Glossary

 

     

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Abstract of Title:  The condensed history of title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances, transfers, wills, judicial proceedings, mortgages, and encumbrances & liens, and any other facts affecting title.

Acceptance:  Voluntary expression by the person receiving the offer to be bound by the exact terms of the offer.  This expression must be unequivocal and unconditional.

Acceleration Clause:  A clause in a deed of trust or note that accelerates the time when the debt becomes due.  For example, most deeds of trust loans contain a provision that the note shall become due immediately upon the sale or transfer of title of the loan, or upon failure to pay an installment of principal or interest.  Sometimes referred to as "Due on Sale Clause."

Adjustable Rate Mortgage:  A mortgage that has a rate that is adjusted at certain intervals during the loan period.  The adjustment can either be higher or lower depending on the current market rate at the time the adjustment is due.

Adjusted Basis:  Value of property used to determine the amount of gain or loss realized by seller upon sale of the property.  Adjusted Basis equals acquisition cost plus capital improvements minus depreciation.

Adjusted Sales Price:  The total amount realized on the sale of a property minus selling expenses.

Agency:  Any relationship in which one party (agent) acts for or represents another (principal) under the authority of the principal.  Agency relationships should be in writing, such as real estate listings, trusts, powers of attorney, etc.

Agent:  A person authorized by another to act on his or her behalf in communications with other parties.

Agreement:  A contract requiring mutual consent between two or more parties.

Alienation Clause:  A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term. Also called "Due on Sale Clause."

Amenities:  The benefits resulting from the ownership of a property.

Americans with Disabilities Act:  A federal law protecting the rights of individuals with physical or mental impairments.

Amortization Loan:  A loan that is paid off ( both interest and principal ) by regular payments.

Annual Percentage Rate ( APR ):  The cost of a loan or other financing as an annual rate. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

Annuity:  An amount paid yearly or at other regularly timed intervals, often at a guaranteed minimum amount. Also, a type of insurance policy in which the policy holder makes payments for a fixed period or until a stated age, and then receives annuity payments from the insurance company.

Application Fee:  The fee that a mortgage lender or mortgage broker charges to apply for a mortgage to cover some processing costs.

Appraisal:  An analysis by a professional appraiser used to estimate the value of the property. This includes examples of sales of similar properties.

Appreciation:  An increase in the market value of a home due to changing market conditions and/or home improvements, usually accumulated over time.

Arbitration:  A process by which disputes are settled by a fair and neutral third party (arbitrator).  The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to state their case, after which the arbitrator makes a decision.

Arbitrator:  A professional that is licensed to monitor arbitrations.

Arrears:  Payment delinquency in meeting an obligation or interest paid at the end of a period for using the money during the previous period.  For Example:  Most home mortgages are paid on the first of the month, so the interest is being paid in arrears for the previous month.

Asbestos:  A toxic material once used in housing insulation and fireproofing.  Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes.  However, some older homes may still contain asbestos.

Asking Price:  The price of a property specified in a listing agreement for which the home is for sale.

Assessed Value:  Generally the value placed on the property by the government for the purpose of taxation.

Assessment:  A Levy against property in addition to general taxes.  Usually for improvements such as streets or sewers, etc.

Assessor:  A government official who establishes the value of a property for taxation purposes.

Asset:  Anything of monetary value that is owned by a person or a company.  Assets include real property, personal property, stocks, mutual funds, etc.

Assignee:  One to whom contractual rights are transferred.

Assignment of Mortgage:  A document evidencing the transfer of ownership of a mortgage from one person to another.

Assignor:  The person transferring contractual rights to another.

Assumable Mortgage:  A mortgage loan that can be taken over (assumed) by the buyer when a home is sold.  The mortgage company may or may not require the buyer to qualify for the loan.  It is also the decision of the mortgage company as to whether the seller is released from responsibility or not.  If the mortgage contains a due-on-sale clause, the loan may not be assumed without the mortgage company's consent.

Assumption:  A homebuyer's agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Assumption Fee:  The fee a lender charges a buyer to assume the seller's existing mortgage.

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Balance Sheet:  A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon Mortgage:  A mortgage with monthly payments based on an amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time.

Balloon Payment:  A final lump sum payment that is due at the maturity date of a balloon mortgage.

Bargain-and-Sale Deed:  A form of deed usually without covenants of title.

Bankruptcy:  When a person is legally declared unable to pay their debts. Bankruptcy can severely impact credit and ability to borrow money.

Basis:  The value of property for income tax purposes; consists of original costs plus capital improvements.

Before-Tax Income:  Total Income before taxes are deducted.  Also known as "Gross Income."

Beneficiary:  The recipient of benefits, from a deed of trust, insurance policy, or financial arrangements.

Bequest:  A gift of personal property by a will.

Bill of Sale:  An instrument transferring ownership of personal property.

Biweekly Payment Mortgage:  A mortgage with payments due every two weeks.

Breach of Contract:  Failure to perform a contract, in whole or in part, without legal excuse.

Bona fide:  In good faith, without fraud.

Bridge Loan:  A short-term loan secured by the borrower's current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold.  Also called a "Swing Loan."

Broker:  An individual or firm that acts as an agent between providers and users of products or services, such as a Real Estate Broker or Mortgage Broker.

Building Code:  Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings.  The codes are designed to provide for the safety, health and welfare of the public.

Buydown:  An arrangement whereby a third party provides an interest subsidy to reduce the borrower's monthly payments; typically in the early years of the loan.

Buyer Brokerage:  An agency relationship between a buyer and a broker, where the broker represents the buyer.

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Cap:  For an Adjustable-Rate Mortgage ( ARM ), a limitation on the amount the interest rate or mortgage payments may increase or decrease.  See also "Lifetime Cap" and "Periodic Cap."

Capacity:  Used for loan qualification.  Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you've paid for your housing costs, debts and other obligations.

Cash-out Refinance:  A refinance transaction in which the borrower receives additional funds over and above the amount needed to repay the existing mortgage, closing costs, points, and any subordinate liens.

Certificate of Deposit:  A document issued by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Eligibility:  A document issued by the U.S. Department of Veterans Affairs ( VA ) certifying a veteran's eligibility for a VA-guaranteed mortgage loan.

Chain of Title:  The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Orders:  An addendum to a contract to change its terms.  This must be signed by all parties to the contract.

Civil Rights Act of 1866:  A federal law that prohibits all discrimination on the basis of race.

Civil Rights Act of 1968:  A federal law that prohibits discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, sex, or national origin.  Also See "Fair Housing Act of 1968."
 
Clear Title:  Ownership of property that is free of liens, defects, or other encumbrances.

