page 8. Page 9. Page 10. Page 11. Page 12. Page 13. Page 15. Page 16. Page 17. Page 18.

Selecting an Agent A Loan? Good Faith Estimate Pre-Approval Letter Closing Costs Disbursement Sheet Ways of Holding Title Title Vesting Chart What is an Escrow? What a Title Company Does Title Insurance Title Policy Comparison Tax Deductible Moving Expenses Moving Checklist Loan Payoffs, Disclosures & Contingencies Home Warranty & Appraisal Process Glossary of Terms

Equity Title of Nevada

SELECTING AN AGENT Most people don’t venture out into the Real Estate market without the support of an agent who finds new listings, shows homes that are on tour and offers real estate advice. The few who decide to look for a house on their own put themselves at a real disadvantage; they may not know the market in a given area, nor do they have help or access to the Multiple Listing Service (MLS) computerized listings of homes for sale that only an agent can utilize. So before you start your home shopping, you should first start shopping for a real estate professional.

YOUR REAL ESTATE PROFESSIONAL SHOULD.... 

Play a critical role in finding your "special home" that suits your personal lifestyle, meets your needs and wants, yet stays within your budget.



Access and analyze the multiple listing service system, locating properties for sale in your specified area of interest.



Be knowledgeable about your marketplace.



Respectful of your desires, lets you make your own decisions, and does not force you into buying something that isn't right for you.



Be successful in multi-party, face-to-face negotiating. Your Realtor will write up your offer and then present it to the seller for you.

Equity Title of Nevada

A LOAN? If you are obtaining financing, Real Estate agents and Lenders recommend that home buyers get preapproved with a lender before selecting a home to purchase. The choice of a lender is an important decision. Your real estate professional has access to many lenders offering a variety of loan programs to suit your particular needs.

REASONS TO GET PRE-APPROVED....  With pre-approval, you can determine which loan program best fits your needs and which programs you qualify for.  You will know exactly how much you are approved for. It's no fun to find your "ideal home" and then find out you can't afford it.  Your monthly payment can be set. This will allow you to budget your money before making this large investment.  It shows you your down payment and closing costs.  If you are a first-time buyer, you may be able to qualify for a special first-time buyer program which may allow you to afford more home for your money.  If you feel you would like and can afford a higher mortgage payment but are not able to meet qualifications, a cosigner may help  Improves your negotiating position with the seller by showing you are qualified.  Saves time once you’ve selected a home. The loan process is already under way.  Many luxury homes require proof of funds or a preapproval letter prior to being shown.

Equity Title of Nevada

GOOD FAITH ESTIMATE

Equity Title of Nevada

PREAPPROVAL LETTER

Equity Title of Nevada

CLOSING COSTS When buying a home, there are several different closing costs involved. Your real estate agent will receive an Estimated HUD 1 statement from the escrow company showing all the costs and charges involved. He/she will go over them all with you prior to closing. If your purchase includes a new loan, you will receive a Good Faith Estimate from your lender showing closing costs and settlement charges. Listed below are some typical closing costs you may incur as part of your transaction.

Escrow/Title Company Fees –These are standard fees for items such as document prep fees, recording fee, settlement or closing fee, notary fee, inspection fee, and your lender’s policy of title insurance (if obtaining financing). Lender Fees: Appraisal Fee - Your lender will require that an appraisal be done on the home that you are buying. This is a one-time charge that can cost $300 and up depending on the size of the home you are buying. This charge is negotiable. In some cases, you can negotiate that you will pay the appraisal fee upfront and be reimbursed by the Seller upon successful close of escrow. Credit Report Fee – When you lender pulls your credit report they charge a one-time fee. Loan Discount Fee – This is optional depending on what type of loan you choose. Occasionally buyers choose to pay a Loan Discount Fee or Points in order to reduce their interest rate. If you are paying cash, this will not pertain to you. Loan Origination Fee – This is your Lender’s administrative costs involved in processing your loan. If you are paying cash, this will not pertain to you. PMI Premium – This is short for Primary Mortgage Insurance. If you do not put down a full 20% down payment on your loan, the Lender might charge you for mortgage insurance. If you are paying cash, this will not pertain to you. Prepaid Interest – If you are getting a loan to purchase the property, the interest on the loan is prorated depending on the day of the month that you close escrow. You may be required to pay interest for several days to an entire month. If your loan closes at the end of the month, you will only have to pay interest for a day or so. Prorations for Taxes, HOA and Sewer – Many times the Seller has prepaid his taxes, HOA dues, sewer, trash, and other assessments. If this is the case, you will be required to reimburse the seller a prorated amount of the items that have been paid. Hazard Insurance - You will also need to pay a year’s hazard insurance premium up front. Hazard Insurance is just another name for your home owner’s insurance policy. If a new loan is part of the purchase, you might be required to put a certain amount for taxes and insurance into a special reserve account held by your lender.

