Think of this glossary as a gateway to decoding the mind-numbing acronyms, that the real estate and lending (they’re the worst) industry is rampant with. Often as an agent I forget that normal people don’t use the words I do every day. So if you hear a term you don’t understand, don’t be shy. Ask! There are no stupid questions.
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- Automated Underwriting
Automated Underwriting or AUS (Automated Underwriting System) is a way to determine if a loan application should be approved by using a computer system that evaluates characteristics of the borrower’s financial and credit history, as well as information about the property. Generally this process can occur within seconds.
- Cloud on Title
A Cloud on Title is an apparent claim or encumbrance, such as a lien, that, if true, impairs the right of the owner to transfer his or her property free and clear of the interests of any other party. Also known as a title defect.
- Ernest Money
Earnest Money is a good faith deposit but not to be confused with a down payment. When buyers execute a purchase contract, the contract specifies how much money the buyer is initially putting up to secure the contract, to show "good faith," and how much money all together will be deposited as a down payment.
- Material Defect
A material defect is a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people. The fact that a system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect.
- Material Fact
A material fact in real estate is defined as a fact that, if known, might have caused a buyer or seller of real estate to make a different decision with regards to remaining in a contract or to the price paid or received.
- Stigmatized Property
Stigmatized property is a property that has been psychologically impacted by an event which occurred, or was suspected to have occurred, on the property, such event being one that has no physical impact of any kind.
- Title Defect
Title Defect is any encumbrance or claim that might invalidate a title to a property, also called cloud on title.
- Title Insurance
Title insurance is a form of indemnity insurance which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.