Closing:  The process of completing a real estate transaction.  For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property.  In some jurisdictions, closing is referred to as escrow, a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions.  Also see "Settlement."

Closing Agent:  The Person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds.  Typically, the closing is conducted by title companies, escrow companies or attorneys.  Also see Escrow Agent & Settlement Agent.

Closing Costs:  The upfront fees paid by the buyer, seller or third party in connection with a real estate transaction.

Closing Date:  The date on which the sale of a property is to be finalized or a loan transaction completed.

Closing Statement:  A document that lists all closing costs of a real estate transaction.  It provides the sales price, down payment and all loan figures, as well as the total "Closing Costs" required from the buyer and seller.  Also see "HUD-1 Settlement Statement" & "Settlement Statement."

Cloud on a Title:  A claim, encumbrance, lien, or condition that impedes the transfer of title to the real property until disproved or eliminated through such means as a quitclaim deed or a quiet title legal action.

Co-borrower:  Any borrower other than the first borrower whose name appears on the application and mortgage note, even when that person owns the property jointly with the first borrower and shares liability for the note.

Collateral:  An asset that is pledged as security for a loan.  The borrower risks losing the asset if the loan is not repaid according to the terms of the loan agreement.  In case of a mortgage, the collateral would be the real property.

Commitment Letter:  A letter provided by a mortgage company to assure that the buyer has been pre-qualified and can get a loan.

Commission:  A fee paid for the performance of services, such as a broker's commission.

Common Area:  Those portions of a building, land, or improvements and amenities owned by a planned unit development ( PUD ) or condominium project's homeowner's association ( or a cooperative project's cooperative corporation ) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance.  Common areas may include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, etc.

Comparable Sales ( COMPS ):  Properties that are used as a comparison in determining the current value of a property that is being appraised.

Concession:  Something given up or agreed to in negotiating the sale of a house.  For example, the sellers may agree to help pay for closing costs.  Also see "Incentive."

Consideration:  Anything which is of value and induces one to enter into a contract.

Condominium:  A unit in a multi-unit building.  The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas. They do not own the common elements such as the exterior walls, floors, and ceilings or the structural systems outside of the unit; these are owned by the condominium association.  There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

Construction Loan:  A loan for financing the cost of construction or improvements to a property.  The lender disburses payments to the builder at periodic intervals during construction.

Constructive Notice:  A notice in which all affected parties are bound by presumed knowledge of a fact even though they have not been actually notified of such fact

Contract:  An agreement between competent parties upon legal consideration to do, or abstain from doing, some legal act.

Contingency:  A condition that must be met before a contract may close.  For example, buyers may include contingencies for a home inspection, qualifying for financing, or appraisal value.  The transaction will not complete until these contingencies are satisfied or released.

Contingency Release:  An action to remove a contingency from a contract.

Conventional Mortgage:  A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration ( FHA ), the U.S. Department of Veterans Affairs ( VA ), or the Rural Housing Service ( RHS ). Also see "Government Mortgage."

Conversion Option:  A provision in some adjustable-rate mortgage ( ARM ) loans that allows the borrower to change the ARM to a fixed-rate mortgage at specified times after loan origination.

Convertible ARM:  An adjustable-rate mortgage ( ARM ) loan that allows the borrower to convert the loan to a fixed-rate mortgage under specified conditions.

Conveyance:  An instrument in writing, such as a deed or deed of trust, used to transfer title to property from one person to another.

Cooperative Project ( Co-op ):  A project in which a corporation holds title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title.

Cost of Funds Index ( COFI ):  An index that is used to determine interest changes for certain adjustable-rate mortgage ( ARM ) loans.  It is based on the weighted monthly average cost of deposits, advances, and other borrowings of members of the Federal Home Loan Bank of San Francisco.

Counter-offer:  An offer made in response to a previous offer.  For example, after the buyer presents the first offer, the seller may make a counter-offer with a higher sale price.

Covenants, Conditions and Restrictions ( CC&R'S ):  Restrictive Limitations which may be placed on a property that sets governing rules for its use.

Credit:  The ability of a person to borrow money, or buy goods by paying over time.  Credit is extended based on a lender's opinion of a person's financial situation and reliability, among other factors.

Credit History:  Information in the files of a credit bureau, primarily comprised of a list of individual debts and a record of whether or not these debts were paid back on time or as agreed.

Credit Life Insurance:  A type of insurance that pays off a specific credit amount of debt or a specified credit account if the borrower dies while the policy is in force.

Credit Report:  Information provided by a Credit Bureau that allows a lender or other business to examine your use of credit.  It provides information on money that you've borrowed from credit institutions and your credit history.

Credit Score:  A numerical value that ranks a borrower's credit risk at a given point in time based on a statistical evaluation of information in the individual's credit history that has been proven to be predictive of loan performance.

Creditor:  A person who extends credit to a person borrowing money.

Creditworthy:  Your ability to qualify for credit and repay debts.

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Debt:  Money owed from one person or institution to another person or institution.

Debt-to-Income Ratio:  The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts, such as credit cards.

Deed:  The legal document transferring ownership or title to a property.

Deed-in-Lieu of Foreclosure:  The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure.  Also called a "voluntary conveyance."

Deed of Bargain and Sale:  A deed with an implied covenant that the grantor has clear title and possession.

Deed of Trust:  A legal document in which the borrower transfers the title to a third party (trustee) to hold as security for the lender.  When the loan is paid in full, the trustee transfers title back to the borrower.  If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.

Deed Restriction:  Limitation of land use appearing in deeds.

Default:  Failure to fulfill a legal obligation.  A default includes failure to pay on a financial obligation, but also may be a failure to perform any action required by a contract, even if it is non-monetary.

Delinquency:  Failure to make payment when it is due.  The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.

Delivery and Acceptance:  A transfer of a title by deed requires the grantor to deliver and the grantee to accept a given deed.

Department of Housing and Urban Development ( HUD ):  A federal agency involved with housing.

Depreciation:  A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

Disclosures:  Notices given from one party to another explaining existing conditions of a property or situation.

Discount Point:  A fee paid by the borrower for financing to reduce the interest rate.  A point equals one percent of the loan amount.

Disposable Income:  Income left over after fixed obligations and living expenses for a period of time are paid.

Down Payment:  A portion of the price of a home, not borrowed and paid up-front in cash.  Some loans are offered with zero down-payment.

Dual Agency:  A broker or agent representing both buyer and seller in the same transaction.  Requires special disclosure to all parties involved in the transaction.

Due-on-Sale Clause:  A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term. Also called "Alienation Clause."