Equity Title of Nevada

CLOSING COST DISBURSEMENT SHEET (As is customary in the state of Nevada)

Cash Transaction Escrow Fee

SELLER

BUYER

50%

Owners Title Policy Recording Grant Deed and other public records Home Warranty Premium

X X

Real Estate Commission *Additional Buyer Agent fees apply Termite Inspection *VA / FHA Paid by Seller Homeowners Assoc. Certificate of Resale Fee/Transfer Fee Existing Loan Payoff

Release / Reconveyance Fee

Nevada Transfer Tax ($5.10/1000)

X X

Conventional Loan Owners Title Policy Lender Policy Recording Grant Deed and other public records Real Estate Commission *Additional Buyer Agent fees apply Termite Inspection *VA / FHA Paid by Seller Homeowners Assoc. Cert. Of Resale/Transfer Fee Existing Loan Transfer Fees Existing Loan Payoff Nevada Transfer Tax ($5.10/1000)

SELLER X X

BUYER

X X X X

50% X X

50%

Equity Title of Nevada

A LOOK AT SOME WAYS TO TAKE TITLE IN NEVADA Community Property:       

Requires a valid marriage between two people Each spouse holds an undivided one-half interest in the estate One spouse cannot partition the property by selling his or her interest Requires signatures of both spouses to convey or encumber Each spouse can devise (will) one-half of the community property Upon death the estate of the decedent must be "cleared" through probate, affidavit or adjudication Both halves of the community property are entitled to a "stepped up" tax basis as of the date of death Joint Tenancy With Right Of Survivorship:

      

Parties need not be married; may be more than two joint tenants Each joint tenant holds an equal and undivided interest in the estate, unity of interest One joint tenant can partition the property by selling his or her interest Requires signatures of all joint tenants to convey or encumber the whole Estate passes to surviving joint tenants outside of probate No court action required to "clear" title upon death of joint tenant(s) Deceased tenant's share is entitled to a "stepped up" tax basis as of the date of death Community Property with Right Of Survivorship:

      

Requires a valid marriage between two persons Each spouse holds an undivided one-half interest in the estate One spouse cannot partition the property by selling his or her interest Requires signatures of both spouses to convey or encumber Estate passes to surviving spouse outside of probate No court action required to "clear" title upon the first death Both halves of the community property are entitled to a "stepped up" tax basis as of the date of death Tenants in Common

  

An undivided ownership in real estate by two or more persons The interests need not be equal, and in the event of the death of one of the owners, no right of survivorship in the owners exists, but instead the interest passes to the heirs of the deceased It exists when two or more persons acquire title, not as community property or as joint tenants. Each owner has a separate and distinct interest, which must be shown on the deed of acquisition. Each owner may deal with their interest without the consent of the other co-tenants

This information is provided by Equity Title of Nevada as a courtesy only. For more information, you are encouraged to contact a professional legal tax advisor.

Equity Title of Nevada

VESTING CHART “Tenants in Common”

“Joint Tenants” or “Joint Tenants with Right of Survivorship”

“Community Property”

Two or more persons. 1 Husband and May be Husband Wife or Domestic Partners 2 and Wife or Domestic Only. Partners 2.

“Community Property with Right of Survivorship”

Parties

Two or more persons. 1 May be Husband and Wife or Domestic Partners. 2

Division

Ownership can be divided into any number in interests, equal or unequal.

Ownership interests must be equal.

Creation

Created by one or more conveyances (law presumes equal interests if not otherwise specified).

Must be created by a single conveyance. Vesting must specify joint tenancy.

Created by single conveyance or presumed by reason of marriage or domestic partnership2.

Created by single conveyance. Vesting must specify right of survivorship.

Possession

Equal rights of possession.

Transferability

Each owner’s interest may be conveyed or mortgaged separately. 3

Conveyance by one co-owner without the other severs the joint tenancy, resulting in tenancy in common. 3

Both spouses or domestic partners2 must join in the conveyance or mortgage of real property.

