Real Estate Lingo

Abuttment– Touching or joining.

Acceleration Clause– A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.  

Access– The right to enter and leave a tract of land.  

Addendum– An addition to a document

Adjustable Rate Mortgage (ARM)– A type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market.  Typical ARM periods are one, three, five, and seven years.

Amortization– The gradual repayment of a mortgage loan by installments.

Annual percentage rate (APR)– The total costs (interest rate, closing costs, fees, and so on) that are part of a borrower’s loan, expressed as a percentage rate of interest.  The total costs are amortized over the term of the loan.

Application Fees– Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.

Appraisal– A written analysis of the estimated value of a property prepared by a qualified appraiser.

Appreciation– An increase in the value of a property due to changes in the market conditions or other causes, which may be either temporary or permanent.

Assessed Value– The valuation placed on property by a tax assessor for purposes of taxation.  

Attorney-in-fact– One who holds power of attorney from another to execute documents on behalf of the grantor of the power.

 

Balloon mortgage– A type of mortgage that is generally paid over a short period of time, but is amortized over a longer period of time.  The borrower typically pays a combination of principal and interest.  At the end of the loan term, the entire unpaid balance must be repaid.

Bridge Loan– A form of second trust that is collateralized by the borrower’s present home in a manner that allows the proceeds to be used for closing a new house before the present home is sold.

Buyer agency– A real estate broker retained by the buyer who has a fiduciary duty to the buyer, shows the buyer’s properties, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction.

 

Chattel– Another name for personal property

Closing– Point of a real estate transaction when the seller transfers title to the buyer in exchange for the purchase price. 

Closing costs-Fees required by the lender at closing.  The fees can vary among lending institutions, but may include the application fee, origination fee, points, appraisal fee, title search, title insurance, etc. 

Comparative market analysis– A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.

Condominium– A form of property ownership providing ownership of an apartment or other space, and undivided interest in land and common areas of the structure.

Contingency– A condition that must be met before a contract is legally binding.

Conventional Mortgage– A mortgage securing a loan by investors without government underwriting (e.g. not FHA insured or VA guaranteed) 

Counter Offer– A new offer made as a result of another offer, which modifies or cancels the original offer.

 

Default– An act or omission that constitutes the failure to live up to a promise or discharge an obligation or duty under an agreement with another party, as a result of which the non-defaulting party may exercise specified remedies against the defaulting party.

Deed of Trust– The document used to mortgage real estate and conveys the property to a third party (trustee) who holds it for the benefit of the creditor.

 

Earnest Money Deposit– Down payment of part of the purchase price to bind a contract for property. 

Easement– The right of way giving persons other than the owner access to or over a property.

Equity– The value of the interest of a property owner less encumbrances on the property.

Exclusions– Fixtures or personal property that are excluded from the contract or offer to purchase.

 

Fee Simple– A form of property ownership where the owner has the right to use and dispose of property at will.

FHA– Federal Housing Administration

FHA (Federal Housing Administration) Loan Guarantee– A guarantee by the FHA that a percentage of a loan will be underwritten by a mortgage company or banker

FmHA Loan– Similar to FHA loan, usually used for residential properties in rural areas.

Fixture– Personal property that has become part of the property through permanent attachment.

 

Good Faith Estimate– Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide, in writing, to potential borrowers, a good faith estimate of closing costs.

Grantee– The person to whom an interest in real property is conveyed.

Grantor– The person conveying an interest in real property.

 

Hazard Insurance– Insurance that covers losses to real estate from damages that might affect its value. 

Homeowner’s Insurance– Coverage that includes personal liability and theft insurance in addition to hazard insurance.

HUD– U.S. Department of Housing and Urban Development

HUD/RESPA– (Housing and Urban Development/Real Estate Settlement Procedures Act):  A document and statement that details all of the monies paid out and received at a real estate property closing.

 

IDX: (Internet Date Exchange Allows real estate brokers to advertise each other’s listings posted to listing databases such as the multiple listing service.

Inclusions– Fixtures or personal property that are included in a contract or offer to purchase.

Interest Rate Lock– When the borrower and lender agree to lock a rate on loan.  Can have terms and conditions attached to the lock.

 

Joint Tenancy– A tenancy shared equally by two or more parties with the right of survivorship.  On the death of a joint tenant, the survivor takes the entire property.  