Duty of Disclosure:  A responsibility for revealing all information that affects the agreement.

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Earnest Money Deposit:  The deposit to show that you are committed to buying the home. The deposit usually will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.

Easement:  A right to the use of, or access to land owned by another.

Egress:  The right to leave a parcel of land entered ( "Ingress" ) by law.

Electronic Funds Transfer ( EFT ):  The transfer of funds from one bank to another.

Employer-Assisted Housing:  A program in which companies assist their employees in purchasing homes by providing assistance with the down payment, closing costs, or monthly payments.

Encroachment:  The intrusion onto another's property without right or permission.

Encumbrance:  A claim on a property, such as a lien, mortgage or easement.

Equal Credit Opportunity Act ( ECOA ):  A federal law that requires lenders to make credit equally available without regard to the applicant's race, color, religion, national origin, age, sex, or marital status, the fact that all or part of the applicant's income is derived from a public assistance program, or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.  It also requires various notices to consumers.

Equitable Title:  An interest in real estate such that a court will take notice and protect the owner's rights.

Equity:  The value in your home above the total amount of the liens against your home.  For example: if you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

Escalation Clause:  The clause in a lease or loan permitting the lessor or lender to increase the rent.

Escrow:  The process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions.

Escrow Deposit:  An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition.  For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the "Closing" of a sale of real estate.

Escrow Account:  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 insurance policy premiums, required to protect their security.  Sometimes referred to as as "Impound" or "Reserve" account.

Escrow Agent:  The Person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds.  Also see Closing Agent & Settlement Agent.

Escrow Analysis:  The accounting that a mortgage servicing company performs to determine the appropriate balances for the escrow account, compute the borrower's monthly escrow payments, and determine whether any shortages, surpluses or deficiencies exist in the account.

Escrow Instructions:  Written directions to the escrow agent setting forth terms from the real estate contract for the escrow closing.

Estate at Will:  A leasehold estate that may be terminated by either party at any time.

Estate for Years:  A leasehold estate of definite time frame.

Estate from Period-to-Period:  A leasehold estate that automatically renews itself for consecutive periods until terminated by notice from either party.  Also called Estate from Year-to-Year or Periodic Tenancy.

Estate from Year to Year:  A leasehold estate that automatically renews itself for consecutive periods until terminated by notice from either party.  Also called Estate from Period-to-Period or Periodic Tenancy.

Estate in Fee:  An estate in fee simple.

Estate in Real Property:  An estate sufficient to provide the right to use, possession, and control of land. Also establishes the degree and time frame of ownership.

Eviction:  A legal procedure to remove someone from real property.

Exclusive Agency Listing:  A listing agreement under which a real estate broker (known as the listing broker) acts as an exclusive agent to sell the property for the property owner, but may be paid a reduced or no commission when the property is sold if, for example, the property owner rather than the listing broker finds the buyer. This kind of listing agreement can be used to provide the owner a limited range of real estate brokerage services rather than the traditional full range. As with other kinds of listing agreements, if a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the broker.

Exclusive Right-to-Sell Listing:  The traditional kind of listing agreement under which the property owner appoints a real estate broker (known as the listing broker) as exclusive agent to sell the property on the owner's stated terms, and agrees to pay the listing broker a commission when the property is sold, regardless of whether the buyer is found by the broker, the owner or another broker. This is the kind of listing agreement that is commonly used by a listing broker to provide the traditional full range of real estate brokerage services. If a second real estate broker (known as a selling broker) finds the buyer for the property, then some commission will be paid to the selling broker.

Execute:  To complete or finish, in real estate deeds, to sign, seal, and deliver.

Executed Contract:  An agreement that has been fully performed.

Executor:  A person named in a will and approved by a probate court to administer the deposition of an estate in accordance with the instructions of the will.

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Fair Credit Reporting Act ( FCRA ):  A consumer protection law that imposes obligations on credit bureaus (and similar agencies) that maintain consumer credit histories, lenders and other businesses that buy reports from credit bureaus, and parties who furnish consumer information to credit bureaus.  The FCRA also limits the sale of credit reports from credit bureaus by requiring the purchaser to have a legitimate business need for the data, allows consumers to learn the information on them in credit bureau files (including one annual free credit report), and specifies procedure for challenging errors in that data.

Fair Housing Act of 1968:  A federal prohibition on discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, sex, or national origin.  Also See "Civil Rights Act of 1968."

Fair Housing Amendments Act of 1988:  A law adding to the "Fair Housing Act of 1968" provisions to prevent discrimination based on mental or physical handicap or familial status.

Fair Market Value:  The price at which property would be transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.  Same as "Market Value."

Fannie Mae (FNMA):  A New York stock exchange company that is a public company that operates under a federal charter and is the nation's largest source of financing for home mortgages.  Fannie Mae does not lend money directly.  It purchases mortgage loans from institutions that lend directly to consumers.

Federal Home Loan Banks:  A system of 11 regional banks established by the Home Loan Bank act of 1932 in order to keep a permanent supply of money available for home financing.

Federal Housing Administration ( FHA ):  An agency within the U.S. Department of Housing and Urban Development ( HUD ) that insures mortgages and loans made by private lenders.

Fee Simple:  An estate under which the owner is entitled to unrestricted powers to dispose of the property,  by sale, will or inheritance.

Federal Reserve System:  The U.S. agency that regulates monetary policy, money supply and interest rates.

FHA:  An agency within the U.S. Department of Housing and Urban Development ( HUD ) that insures mortgages and loans made by private lenders.

FHA-Insured Loan:  A loan that is insured by the Federal Housing Administration ( FHA ).

Fiduciary:  A person, such as an agent, placed in a position of trust in relation to the person for whose benefit the relationship is created.

Final Statement:  Consummation of a contract to buy and sell real property.

Finance Charge:  An amount imposed on the borrower of a loan, consisting of an origination fee, service charges, discount points, interest, credit report fees, and other fees.

First Mortgage:  A mortgage that is the primary lien against a property.

First-Time Home Buyer:  A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the property.

Fixed-Period Adjustable-Rate Mortgage:  An Adjustable-rate mortgage ( ARM ) that offers a fixed rate for an initial period, generally three to ten years, and then adjusts periodically, for the remainder of the term.

Fixed-Rate Mortgage:  A mortgage with an interest rate that does not change during the entire term of the loan.

Fixture:  Personal property that has become real property by having been permanently attached to real property.

Fixing-up Expenses:  Costs incurred by the seller of a principal residence in preparing it for sale.

Flood Insurance:  Insurance that compensates for physical property damage resulting from flooding.  It is required by some mortgage companies for properties located in federally designated flood hazard zones.