Husband and Wife or Domestic Partners 2 Only.

Liens against One Owner

Unless married or domestic Unless married or The entire property subject The entire property subject partners, liens against one domestic partners, liens to forced sale to satisfy the to forced sale to satisfy the owner do not affect the interest against one owner do not debt of either spouse or debt of either spouse or of the other affect the interest of the domestic partner2. domestic partner2. owner(s). other owner(s).

Upon the Death of One Owner

Deceased’s interest Deceased’s interest passes Deceased’s ½ interest passes automatically to passes to surviving spouse by will or intestacy to surviving joint tenant. his/her heirs. Requires probate or domestic partner2 unless Probate court order is not court order. otherwise devised by will. required.

Possible Advantages / Disadvantages

Co-owner’s interests may be separately transferable. 3 Death requires probate court order .

Right of Survivorship (avoids probate). Possible tax disadvantages for spouses.

Deceased’s interest passes automatically to surviving joint tenant. Probate court order is not required.

Limited survivorship Right of survivorship rights. Mutual consent (avoids probate). Mutual required for transfer. consent required for Surviving spouse or transfer. Surviving spouse domestic partner2 may have or domestic partner2 may tax advantage. have tax advantage.

“Persons” includes a natural person, as well as a validly formed corporation, limited partnership, limited liability company, general partnership or trust. Trust property is vested in the Trustee. 2 . Domestic partnerships are governed by the Nevada Domestic Partnership Act, effective October 1, 2009. A Certificate of Registered Domestic Partnership must be issued by the Nevada Secretary of State. 3 . Transfers by married persons or domestic partners may require a quitclaim deed from the spouse/partner for title insurance purposes.

Equity Title of Nevada

WHAT IS AN ESCROW? WHAT IS AN ESCROW AND WHAT DOES AN ESCROW COMPANY DO? When you purchase a home in Nevada the closing transaction is handled by an Escrow and/or Title Company. The Escrow Company is a neutral third party who reviews the terms of the purchase agreement to make sure that it is fully executed and all the signatures are present. They then research the property and prepare a Preliminary Title Report to search all deeds and liens on the property, which includes all tax, sewer, trash, & HOA information. Which the escrow holder then uses to ensure that all outstanding balances are prorated from the time the property records in the new Buyer’s name. They also receive the Buyer’s funds, pay off any current deeds of trust and make sure everything is paid current upon closing to ensure that the Buyer receives the property free and clear. Within 6 weeks after closing you should receive confirmation of your Title Insurance Policy from the escrow/title company.

HOW DOES THE ESCROW PROCESS WORK? Once you sign your purchase agreement and the Seller of the home accepts it, your real estate agent will open escrow by sending the escrow company the purchase agreement and any other counter offers and addendums. The buyers’ realtor will also deposit the buyers’ earnest money deposit into the escrow account. WHERE DOES MY MONEY GO? The Buyers’ earnest money deposit is deposited into the escrow company’s trust account to hold until close of escrow. These funds are applied to the total amount owed at the time of closing. Your real estate agent will be given a deposit receipt which they will then forward on to you. WHAT INFORMATION DO I NEED TO PROVIDE? Once your escrow is opened, the escrow company will ask you to complete a Statement of Identity. This form just asks for your name, social security number, spouse information, and address. Because many people have the same name, we need to make sure we don’t confuse anyone. This information is strictly confidential and will not be shared with anyone. HOW LONG IS THE ESCROW PROCESS? In a normal transaction, the escrow takes approximately 30-45 days. However, if the transaction is part of a short sale it could take up to 6 months depending on the bank’s approval.

Equity Title of Nevada

WHAT A TITLE COMPANY DOES REQUESTS A TITLE REPORT AND POLICY

Title Report:

A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title insurance policy is issued.

Title Policy:

Title insurance is insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances on the property. PAYS OFF EXISTING LOANS The title company pays off existing loans when so ordered.

TAXES AND INSURANCE The title company prorates the taxes and insurance upon instructions from the Buyer and the Seller.

COMPUTES INTEREST ON LOANS

ACQUIRES HAZARD INSURANCE

SIGNING OF DOCUMENTS Assists the buyer and seller when signing documents.

RECORDING DOCUMENTS The title company records the appropriate documents with the county recorder making public notice.

DISBURSEMENT The title company disburses the documents and money to each party involved, coordinating when and how parties are paid.

