Tired of that alphabet soup of legal jargon that accompanies any real estate transaction?
Here’s a break down (in simple English) of some regularly used terms you should know.
Acceleration Clause: In a mortgage, this clause gives the lender the right to demand payment of the entire remaining loan balance for various reasons, most commonly when a borrower fails to make payments or transfers the title to another individual without informing the lender.
As Is: (i.e. “short sale as is”) When a property is put on market in its current condition. Infers that the seller is not responsible for any damages or repairs needed on the property. This language is most often used when dealing with distressed property.
Creditor: A person to whom money is owed.
Lien: The right a creditor has to sell a debtor’s property as payment for a debt. Even if a person declares bankruptcy, a creditor may still have a lien on their property.
Second Mortgage: a subordinate mortgage made while the original mortgage is still in effect. In the case of default, the original mortgage would receive funds from the selling of the property until it is paid off in full. Only after the first is payed off entirely does the second mortgage receive payments. As such, the interest rates on second mortgages are usually higher.
Servicing: The collection of mortgage payments by a lender.
So if you don’t know, now you know, baby!