Freddie Mac ( FHLMC ): 

Foreclosure:  A legal action that ends all ownership rights in a home when the homeowner fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

Forfeiture:  The loss of money, property, rights, or privileges due to a breach of a legal obligation.  In real estate, the most common forfeiture is the earnest deposit if the buyer defaults.

Fully Amortized Mortgage:  A mortgage in which the monthly payments are designed to pay off the obligation at the end of the mortgage term.

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General Contractor:  A person who oversees a home construction or improvement project and handles various aspects such as scheduling workers, ordering supplies and quality control.

General Warranty Deed:  A deed denoting an unlimited guarantee of title.

Gift Letter:  A letter that a family member writes verifying that they have given a buyer a certain amount of money as a gift and that they don't have to repay it.  The buyer can use this money towards a portion of the down payment with some mortgages.

Ginnie Mae (GNMA):  A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies.  Formal name: "Government National Mortgage Association".

Good-Faith Estimate:  A form required by the Real Estate Settlement Procedures Act ( RESPA ) that discloses an estimate of the amount of charges, for specific settlement services the borrower is likely to incur in connection with the mortgage transaction.

Government Mortgage:  A mortgage loan that is insured or guaranteed by a federal government entity such as the Federal Housing Administration ( FHA ), the U.S. Department of Veterans Affairs ( VA ), or the Rural Housing Service ( RHS ).  Also see "Conventional Mortgage."

Government National Mortgage Association (Ginnie Mae):  A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies.  Also known as "Ginnie Mae."

Grant:  Transfer of a title to real property by deed.

Grant Deed:  One of the many types of Deeds used to transfer real property.

Grantee:  One to whom a grant is made, generally the buyer.

Grantor:  One who grants property or property rights, generally the seller.

Gross Income:  Total income before taxes are deducted. Also known as "Before-Tax Income."

Gross Monthly Income:  The monthly income you earn before taxes and other deductions.

Growing-Equity Mortgage ( GEM ):  A fixed-rate mortgage in which the monthly payments increase according to an agreed-upon schedule, with the extra funds applied to reduce the loan balance and loan term.

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Hazard Insurance:  Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.

Highest and Best Use:  A process to determine the use of the property which produces the highest value for the land.  The process is comprised of four steps: 1. The Appraiser determines all uses which are legally permissible for the property; 2. Then they determine which are legally permissible and which ones are physically possible; 3. Then, which ones are financially feasible; 4. And then, which one single is the most  productive for the site.  The Appraiser may do this entire process twice; once as if the land were vacant and once if there are improvements that need to be demolished.  For an Appraisal, an assumption is made that the owner or buyer would employ the property in its highest and best use.

Home Equity Conversion Mortgage ( HECM ):  A type of mortgage developed and insured by the Federal Housing Housing Administration ( FHA ) that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Sometimes called a "Reverse Mortgage."

Home Equity Line of Credit ( HELOC ):  A type of revolving loan, that enables a home owner to obtain multiple advances of the loan proceeds at his or her own discretion, up to a limit.  This limit is generally a percentage of the borrower's equity in the property.

Home Inspection:  A professional inspection of a home to determine the condition of the property.  The inspection should include a detailed report of the results.

Homeowner's Insurance:  Includes the coverage of Hazard Insurance plus additional coverage for personal liability, and other such coverage.

Homeowner's Warranty ( HOW ):  An insurance policy that covers certain home repairs and fixtures for a specified period of time.

Homeowners' Association:  An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.

Homestead:  The land and Dwelling of a homeowner.

Homestead Exemption:  An exemption of a specified amount of value of a homestead from the claims of creditors or taxation as provided by state statue.

Housing and Urban Development ( HUD ):  An agency of the federal government concerned with housing programs and laws.

Housing Expense Ratio:  The percentage of your gross monthly income that goes toward paying your housing expenses.

HUD:  An agency of the federal government concerned with housing programs and laws.

HUD-1 Settlement Statement:  A document that lists all closing costs of a real estate transaction. It provides the sales price, down payment and all loan figures, as well as the total "Closing Costs" required from the buyer and seller.  Also see "Settlement Statement" & "Closing Statement."

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Impound Accounts:  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 insurance policy premiums, required to protect their security.  Sometimes referred to as as "Escrow" or "Reserve" account.

Improvements:  Changes or additions made to a property.  They will typically increase the value of the property, except in cases of over-improvement.

Incentive:  Something given up or agreed to in negotiating the sale of a house.  For example, the sellers may agree to help pay for closing costs.  Also see "Concession."

Income Property:  A property developed or purchased to generate rental income, tax benefits, or profitable resale.  Also called "Investment Property."

Index:  A number used to compute the interest rate for an adjustable-rate mortgage ( ARM ). The index is generally a published number or percentage, such as the average interest rate or yield on U.S. Treasury bills.  A margin is added to the index to determine the interest rate that will be charged on the ARM.  This interest rate is subject to any caps on the maximum or minimum interest rate that may be charged on the mortgage as stated in the note.

Individual Retirement Account ( IRA ):  A tax-deferred savings plan that can help you build a retirement fund.

Inflation:  An increase in prices.

Ingress:  The right to enter a parcel of land, usually used with "egress." ( entering and leaving ).

Initial Interest Rate:  The original interest rate for an adjustable-rate mortgage (ARM).  Also known as the "start rate."

Inquiry:  A request for a copy of your credit report by a lender or other business.  Usually when you fill out a credit application.

Installment:  The regular periodic payment that a borrower agrees to make to a lender as specified in a note.

Installment Debt:  A loan that is repaid in accordance with a schedule of payments for a specified term.

Instrument:  Any writing having legal form and significance, such as a deed, mortgage, will, lease, etc.

Interest:  The cost of borrowing money.  Interest is generally a percentage of the amount borrowed and stated in terms of an annual rate.

Interest Accrued Rate:  The percentage rate at which interest accumulates or increases on a mortgage loan.

Interest in Property:  A legal share of ownership in property, whether entire or partial.

Interest Rate:  The interest rate paid to borrow the money to buy a home.  Same as "Mortgage Rate" & "Note Rate."

Interest Rate Cap:  For an adjustable-rate mortgage ( ARM ), a limitation on the amount the interest rate can change per adjustment and/or over the lifetime of the loan, as stated in the mortgage note.

Interest Rate Ceiling:  For an adjustable-rate mortgage ( ARM ), the maximum interest rate, as specified in the mortgage note.

Interest Rate Floor:  For an adjustable rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

Internal Revenue Code 1031:  IRS regulations governing the exchange of like-kind property in which the exchange property is not identified at the time of exchange.  Also see "Starker Exchange."