 

Lien– A charge against a property whereby the property is made security for the payment of a debt. 

Loan commitment– A written document telling the borrowers that the mortgage company has agreed to lend them a specific amount of money at a specific interest rate for a specific period of time.  The loan commitment may also contain conditions upon which the loan commitment is based.

 

Marketable Title– Clear title with no encumbrances, has no serious defects and will not expose the buyer to litigation.

Mortgage– A legal document that pledges a proeprty to the lender as security for payment of a debt.

Mortgagee– The lender in a mortgage agreement.

Mortgagor– The borrower in a mortgage agreement.

Multiple Listing Service (MLS)– A service that compiles available properties for sale by member brokers.

 

NATIONAL ASSOCIATION OF REALTORS® (NAR)– A national association comprised of real estate professionals.

 

Personal Property– Any property which is not real, e.g. money, cars, etc.

Points (or loan discount points):  A one-time charge by a lender to lower the interest rate on a loan.  Each point is equal to 1 percent of the loan amount.  For example, one point on a $100,000 mortgage would cost $1,000.

Planned unit development (PUD)– Mixed-use development that sets aside areas for residential use, commercial use, and public areas such as schools, parks, and so on.

Pre-approval– A higher level of buyer/borrower pre-qualification required by a mortgage lender.  Some pre-approvals have conditions the borrower must meet.

Pre-qualification– The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow.  Some pre-qualifications have conditions that the borrower must meet.

Prepaid interest– Funds paid by the borrower at closing based on the number of days left in the month of closing.

Principal, interest, taxes, and insurance (PITI)– The four components of a monthly mortgage payment.  Principal reduces the balance of the mortgage.  Interest is the fee charged for borrowing money.  Taxes and Insurance refers to the amount escrowed monthly to pay real estate taxes and hazard and mortgage insurance.  


Private mortgage insurance (PMI)– A special insurance paid by a borrower in the monthly installments, typically of loans of more than 80 percent of the value of the property.

Promissory Note– Once a lender agrees to make a loan, the borrower signs a note promising to repay the loan under designated terms.

 

Radon– A radioactive gas found in some homes that in sufficient concentrations can cause health problems.

Rate Lock– A commitment issued by a lender to a borrower guaranteeing a specific interest rate for a specific time.   

Real Estate Agent– An individual who is licensed by the state and who acts on behalf of his or her client, the buyer or seller. 

Real Estate Contract– A binding agreement between buyer and seller.  It consists of an offer and an acceptance as well as consideration (i.e. money).

Real Estate Settlement Procedure Act (RESPA)– A consumer protection law that requires lenders to give borrowers advance notice of closing costs.  

REALTOR® – A registered trademark of the NATIONAL ASSOCIATION OF REALTORS that can be used only by its members.

Release Deed– A written document stating that a seller or buyer has satisfied his or her obligation on a debt.  This document is usually recorded.

 

Second Mortgage– A mortgage that has a lien subordinate to the first mortgage.

Special Assessment– A charge laid against real estate by public authority to defray the cost of making public improvements from which the real estate benefits. 

Subdivision– Area of land that has been divided into smaller plats, suitable for building.

 

Tenancy in Common-A tenancy shared by two or more parties, without right of survivorship.  Interest of tenant in common who is deceased will pass as an asset of his estate.  Each tenant in common may sell, mortgage or give away his interest during his life or transmit it at death.  

Time Is Of The Essence– A clause in a contract which provides that punctual performance is essential so that where one of the contracting parties fails to perform within the time specified that parties in default.  

Title Insurance– Insurance that protects the lender (lender policy) or the buyer (owner’s policy) against loss arising from disputes over ownership of property.

Truth-In-Lending– A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage the annual percentage rate and other charges.

 

VA Loan– A loan guaranteed available to veterans by the veterans’ administration insuring payment in case of borrower default.  

 

Warranty Deed– Conveyance of title that contains certain assurances and guarantees by the grantor that the deed conveys a good and unencumbered title.

 

Zoning– Zoning regulates such matters as the use of land, the size of lots, the height, bulk, type and use of buildings, the proportion of a lot which a building may occupy, density of development, etc.  

 

 

 

 

 

 

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