Equity Title of Nevada

TITLE INSURANCE In Nevada, most real estate transactions are closed with a title insurance policy. Many homebuyers just assume that when they purchase a piece of property, possession of the deed to the property is all they need to prove ownership. This is not true. Hidden hazards may attach to real estate. A property owner's greatest protection is a policy of title insurance.

WHAT IS TITLE INSURANCE? It is a contract of indemnity that guarantees that the title is as reported and, if not reported and the owner is damaged, the title policy covers the insured for their loss up to the amount of the policy. Title insurance assures owners that they are acquiring marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems that were already in existence at the time the policy was issued.

THE TITLE SEARCH Title companies work to eliminate risks by performing a search of the public records or through the title company's own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record that could affect the title to the property. When a title search is complete, the title company issues a preliminary report detailing the current status of title.

THE PRELIMINARY REPORT A preliminary report contains vital information which can affect the close of escrow: Ownership of the subject property; where the current owners hold title; matters of record that specifically affect the subject property or the owners of the property; a legal description of the property and an informational plat map.

Equity Title of Nevada

TITLE POLICY COMPARISON ALTA Standard or CLTA

COVERAGE 1. Someone else owns an interest in the title 2. A document is not properly signed 3. Forgery, fraud, duress 4. Defective recording of any document 5. There are restrictive covenants 6. There is a lien on the title because there is: a) a deed of trust b) a judgment, tax, or special assessment c) a charge by the homeowners association 7. Title is unmarketable 8. Mechanics lien protection 9. Forced removal of a structure because it: a) extends onto other land or onto an easement b) violates a restriction in Schedule B ∗ c) violates an existing zoning law 10. Can’t use land for residence because the use violates a restriction in Schedule B or a zoning ordinance 11. Pays rent for substitute land or facilities 12. Unrecorded lien by a homeowner’s association 13. Unrecorded easements 14. Rights of third parties under unrecorded leases 15. Plain language 16. Building permit violations* 17. Compliance with Subdivision Map Act* 18. Restrictive covenant violations 19. Post Policy forgery 20. Post Policy encroachment 21. Post Policy damage from minerals or water extraction 22. Post Policy living trust coverage 23. Post Policy automatic increase in value up to 150% 24. Post Policy adverse possession 25. Post Policy cloud on title 26. Post Policy prescriptive easement 27. Enhanced access-both vehicular & pedestrian 28. Map not consistent with legal description 29. Covenant violation resulting in reversion 30. Boundary walls and fence encroachment* 31. Enhanced marketability 32. Violations of building setbacks 33. Discriminatory covenants 34. Insurance coverage forever ∗

X X X X X X X X X X

ALTA “R”

Extended Policy

X X X X X X X X X X X X X X X X

X X X X X

X X X X X X X X X X X X X X X X X X X X X X X X

Subject to a deductible and a maximum indemnity liability which may be less than the policy amount.

NOTE: Some coverage may not be available in your area due to legal, regulatory, underwriting requirements or other restrictions. Please contact your title representative for information.

Equity Title of Nevada

TAX DEDUCTIBLE MOVING EXPENSES: If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable moving expenses but not any expenses for meals. To qualify for the moving expense deduction, you must satisfy two tests. Under the first test, the "distance test", your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home. FIGURE A The second test is the "time test". If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location. There are exceptions to the time test in case of death, disability and involuntary separation, among other things. If you are a member of the armed forces and your move was due to a military order and permanent change of station, you do not have to satisfy the "distance or time tests". Moving expenses are figured on Form 3903 [http://www.irs.gov/pub/irs-pdf/f3903.pdf] Moving Expenses, and deducted as an adjustment to income on Form 1040 (PDF). You cannot deduct any moving expenses covered by reimbursements from your employer that are excluded from income. For more information on deductible and nondeductible moving expenses, please refer to IRS Publication 521 [www.irs.gov/pub521] and see FIGURE B.