Investment Property:  A property developed or purchased to generate rental income, tax benefits, or profitable resale.  Also called "Income Property."

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Joint Tenancy:  An individual interest in property, taken by two or more joint tenants.  The interests must be equal, occurring under the same conveyance, and beginning at the same time.  Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.

Judgment Lien:  A Lien on the property of a debtor resulting from the decree of a court.

Jumbo Loan:  A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae or Freddie Mac.  Also called "Non-Conforming Loan."

Junior Mortgage:  A loan that is subordinate to the primary loan or first-lien mortgage loan, for example a second or third mortgage.

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Late Charge:  A penalty imposed by the lender when a borrower fails to make a scheduled payment on time.

Lease:  An agreement by which an owner of real property gives the right of possession to another for a specified period of time and for a specified consideration ( rent ).

Lease-Purchase Option:  An option given by owners to rent a property to a tenant, who has the option to buy the home within a specified period of time.  The terms can include fixing a price, having part of the payments accumulate for a down payment, or anything that the owner and tenant may agree upon.

Legal Description:  A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land.  It should identify a parcel of land so well that it cannot be confused with any other.

Liabilities:  A person's debts and other financial obligations.

Liability Insurance:  Insurance coverage that protects property owners against claims of negligence, personal injury or property damage to another party.

LIBOR-Index:  An index used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans, based on the average interest rate at which international banks lend to or borrow funds from the London International bank Market.

Lien:  A claim or charge on a property for payment of a debt.

Lien Release:  The document needed to remove a lien on a property.

Lienee:  One whose property is subject to a lien.

Lienor:  The one holding a lien against another.

Life Estate:  A freehold estate created for the duration of the life or lives of certain persons; a non-inheritable estate.

Life Estate in Remainder:  A form of life estate in which certain persons, called remaindermen, are designated to receive the title upon termination of the life tenancy.

Life Estate in Reversion:  A form of life estate that goes back to the creator of the estate in fee simple upon termination.

Life Estate Pur Autre Vie:  An estate in which the duration is measured by the life of someone other than the life tenant.  See also "Pur Autre Vie."

Life Tenant:  One holding a life estate.

Lifetime Cap:  For an adjustable-rate mortgage ( ARM ), a limit on the amount that the interest rate or monthly payment can increase or decrease over the life of the loan.

Like-kind Property:  A tax term used in a Starker Exchange to identify that properties being exchanged are similar in nature as governed by the laws of the Internal Revenue Code 1031.

Limited Improvement District ( LID ):  A Community that has a lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street light, etc.) which directly benefits the assessed property.  Also known as "Special Improvement District ( SID )."  Also see "Special Assessment."

Listing Contract:  A contract whereby a property owner employs a real estate broker to market a property.

Liquid Asset:  A cash asset or an asset that is easily converted into cash.

Liquidated Damages:  Money to be paid and received as compensation for a breach of contract.

Loan Origination:  The process by which a loan is made, which may include taking a loan application, processing and underwriting the application, and closing the loan.

Loan Origination Fee:  Fees paid to your mortgage lender or broker for processing the mortgage application.  This fee is usually in the form of points.  One point equals one percent of the mortgage amount.

Loan Package:  The file of all items necessary for the lender to decide to approve or not approve a loan. These items will include the information on the prospective borrower ( loan application, credit reports, financial statements, employment letters, etc. ) and information on the property ( appraisal, survey, etc. ).

Loan-To-Value Ratio ( LTV ):  The relationship between the loan amount and the value of the property, expressed as a percentage of the property's value.  For example, a $100,000 home with an $80,000 mortgage, has an LTV of 80 percent.

Lock-in Rate:  The interest rate which is "locked in" or guaranteed for a specified period of time prior to closing.  See also " Rate Lock."

Lots and Blocks:  A description of Real Property that identifies a Parcel of Land by reference to Lot and Block numbers appearing on maps and plats of Recorded Subdivided Land.

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Maintenance Reserve:  Money reserved to cover anticipated maintenance costs.

Margin:  A percentage added to the index for an adjustable-rate mortgage ( ARM ) to establish the interest rate in each adjustment date.  The Index is a number used to compute the interest rate for an adjustable-rate mortgage ( ARM ).  The index is generally a published number or percentage, such as the average interest rate or yield on U.S. Treasury bills. This interest rate is subject to any caps on the maximum or minimum interest rate that may be charged on the mortgage as stated in the note.

Marketable Title:  Clear title which can be sold to a prudent purchaser reasonably free from risk of litigation over possible defects.

Market Value:  The price at which property would be transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.  Same as "Fair Market Value."

Material Fact:  A fact upon which an agreement is based, and without which, said agreement would not be made.

Maturity Date:  The date on which a mortgage loan is scheduled to be paid in full, as stated in the note.

Mechanic's Lien:  A lien created by statue for the purpose of securing priority of payment for the price or value of work preformed and material furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.

Mediation:  The process by which disputing parties get together to talk about their differences and hopefully arrive upon an agreement to settle their dispute.

Meeting of the Minds:  A condition that must exist for creation of a contract, essentially meaning that all parties agree.

Merged Credit Report:  A credit report issued by a credit reporting company that combines information from two or three major credit bureaus.

Metes and Bounds:  A Method of Land Description that identifies a Property by specifying the Shape and Boundary Dimensions, using Terminal Points and Angles.

Mortgage:  A loan using a home as collateral.  In some states the term mortgage is also used to describe the document you sign.  It also may be used to indicate the amount of money the buyers borrow, with interest, to purchase the home.  The sales price of the home minus the down payment.

Mortgage Broker:  An individual or firm that brings borrowers and lenders together to facilitate the mortgage process.

Mortgage Insurance:  Insurance written by an independent mortgage insurance company that protects the mortgage lender against losses incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sales price.  The federal government writes this form of insurance through its FHA and VA. Private companies write this insurance for conventional loans.

Mortgage Insurance Premium ( MIP ):  The amount paid by a borrower for mortgage insurance.  This may be payable at closing or in monthly payments throughout the loan.

Mortgage Lender:  The lender providing funds for a mortgage.  Lenders also manage the credit and financial information review, the property and the loan application process through closing.

Mortgage Life Insurance:  A type of insurance that will pay off the mortgage balance if the borrower dies while the loan is outstanding.

Mortgage Rate:  The interest rate paid to borrow the money to buy a home.  Same as "Interest Rate" & "Note Rate."

Mortgagee:  The institution or individual to whom a mortgage is given and loans the money.  Same as "Lender."

Mortgagor:  The owner of real estate who pledges it as security for the repayment of a debt. Same as "borrower."

