Home Buying Terms You Should Know

Amendments
A change—either to alter, add to, or correct—part of an agreement without changing the principal idea or essence.

Appraisal
An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

Assumption
Taking over another person’s financial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real property.

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

Close of Escrow
Generally the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

Comparable Sales
Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”

Deed of Trust
An instrument used in many states in place of a mortgage.

Deed Restrictions
Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.

Earnest Money Deposit
Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.

Easement
A right, privilege or interest limited to a specific purpose that one party has in the land of another.

Hazard Insurance
Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

Impounds
A trust type of account established by lenders for the accumulation of 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 parcel of land. It should so thoroughly identify parcel of land that it cannot be confused with any other.

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

Mortgage
The instrument by which real property is pledged as security for repayment of a loan.

PITI
A payment that combines Principal, Interest, Taxes, and Insurance.

Power of Attorney
A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”

Purchase Agreement
The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.

Quitclaim Deed
A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title by the grantor.

Recording
Filing documents affecting real property with the County Recorder as a matter of public record.