Lots of times clients ask me what this or that means in a real estate transaction. I think it would be fun to include some new words every week that will help you understand some of the lingo you hear during the course of a transaction. This will help me brush up too, (since I took that real estate licensing test almost fifteen years ago!)

If you have any questions about any of this, you know who to call. : )


Acceleration Clause

1.  A condition in a real estate financing instrument giving the lender the power to declare all sums owed to the lender immediately due and payable upon the happening of an event such as sale of the property or a delinquency in the repayment of the note.

2.   Clause in a deed of trust or mortgage which "accelerates" the time when the indebtedness becomes due. For example, some mortgages or deeds of trust contain a provision that the note balance shall become due immediately upon the resale of the land or upon the default in the payment of principal and interest.		  

 

   


Biweekly Payment Loan

A mortgage which requires principal and interest payments at two-week intervals which is exactly half of what a monthly payment would be which over a year's time, the 26 payments are equivalent to 13 monthly payments on a comparable mortgage loan.


Commitment Letter
An official notification to a borrower which generally specifies the terms of the loan and a date for the closing by a lender of the intent to grant a loan.  
 
 
Deed Of Trust
 
A document which transfers title in a property to a trustee, whose obligations and powers are stipulated; often used in mortgage transactions.  
 

Earnest Money

A sum of money or other consideration tendered by a prospective purchaser as evidence of good faith in conjunction with an offer to purchase rights in real property.


Fair Market Value

 
The amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under any pressure to buy.