Multifamily Mortgage:  A mortgage loan on a building with five or more dwelling units.

Multifamily Properties:  Typically, buildings with five or more dwelling units.

Multiple Listing Service: ( MLS ):  A clearinghouse through which member real estate brokerage firms regularly and systematically exchange information on listings of real estate properties.  This gives tremendous exposure and marketing potential to the properties.  All of the members cooperate to locate purchasers and for this, they share commissions.  The MLS for an area is usually operated by a local, private real estate association.

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National Association of REALTORS® ( NAR ):  This is a national trade organization that monitors standards of the industry.  Members must take an oath to adhere to a strict "Code of Ethics".  In addition, the REALTOR® organization provides extensive training and tools for its members to assure that you are getting the best representation available.

Negative Amortization:  An increase in the balance of a loan, caused by adding unpaid interest when the payment does not cover the interest due.

Net Monthly Income:  Total income minus taxes.  It is the amount of money that you actually receive in your paycheck.

Net Worth:  The value of a company or individual's assets minus liabilities.

Non-Conforming Loan:  A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae or Freddie Mac.  Also called "Jumbo Loan."

Note:  A unilateral agreement containing an express and absolute promise of the borrower to pay a named person, or order, or bearer, a definite sum of money at a specified date or on demand.  Usually provides for interest and, concerning real property, is secured by a mortgage or deed of trust.

Note Rate:  The interest rate paid to borrow the money to buy a home.  Same as "Interest Rate" & "Mortgage Rate."

Notice of Cessation:  A notice stating that work has stopped on a construction project.  This is done to accelerate the period for filing a mechanic's lien.

Notice of Completion:  A notice, recorded to show that a construction job is finished.  The length of time in which mechanic's liens may be filed depends upon when and if a notice of completion is recorded.

Notice of Default:  A notice filed to show that the borrower under the mortgage or deed of trust is in default, usually meaning that they are behind on the payments.

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Occupancy:  Physical possession of a property.

Offer:  A formal bid from a buyer to the seller to purchase a home.

Offer and Acceptance:  Necessary element for the creation of a contract.  One party makes an offer that is accepted by the other parties.  Also used to describe the contract that details the price and terms for a real estate transaction.  In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sales price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.  Also called a "Purchase Agreement" or "Purchase and Sale Agreement" or "Sales Contract."

Offeree:  One to whom an offer is made.

Offeror:  One making an offer.

Open House:  A special time when the home is open to the public for certain hours.  Anyone that is interested may view the property.

Original Principal Balance:  The total amount of money owed on a mortgage before any payments are made.

Origination Fee:  A fee paid to a lender or broker to cover the administration costs of processing a loan application.  The origination fee typically is stated in the form of points.  One point equals one percent of the mortgage amount.

Ownership:  Rights to the use, enjoyment, and alienation of the property, to the exclusion of others. Concerning Real Property, absolute rights are rare, being restricted by zoning laws, restrictions, liens, etc.

Owner Financing:  An agreement in which the seller provides all or part of the financing for the buyer's purchase of the property.  See also "Seller Take-Back."

Owner-Occupied Property:  A property that serves as the owner's primary residence.

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Partial Payment:  A payment that is less than the scheduled monthly payment on a loan.

Payment Change Date:  For an adjustable-rate mortgage ( ARM ) loan, the date on which a new monthly payment amount takes effect.

Payoff:  The payment in full of an existing loan or other lien.

Periodic Cap:  For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate or monthly payment can increase or decrease during any one adjustment period.

Periodic Tenancy:  A leasehold estate that automatically renews itself for consecutive periods until terminated by notice from either party.  Also called Estate from Year-to-Year or Estate from Period-to-Period.

Personal Property:  Any property that is not real property.  Generally removable and not attached to the property.

PITI:  An acronym for the four primary components of a monthly mortgage: principle, interest, taxes, and insurance.

PITI Reserves:  A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home.  The principal, interest, taxes, and insurance ( PITI ) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD):  A real estate development in which individuals hold title to a particular residential lot and home while the common facilities are owned and maintained by a homeowners' association, which is an organization of all the homeowners.

Point:  One percent of the amount of a mortgage loan.  For example, if a loan is made for $100,000, one point equals $1,000.

Power of Attorney:  A legal document authorizing another person to act on one's behalf.  A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-Approval:  A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan.  This process typically includes a review of the applicant's credit history and may involve the review and verification of income and assets to close.

Pre-Approval Letter:  A letter from a mortgage lender indicating that a prospective borrower qualifies for a mortgage of a specific amount.

Pre-Qualification:  A preliminary assessment by a lender of the amount it will lend to a potential home buyer.  The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.

Preliminary Report:  A report which is an offer to issue title insurance, under certain conditions.  If all of the conditions are met and the transaction is completed, then a title insurance policy is issued.

Prepaid Expenses:  Those expenses of property which are paid in advance and will usually be prorated upon sale, such as taxes, insurance, rent, etc.

Prepaid Items:  Funds paid at closing to start an impound account, as required in certain loans.  Generally these are for insurance and taxes.

Prepayment:  Any amount paid to reduce the principal balance of a loan before the scheduled due date.

Prepayment Penalty:  A fee that a borrower may be required to pay to the lender for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principal balance before the scheduled due date.

Principal:  The amount of money borrowed or the amount of the loan that has not yet been repaid to the lender.  This does not include the interest paid to borrow the money.  The principal balance ( sometimes called the outstanding or unpaid principal balance ) is the amount owed on the loan minus the amount you've repaid.  Also refers to the person who gives authority to an agent or attorney.

Private Mortgage Insurance:  Insurance written by an independent mortgage insurance company that protects the mortgage lender against losses incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sales price.

Promisee:  One to whom a promise has been made, such as the lender under a promissory note.

Promisor:  One who makes a promise, such as borrower under a promissory note.

Promissory Note:  A written promise to repay a specified amount over a specified period of time.

Property Appreciation:  An increase in the market value of a home due to changing market conditions and/or home improvements, usually accumulated over time.

Prorations:  To divide ( prorate ) property taxes, insurance premiums, rental income, etc. between the buyer and seller proportionately to the date of closing.

Public Records:  Generally at a county level, the records of all documents which are necessary to give notice.  All transactions for real estate should be recorded and are available to the public. 

Pur Autre Vie:  Latin meaning "for the life of another."  A life estate measured by the life of someone other than the life tenant.

Purchase Agreement:  A contract that details the price and terms for a real estate transaction.  In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sales price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.  Also called a "Purchase and Sale Agreement" or "Offer and Acceptance" or "Sales Contract."

