REFERENCE
THE VOCABULARY,
IN PLAIN ENGLISH.
Most of the intimidation in this category is vocabulary. Here is the working set, defined plainly and without jargon defending itself with more jargon.
Definitions only. Nothing here is legal or tax advice, and nothing on this site is an offer or a solicitation.
The paper
| Term | Plain meaning |
|---|---|
| Promissory note | The borrower's written promise to repay. States the amount, payments, maturity, default and remedies. The debt itself. |
| Mortgage | The instrument that pledges real property as security for a debt and creates a lien. Used in South Carolina; enforced through the courts. |
| Deed of trust | An alternative security instrument used in some states, involving a third-party trustee and often permitting a non-judicial process. |
| Security instrument | The general term for whichever document attaches a debt to specific property. |
| Lien | A recorded claim against property securing an obligation. It travels with the property until satisfied. |
| Lien position | Where a lien sits in the payment order. First position is satisfied before any junior lien receives anything. |
| Recording | Filing an instrument in county public records. Gives notice to the world and establishes priority. |
| Subordination | An agreement in which a lien holder accepts a lower priority than they would otherwise have. |
| Personal guaranty | A promise by an individual to repay a debt owed by an entity. Only as good as the guarantor's reachable assets. |
| Assignment | Transfer of a contract or a note from one party to another, where permitted by the document. |
The collateral
| Term | Plain meaning |
|---|---|
| Collateral | The specific property pledged to secure a loan, and what a lender looks to if the loan is not paid. |
| LTV | Loan-to-value. The loan amount compared to the property's value. Always ask which value. |
| ARV | After-repair value. What a property is expected to be worth once planned work is complete. A projection, not a fact. |
| As-is value | What the property is worth today in its current condition. The only value that exists on funding day. |
| Equity cushion | The difference between value and what is owed. What absorbs cost overruns, delay and a lower sale. |
| Appraisal | A valuation prepared by a licensed appraiser under professional standards. |
| BPO | Broker price opinion. A valuation from a broker or agent. Faster and less formal than an appraisal. |
| Comparable sales | Recent sold properties similar in location, type, size and condition, used to establish value. |
| Title insurance | A policy insuring against certain title defects, subject to its exceptions. A lender's policy insures the lender's position. |
| ALTA | American Land Title Association. Its standardized policy and endorsement forms are used across the industry. |
| Mechanic's lien | A claim recorded by a contractor or supplier for unpaid work or materials, with statutory treatment that can affect priority. |
This is one piece of a bigger picture; the full story behind this work has the rest.
The money and the term
| Term | Plain meaning |
|---|---|
| Principal | The amount borrowed, separate from any interest or fees. |
| Points | A fee expressed as a percentage of the loan amount, typically charged at origination. |
| Origination | The process of creating a loan, and the fees associated with doing so. |
| Draw schedule | An arrangement releasing construction funds in stages against completed and verified work rather than all at closing. |
| Maturity | The date the loan is due in full. The date everything in diligence is actually about. |
| Balloon | A large payment of remaining principal due at maturity rather than amortized over the term. |
| Amortization | The schedule by which principal is paid down over time through regular payments. |
| Seasoning | How long something has existed — an ownership period, a payment history — often required before a refinance or resale. |
| Payoff | The total amount required to satisfy a loan in full on a given date, including accrued items. |
| Escrow | Funds or documents held by a neutral third party pending completion of agreed conditions. |
| Servicing | Administration of a loan after closing: collecting payments, applying them correctly, and keeping records. |
When things go wrong
| Term | Plain meaning |
|---|---|
| Default | Failure to meet an obligation under the loan documents. What counts as default is defined in the note. |
| Cure period | Time given after a default notice during which the borrower may fix the problem before remedies proceed. |
| Forbearance | A lender's agreement to hold off on remedies for a period, usually on stated conditions. Not forgiveness. |
| Foreclosure | The legal process of enforcing a security interest against property. Judicial in South Carolina, meaning it runs through the courts. |
| Deficiency judgment | A judgment for the shortfall when a foreclosure sale does not cover the debt. Availability and procedure vary by state and situation. |
| Deed in lieu | A borrower conveying the property to the lender to avoid foreclosure. Carries its own risks and requires counsel. |
| REO | Real estate owned. Property a lender holds after foreclosure, with all the obligations of ownership attached. |
| Cloud on title | Any claim or defect that calls ownership into question and interferes with a clean transfer. |
| Lis pendens | A recorded notice that litigation affecting the property is pending. |
If a term you encounter is not on this list, that is a reason to ask rather than to nod. In this category, the words are the transaction, and every one of them should be explained by your own attorney before you sign anything.
Frequently asked
Questions people actually ask
What is the difference between a note and a mortgage?
The note is the promise to repay and is the debt itself. The mortgage is the instrument that attaches that debt to a specific property and creates a recorded lien.
What does first lien position mean?
That your lien is satisfied first out of the proceeds of a sale or foreclosure, before any junior lien receives anything. If proceeds run short, junior positions can recover nothing.
What are points?
A fee expressed as a percentage of the loan amount, usually charged when a loan is originated. What any particular loan's fees are is a matter for the loan documents, not for a website.
What is seasoning?
How long something has existed — how long a property has been owned, or how long a payment history runs. Some lenders and programs require a seasoning period before a refinance or resale.
What is a deficiency judgment?
A judgment for the remaining balance when a foreclosure sale does not produce enough to satisfy the debt. Whether one is available and how it works depends on state law and the specific situation. Ask a South Carolina attorney.
Why does this site define so much and quote no numbers?
Because vocabulary is genuinely useful and figures would not be. Every rate, fee and term belongs to a specific transaction and its documents. This site publishes no returns, rates or yields, and nothing on it is an offer or a solicitation.
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