Equity Title of Nevada

Nondeductible Expenses You cannot deduct the following items as moving expenses: Any part of the purchase price of your new home Car tags Driver's license Expenses of buying or selling a home (including closing costs, mortgage fees, and points) Expenses of entering into or breaking a lease Home improvements to help sell your home Loss on the sale of your home Losses from disposing of memberships in clubs Mortgage penalties Pre-move house hunting expenses Real estate taxes Refitting of carpet and draperies Return trips to your former residence Security deposits (including any given up due to the move) Storage charges except those incurred in transit and for foreign moves

Equity Title of Nevada

MOVING CHECKLIST FORMER RESIDENCE Changing Address

Moving Preparation

 Forward address at post office



 Credit card accounts

 Auto transportation needs

 Publications

 Pet transportation needs

 Bank accounts



Defrost refrigerator

Travel cash or checks

 Hand carry jewelry and valuables Utilities to Cancel



Leave keys



Leave garage door opener



Telephone, check for refund



Gas & Electric, check for refund



Water, check for refund

Medical Services to Obtain



Garbage



Medical records

 Cable, check for refund



Dental records



Veterinarian records

School transcripts for kids

NEW RESIDENCE Changing Address

Government Licenses & Services



Apply for state driver's license



Utilities



New address on driver's license

 Telephone: new number___________________



Ask postman to hold mail for your arrival



Gas



Electric



Water

Medical Services



Garbage



New doctor



New dentist



New veterinarian

 Cable

Equity Title of Nevada

DISCLOSURES AND CONTINGENCIESâ&#x20AC;Ś During the process of selling your property, you will be asked to fill out a property disclosure form that is now required by law. In this document, you will inform the buyer of any significant facts you have about the condition of the property. There will be various contingency dates in your real estate sales contract. You should be very aware of these and be sure that the actions required are performed in a timely manner. Such contingencies include the Buyerâ&#x20AC;&#x2122;s loan approval, approval of the Preliminary Title Report, and approval of termite, and other inspections. Stay closely in touch with your real estate agent regarding these important dates. When the loan is approved and the loan documents are sent to the escrow officer or the escrow assistant handling your transaction, all remaining necessary documents will be prepared.

Equity Title of Nevada

PURCHASING A HOME WARRANTY Itâ&#x20AC;&#x2122;s always a good idea to purchase a home warranty on your new home. This home warranty protects you in case something in your home breaks during the first year of ownership. A normal policy covers the appliances, mechanical, electrical, and plumbing. You may need to check what is included in the basic policy to make sure that you have air conditioning, roof and pool coverage. If not, you may want to request the additional coverage. The price of the home warranty starts at approximately $400 and goes up depending on any additional coverage that you purchase. This expense is negotiable and you may be able to have the Seller pay for it at close of escrow. In fact, the Seller may have already placed a home warranty on the home during the listing period. This policy is paid for by the escrow company during the close of escrow process.

The Appraisal Process If you are securing a new loan for the purchase of your home, your Lender will require an appraisal to determine the fair market value of the property. Your lender has their own approved appraisers that they will schedule to visit the property. The appraiser will then research similar homes in the area according to size, age, construction and amenities, and what has sold within the last 6 months. They will also visit the home and do a thorough inspection of the exterior and interior conditions. Once they complete their inspection, they will compile a complete report and will present it to the Buyer within approximately 3-4 days. In some circumstances, the Lender may require repairs before they will lend on your home. This is especially important if you are applying for an FHA or VA loan. The property will have to meet certain requirements to qualify.

Equity Title of Nevada

GLOSSARY OF TERMS Adjustable Rate Mortgage

A mortgage with an interest rate that changes over time in line with (ARM) movements with the index.

Adjustment Period

Period of time between interest rate changes on an ARM. For example a loan with an adjustment period of one year is called a one year ARM, which means the interest rate can change once a year.

Agency

A legal relationship in which someone (principal) hires someone else (agent) to represent them to a third party.

Amortization

Repayment of a loan in equal installments of principal and interest rather than interest only payments

Annual Percentage Rate

The total finance charge (interest, loan fees, points expressed as percentage (APR) of the loan amount).

Application Fee

A fee to cover some of the charges of the loan process.

Appraisal Fee

A fee charged by the Lender for an appraisal.

Assessed Value

The value placed on the property by the Appraisal District as a basis for taxation.

Assumption of Mortgage

A Buyerâ&#x20AC;&#x2122;s agreement to assume the liability under an existing note secured by a mortgage or deed of trust. The Lender must approve the Buyer to assume the loan.

Balloon Payment

An instance in which the final installment payment on a note is greater than the preceding payments, and pays the note in full.

Beneficiary

The recipient of benefits, often from a deed of trust; usually the lender.

Buy Down

A fixed rate loan where the interest rate and payment are reduced for a specific period of time by paying the interest up front to subsidize the lower payment.

Cap

The limit on how much the interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.

Chain of Title

A history of conveyances and encumbrances affecting the property title.