Purchase and Sale Agreement:  A contract that details the price and terms for a real estate transaction.  In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sales price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.  Also called a "Purchase Agreement" or "Offer and Acceptance" or "Sales Contract."

Purchase Money Mortgage:  A mortgage loan that enables a borrower to acquire a property.

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Qualifying Guidelines:  Criteria used by mortgage companies to determine eligibility for a loan.

Qualifying Ratios:  Calculations that are used in determining the loan amount that a borrower qualifies for, typically a comparison of the borrower's total monthly debt payments and other recurring monthly obligations.

Quality Control:  A system of safeguards to ensure that loans are originated, underwritten and serviced according to the lender's standards and, if applicable, the standards of the investor, governmental agency, or mortgage insurer.

Quitclaim:  To relinquish or release a claim to real property.

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.

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Radon:  A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

Rate Lock:  An agreement in which an interest is "locked in" or guaranteed for a specified period of time prior to closing.  See also "Lock-in Rate."

Ratified Sales Contract:  A contract that shows both the buyer and the seller of the house have agreed to an offer.  This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspection, making repairs, closing by a certain date, etc.

Ready, Willing, and Able:  An expression to describe a buyer who is ready to buy, financially able to pay the negotiated price and willing to proceed.

Real Estate:  Land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items which would be personal property if not attached.  The term is generally synonymous with real property, although in some states a fine distinction may be made.  Also may refer to rights in real property as well as the property itself.

Real Estate Broker:  A person or organization who negotiates real estate sales, exchanges, or rentals for others for compensation or a promise of compensation.

Real Estate Professional:  An individual who provides services in buying and selling homes.  A real estate professional is generally paid a percentage of the home sale price by the seller.  Real estate professionals that work with sellers represent the interests of the sellers.  Real estate professionals that work with buyers represent the interests of the buyers.  There are special circumstances whereby a real estate professional may represent both the buyers and sellers.  Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

Real Estate Salesperson:  A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker.

Real Estate Settlement Procedures Act ( RESPA ):  A federal law that requires lenders to provide home mortgage borrowers with information about transaction-related costs prior to settlement, as well as information during the life of the loan regarding servicing and escrow accounts.

Real Property:  Land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items which would be personal property if not attached. Also see "Real Estate."

REALTOR®:  A registered trademark of the National Association of Realtors, its use is limited to members only.  Members must take an oath to adhere to a strict "Code of Ethics".

Realty:  Land and everything permanently attached to land.

Reconveyance:  An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt.  Most commonly used for payment in full in a trust deed.

Recordation:  Written registration of an owner's title in public records to protect against subsequent claimants.

Recorder:  The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

Recording:  The filing of a lien or other legal documents in the appropriate public record.

Recording Fee:  The amount paid to the recorder's office in order to make a document a matter of public record.

Refinance:  Getting a new mortgage with all or some portion of the proceeds used to pay off the prior mortgage.

Regulation Z:  Requirements issued by the Federal Reserve Board in implementing the Truth in Lending Law, which is part of the Federal Consumer Credit Protection Act.

Rehabilitation Mortgage:  A mortgage loan made to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Reject:  To refuse to accept an offer.

Remaining Term:  The original number pf payments due on the loan minus the number of payments that have been made.

Repayment Plan:  An arrangement by which a borrower agrees to make additional payments to pay down past due amounts while making regular scheduled payments.

Rescission:  The cancellation or annulment of a transaction or contract by operation of law or by mutual consent.

Reserve Account:  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 insurance policy premiums, required to protect their security.  Sometimes referred to as as "Escrow" or "Impound" account.

Reverse Mortgage:  A type of mortgage developed and insured by the Federal Housing Housing Administration ( FHA ) that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Technically called a "Home Equity Conversion Mortgage" ( HECM ).

Revocation:  Withdrawal of an offer.

Revolving Debt:  Credit that is extended by a creditor under a plan in which (1) the creditor contemplates repeated transactions; (2) the creditor may impose a finance charge from time to time on an outstanding unpaid balance; and (3) the amount of credit that may be extended to the consumer during the term of the plan is generally made available to the extent that any outstanding balance is repaid.

Right of First Refusal:  A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.  Also known as "First Right of Refusal."

Right of Survivorship:  The right of a survivor of a deceased person to the property of said deceased.  A distinguishing characteristic of a joint tenancy relationship.

Rural Housing Service (RHS):  An agency within the U.S. Department of Agriculture (USDA), which operates a range of programs to help rural communities and individuals by providing loan and grants for housing and community facilities.  This agency also works with private lenders to guarantee loans for the purchase or construction of single family housing.

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Sales Contract:  A contract that details the price and terms for a real estate transaction.  In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sales price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.  Also called a "Purchase and Sale Agreement" or "Offer and Acceptance" or "Purchase Agreement."

Second Mortgage:  A mortgage that has a lien position subordinate to the first mortgage.  ( Second Place )

Secondary Mortgage Market:  The market in which mortgage loan and mortgage-backed securities are bought and sold.

Secured Loan:  A loan that is backed by property such as a house, car, jewelry, etc.

Security:  The property that is given or pledged as collateral for a loan.

Seller Brokerage:  An agency relationship between a seller and a broker, where the broker represents the seller.

Seller Take-Back:  An agreement in which the seller provides all or part of the financing for the buyer's purchase of the property.  See also "Owner Financing."

Seller's Real Property Disclosure ( SRPD ):   A comprehensive checklist from the seller pertaining to the condition of the property including its structure, environmental hazards and any other condition that may affect the property.

Separate Ownership:  Ownership in Severalty by one's spouse.

Separate Property:  Any property acquired by one spouse during marriage by gift or inheritance or purchased with the separate funds of a husband or wife or brought into the marriage by one spouse.

Servicing:  The tasks a lender performs to protect the mortgage investment, including the collection of mortgage payments, escrow administration, and delinquency management.

Settlement:  The completion of a real estate transaction at which time the mortgage documents are signed and then recorded, funds are distributed, and the property is transferred to the buyer.  Also called "Closing" or "Escrow" in different jurisdictions. Also see "Closing" & "Escrow."

Settlement Agent:  The Person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds.  Typically, the closing is conducted by title companies, escrow companies or attorneys.  Also see Escrow Agent & Closing Agent.

Settlement Statement:  A document that lists all closing costs of a real estate transaction.  It provides the sales price, down payment and all loan figures, as well as the total "Closing Costs" required from the buyer and seller.  Also see "HUD-1 Settlement Statement" & "Closing Statement."

Single-Family Properties:  One-to four-unit properties including detached homes, townhomes, condominiums, and cooperatives, and manufactured homes attached to a permanent foundation and classified as real property under applicable state law.

