Real Estate Word of the Day: Underwriting

Underwriting is the process used by lenders, insurance companies, and investors to assess the risk of providing financial services, such as loans or insurance, to a client. In the context of real estate, underwriting involves a thorough evaluation of the property, the borrower, and the market conditions to determine whether to approve a loan application and under what terms.


The Process for Underwriting

When you apply for a mortgage or a real estate investment loan, the first step is the initial application review. This involves collecting your financial information, including income, credit score, employment history, and existing debts. A crucial part of underwriting is the property appraisal. This is…

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Real Estate Word of the Day: Title Insurance

Title insurance is a specialized form of indemnity insurance designed to protect property owners and lenders from potential losses arising from defects in the title to a property. Unlike other insurance types, which protect against future events, title insurance protects against claims for past occurrences. This includes any discrepancies or issues with the property's title that may not have been discovered during the initial title search.

When you purchase a property, a title company conducts a thorough search of public records to uncover any potential issues with the title. This search aims to ensure that the seller has a valid title to transfer and that there are no hidden liens, encumbrances, or other…

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Real Estate Word of the Day: Survey

A survey, in the context of real estate, is a detailed inspection and mapping of a piece of land. This process is carried out by professional surveyors who use specialized equipment to measure and define property boundaries, identify topographical features, and document any existing structures on the land. The end product of this process is a survey report, which includes a detailed map or plat that outlines the precise boundaries and features of the property.


Types of Surveys
  • Boundary surveys are the most common type of survey, used to establish the exact boundaries of a property. It’s crucial for determining property lines and resolving any disputes with neighboring properties.
  • Topographic surveys…

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Real Estate Word of the Day: Quitclaim Deed

A quitclaim deed is a legal document used to transfer ownership or interest in a property from one person (the grantor) to another (the grantee). Unlike other types of deeds, such as warranty deeds, a quitclaim deed offers no guarantees or warranties about the property's title. Essentially, the grantor "quits" their claim to the property, transferring whatever interest they may have without making any promises about the validity of the title.

The most defining characteristic of a quitclaim deed is that it makes no warranties or promises about the property's title. This means the grantee receives only the interest the grantor had at the time of the transfer, which could be none. Quitclaim deeds are…

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Real Estate Word of the Day: Origination Fee

An origination fee is a charge by a lender for processing a new loan application. It is typically a percentage of the total loan amount, often ranging from 0.5% to 1%. This fee compensates the lender for the work involved in evaluating, preparing, and approving your mortgage.

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Real Estate Word of the Day: Notarization

Notarization is a formal process of verifying the authenticity of a document and the identity of the signatories involved. This process is conducted by a notary public—a state-appointed official who acts as an impartial witness in the signing of important documents. The notary public ensures that the parties involved in the transaction understand the contents of the document and are signing it voluntarily.


The Notarization Process

The notarization process typically involves three key steps:

  1. The notary public checks the identification of each signatory to confirm they are who they claim to be. Acceptable forms of ID usually include government-issued documents such as driver’s licenses, passports,…

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Real Estate Word of the Day: Lender

A lender is a financial institution or individual that provides funds to borrowers with the expectation that the money will be repaid, typically with interest. In real estate, lenders provide the capital needed to purchase properties. These can include banks, credit unions, mortgage companies, and even private lenders.

The primary role of a lender in real estate is to finance the purchase of property. When you apply for a mortgage, the lender assesses your financial situation to determine your ability to repay the loan. This involves evaluating your credit score, income, debt-to-income ratio, and other financial metrics. Based on this assessment, the lender will offer you a loan amount, interest rate, and…

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Real Estate Word of the Day: Grantee

A grantee is the individual or entity that receives an interest in property from another party. This transfer of interest typically occurs through a legal document known as a deed. The person or entity transferring the interest is called the grantor. Therefore, in a real estate transaction, the grantor gives, and the grantee receives.

When a property is sold, a deed is prepared to document the transfer of ownership. The grantor signs the deed, indicating their intention to transfer the property to the grantee. Upon signing the deed, the grantee receives the title to the property. The title signifies legal ownership and the right to use and enjoy the property. To make the transfer official and public, the deed is…

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Real Estate Word of the Day: Fixture

A fixture is any piece of property that is physically attached to the land or a building in such a way that it is considered legally part of that property. Essentially, fixtures are items that were once personal property but have become part of the real property due to their attachment.

Common examples of fixtures include built-in appliances or built-in furniture, lighting, plumbing, landscaping. For Sellers: If there are items you want to take with you, clearly communicate this to potential buyers and ensure these items are excluded in the contract. For Buyers: When touring a home, ask about which items are considered fixtures and will remain with the property. Ensure that these items are listed in the purchase…

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Real Estate Word of the Day: Fair Market Value

Fair market value (FMV) is the estimated price at which a property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts and neither being under any compulsion to buy or sell. It represents an accurate and objective valuation of a property under normal market conditions.


Key Factors Influencing Fair Market Value
  • The location of a property significantly affects its value. Properties in desirable neighborhoods with good schools, low crime rates, and proximity to amenities such as shopping centers, parks, and public transportation tend to have higher market values.
  • The condition of the property is another critical factor.…

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