CC&Râ&#x20AC;&#x2122;S

Covenants, Conditions and Restrictions. A document that controls the use, requirements, and restrictions of a property.

Equity Title of Nevada

GLOSSARY OF TERMS, CONTINUED.... Closing Statement

The financial disclosure statement that accounts for all of the funds received and expected at the closing of the escrow, including deposits for taxes, hazard insurance and mortgage insurance.

Conventional Mortgage

A mortgage securing a loan made by investors without government underwriting â&#x20AC;&#x201C; that is, not FHA insured or VA guaranteed.

Convey or Conveyance

Process of transferring ownership of property from one person to another.

Courier Fee

Charges for delivery.

Credit Report Fee

Assessed by the Lender for a required credit report from a credit bureau.

Deed

A document which, when properly executed and delivered, conveys title of real property.

Deed of Trust

An instrument used in many states to place a mortgage.

Disclosure

To make known or public. When dealing with real property, all disclosures should be made in writing.

Discount Points

A negotiable fee paid to the lender to secure financing for the Buyer. Discount points are up-front interest charges to reduce the interest rate on the loan over the life, or a portion, of the loanâ&#x20AC;&#x2122;s term. One discount point equals one percent of the loan amount.

Due on Sale Clause

An acceleration clause that requires full payment of a mortgage or deed of trust when the secured property changes ownership.

Earnest Money

Money deposited by a buyer as evidence of good faith.

Encumbrance

Anything that affects or limits the ownership of real property, such as mortgages, liens, easements or restrictions of any kind.

Escrow Fee

Charged by the title company to service the transaction and escrow funds, and documents. Usually paid by the Buyer.

Escrow

The deposit of documents and funds with instructions to a neutral third party to carry out the provisions of an agreement or contract.

Exclusive Right to Sell Listing

A written agreement between owner and agent giving the agent the right to sell a property and collect a fee for a set term.

Fair Market Value

The price at which a willing Seller would sell and a willing Buyer would buy, neither being under abnormal pressure.

Equity Title of Nevada

GLOSSARY OF TERMS, CONTINUED.... Fannie Mae

A private corporation dealing in the purchase of first mortgages at discounts.

Freddie Mac

A mortgage that has a rate that is adjusted at certain intervals during the loan period. The adjustment can either be higher or lower depending on the current market rate at the time adjustment is due.

Ginnie Mae

A federal association, working with FHA, which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary position.

Finance Charge

The total cost a borrower must pay, directly or indirectly, to obtain credit.

Impound Accounts

A trust type of account established by Lenders for the accumulation of the borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.

Legal Description

A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should thoroughly identify a parcel of land so that it cannot be confused with any other.

Lien

A form of encumbrance that usually makes a specific property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes mortgages and deeds of trust.

Loan Origination Fee Mortgage

Normally 1% of the loan amount, charged by the Lender to the Buyer. A legal document that provides security for repayment of a promissory note.

Mortgagee’s Title Policy

Required by Lenders to ensure that the Lender has a valid lien. It does not protect the Buyer. Also required for second mortgages.

Owner’s Title Policy

Insures the Buyer against loss due to any defect of the title not excepted or excluded from the policy.

Points

Paid by the Buyer or Seller. One point is equal to one percent of the loan amount.

Principal

The employer of an agent in an agency relationship.

Recording Fee

Charged by the County Clerk to record documents in the public records. Charges are based on the number of pages recorded.

Septic Inspection

The septic system must have certificate by the city or county Health Department.

Survey

Survey of property required by lender; shows lot size, easements, any encroachments, locations of improvements, etc.

Equity Title of Nevada

GLOSSARY OF TERMS, CONTINUED.... Tax Service Fee

Required by the Lender for collection and disbursement of tax escrow by a servicing company.

Termite Inspection

Required by the Lender to show that the property is free and clear of active termites.

Time is of the Essence

Demands punctual performance in a binding contract.

Title Policy

Insurance policy on the ownership of Real Property, against defects in title.

Title

In dealing with Real Property, title means ownership.

Underwriting Fee

Charged by a Lender to underwrite the loan.

VA Funding Fee

Veteranâ&#x20AC;&#x2122;s Administration charge for originating a VA loan.

Warehouse Fee

Charged by the Lender to hold the loan locally before selling it in the secondary mortgage market to an investor.

Zoning

Act of city authorities specifying type of use for which the property may be used.

Equity Title of Nevada