Special Agent:  Agent with limited authority to act on behalf of the principal, such as created by a listing.

Special Assessment:  Lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street light, etc.) which directly benefits the assessed property.  Also see "Special Improvement District ( SID )" & "Limited Improvement District ( LID )."

Special Improvement District ( SID ):  A Community that has a lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street light, etc.) which directly benefits the assessed property.  Also known as "Limited Improvement District ( LID )."  Also see "Special Assessment."

Special Warranty Deed:  A deed containing a limited warranty of title.

Service Members Civil Relief Act:  A federal law that restricts the enforcement of civilian debts against certain military personnel who may not be able to pay because of active military service.  It also provides other protections to certain military personal.

Starker Exchange:  Exchange of like-kind property in which the exchange property is not identified at the time of exchange.  Also called a "Tax Deferred Exchange." ( Internal Revenue Code 1031 )

Starker Trust:  Trust account where money from a Starker exchange is placed until the exchange property can be identified and the transaction closed.

Start Rate:  The original interest rate for an adjustable-rate mortgage (ARM).  Also known as the "Initial Interest Rate."

Statement of Identity:   A confidential form filled out by buyer and seller to help a title company determine if any liens are recorded against either.  Very helpful when people with common names are involved.   Also called "Statement of Information."

Statement of Information:   A confidential form filled out by buyer and seller to help a title company determine if any liens are recorded against either.  Very helpful when people with common names are involved.   Also called "Statement of Identity."

Subordinate Financing:  Any mortgage or other lien with lower priority than the first mortgage.

Succession:  The transfer of real property by will or inheritance, rather than by grant of a deed or any other form or purchase.

Survivorship:  The right of the surviving co-owner to automatically receive the title of a deceased co-owner immediately without probate.

Staging:  The process of preparing your home to market.

Survey:  A precise measurement of a property by a licensed surveyor, showing legal boundaries of a property and the dimensions and location of improvements.

Sweat Equity:  The borrower's contribution to the down payment for the purchase pf a property in the form of labor or services rather than cash.

Swing Loan:  A short-term loan secured by the borrower's current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold.  Also called a "Bridge Loan."

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Tax Base:  The assessed valuation of real property, which is multiplied by the tax rate to determine the amount of tax due. 

Tax Deferred Exchange:  Exchange of like-kind property in which the exchange property is not identified at the time of exchange.  Also called a "Starker Exchange." ( Internal Revenue Code 1031 )

Tax Lien:  A lien for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.  Also a federal income tax lien which may attach to all properties of the person owing taxes.

Tenancy by the Entirety:  A form of ownership by husband and wife whereby each owns the entire property.  In the event of the death of one, the survivor owns the property without probate.

Tenancy in Common:  An undivided ownership in real estate by two or more persons.  The interest need not be equal, and, in the event of the death of one of the owners, no right of survivorship by the other owners exists.

Tennant:  A holder of property under a lease or other rental agreement.

Termite Inspection:  An inspection to determine whether a property has termite infestation or termite damage.  In many parts of the country, a home must be inspected for termites before it can be sold.

Terms:  The considerations, other than price, in a sale, lease, mortgage, etc.  For example, the way the money will be paid, time to take possession, conditions, contingencies, etc.

Time is of the Essence:  A clause used in contracts to bind one party to performance at or by a specific time in order to bind the other party to performance.

Title:  The rights to, and the ownership of, property.  A title or deed is sometimes used as proof of ownership of property.

Title Abstract:  The condensed history of title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances, transfers, wills, judicial proceedings, mortgages, and encumbrances & liens affecting the property.

Title Search:  A check of the public records to ensure that the seller is the legal owner of the property and to identify any liens or claims against the property.

Title Insurance:  An insurance policy protecting the insured from a financial loss caused by a defect in a title to real property.

Trade Equity:  Real estate or assets given to the seller as part of the down payment for the property.

Transfer:  The act by which the title to real property is conveyed from one person to another.

Transfer Tax:  State or local tax payable when title to property passes from one owner to another, usually based upon a percentage of the sales price.

Treasury Index:  An index that is used to determine interest rate changes for certain adjustable-rate mortgage ( ARM ) loans.  It is based on the results of auctions by the U.S. Treasury of Treasury bills and securities.

Trust:  A fiduciary relationship under which one holds title to real property for the benefit of another.  The party creating the trust is called the settler, the party holding the property is the trustee, and the party for whose benefit the property is held is called the beneficiary.

Trustee:  One who is appointed, or required by law, to execute a trust.  Also someone who holds the title to real property under the terms of the deed of trust.

Trustor:  The borrower under a deed of trust.

Truth-In-Lending Act ( TILA ):  A federal law that requires disclosure of a truth-in-lending statement for consumer credit.

Truth-in-Lending Statement:  An accounting of all financial aspects of a mortgage loan required by lenders to give borrowers in residential mortgage loans by Regulation Z of the Federal Reserve Board.  This statement includes a summary of the total cost of credit, such as the total amount borrowed, annual percentage rate ( APR ), and other specifics of the credit.

Two-to Four-Family Property:  A residential property that provides living space for two to four families, although ownership of the structure is evidenced by a single deed.  A loan secured by such a property is considered to be a single-family mortgage.

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Underwriting:  The process by a mortgage company used to determine loan approval.  It involves evaluating the property and the borrower's credit and ability to pay the mortgage.

Undivided Interest:  Ownership of fractional parts not physically divided.

Uniform Residential Loan Application:  A standard mortgage loan application.  This form requests a person's income, assets, liabilities, and a description of the property to be purchased, among other things.

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Veterans Affairs ( VA ):  U.S. Department of Veterans Affairs is a federal government agency that provides benefits to veterans and their dependents, including health care, educational assistance. financial assistance, and guaranteed home loans.

VA Guaranteed Loan:  A mortgage loan for military personnel that is guaranteed by the U.S. Department of Veterans Affairs (VA).

Valuation:  Establishes an opinion of value utilizing an objective approach based on facts related to the property, such as square footage, location, cost to replace, and so on.

Vested Interest:  A present right, interest, or title to real property.  Vesting refers to multiple ways that entities may "Hold Title."

Voluntary Conveyance:  The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure.  Also called a "Deed-in-Lieu of Foreclosure."

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Walk-Through:  A common clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing.

Warrant:  To legally assure that title conveyed is good and possession will be undisturbed.

Warranties:  Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.

Warranty Deed:  A real estate oriented document used to convey fee title to real property from the grantor (usually the Seller) to the grantee (usually the Buyer). 

 

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