Notary Loan Signing Agent Definitions
Borrower (Mortgagor) (Ans- 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 (Ans- 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 (Ans- The process of paying off one loan with the proceeds from a new loan secured by the same property.
Escrow Company (Ans- 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 (Ans- 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 (Ans- 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 1 / 4
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 (Ans- 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 (Ans- 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 (Ans- 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) (Ans- 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 (Ans- The amount of debt, not counting interest, left on a loan.
Note (Ans- Document outlining the terms of the loan. For example, the note would specify that the borrower is borrowing $300,000 at a 4% interest 2 / 4
rate, and will have a certain fixed payment for 30 years. Also called the contract.
Interest Rate (Ans- The cost to the borrower for the money the bank lends to them.
Fixed Rate Note (Ans- 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) (Ans- 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) (Ans- 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 (Ans- 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 3 / 4
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 (Ans- 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 (Ans- When the borrower has not lived up to the agreed upon terms of repayment on the loan.
Foreclosure (Ans- 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 (Ans- 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 (Ans- Taxes that are due to the county where the property resides. Usually due twice a year.
Impound Account/Escrow Account (Ans- An account established to collect property tax and hazard/fire insurance on the property. Sometimes required by the lender as a term of
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