Glossary of Real Estate Terms
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| Amortization. |
The gradual repayment of a mortgage loan by installments. |
| Appraisal. |
An estimate of value based upon an analysis of information. |
| APR. |
The Annual Percentage Rate is the borrower's actual cost of a loan.
It includes the interest rate and other loan origination charges, and is expressed as a
yearly rate and calculated over the life of the loan. |
| Assessed Value. |
Value placed on a property as the basis for taxation. |
| Assessor. |
A public official who establishes the value of a property
for taxation purposes. |
| Assumable Mortgage. |
A mortgage that can be taken over ("assumed") by the buyer
when a home is sold. |
| Balloon Payment. |
The final lump sum payment that is made at the maturity date
of a balloon mortgage. |
| Bearing Wall. |
A wall supporting a vertical load in addition to its own weight. |
| Broker. |
One who acts as an agent for others in Real Estate transactions
for a fee. |
| Building Code. |
Local regulations that control design, construction, and materials
used in construction. Building codes are based on safety and health standards. |
| Capital Gain. |
Income from the sale of an asset. |
| CC&Rs. |
Covenants, conditions and restrictions |
| Closing Statement. |
An accounting of funds made to the buyer and seller separately
at the completion of a Real Estate transaction. |
| Commission. |
An agents compensation for performing the duties of his agency. |
| Comparable Sales. |
Sales which have similar characteristics to the subject property,
used for analysis by the appraiser. |
| Conforming Loan. |
A loan that meets all eligibility requirements of federal agencies
other than FHA and VA, and is under $300,700. If the loan amount is over $300,700, it would
be considered a non-conforming or "jumbo" loan.
|
| Contigency. |
A condition that must be met before a contract is legally binding. |
| Credit Report. |
A report of an individual's credit history prepared by a credit
bureau and used by a lender in determining a loan applicant's creditworthiness. |
| CRV. |
Certificate of reasonable value - The federal Veterans
Administration appraisal of property value. |
| Deed. |
A written instrument which conveys title. |
| Discount Points. |
Discount points are often used to describe a type of fee
that lenders charge. Discount points are additional funds you pay the lender at closing
to get a lower interest rate on your mortgage. |
| Earnest Money. |
Down payment made by a purchaser of Real Estate as evidence
of good faith. |
| Easement. |
A right, privelage or interest which one party has in the land
of another such as a right of way. |
| Encroachment. |
Construction of any improvements on the property of another. |
| Equity. |
The difference between the current market value of a property
and the total amount still owed against that property. |
| Escrow. |
The deposit of instruments, funds and instructions with a neutral
party who will carry out the provisions of a contract or agreement. |
| Exclusive Right to Sell. |
A type of written listing agreement between agent and owner
giving agent the right to collect a commission if the property is sold by anyone during
the term of the agreement. |
| FHA. |
Federal Housing Administration - a government agency that
insures mortgage loans |
| FHA Loan. |
With FHA insurance, you can purchase a home with a low down
payment from 3 percent to 5 percent of the FHA appraised value or the purchase price,
whichever is lower. |
| Foreclosure. |
A legal procedure in which a mortgaged property is sold to
pay the outstanding debt in case of default. |
| Hazard Insurance. |
Insurance coverage that provides compensation to the insured
in case of property loss or damage. |
| Homestead. |
A home upon which the owner has recorded a Declaration of
Homestead, this protects the home against judgements up to an amount specified in the statutes. |
| HUD |
U.S. Department of Housing and Urban Development. The Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by l
enders and sets minimum standards for such homes. |
| HUD-1 Statement. |
The HUD-1 Settlement Statement itemizes the amounts to be paid
by the buyer and the seller at closing. |
| Impounds. |
A trust account set up by lenders to accumulate funds to pay
taxes and insurance. They are usually collected along with the mortgage payment. |
| Income to Debt Ratio. |
A qualifying ratio used in underwriting a residential mortgage
loan, which computes the percentage of monthly income, required to meet the monthly
housing expense. |
| Interest Rate. |
The percentage of a sum of money which is charged for its use. |
| Joint Tenancy. |
Joint ownership by two or more people with the right of
survivorship. All tenants have equal rights and own an equal interest. |
| Lease. |
A contract between property owner and tenant specifying
the conditions under which the tenant may occupy and use the property. |
| LIBOR. |
The London Interbank Offer Rate. An interest rate charged
among banks in London for short term loans denominated in a specific currency.
A common index for debt securities. |
| Lien. |
A legal claim against a property that must be paid off when
the property is sold. |
| Liquidated Damages. |
An agreed upon amount of damages to apply if a certain event occurs. |
| Listing. |
An employment contract between property owner and agent
authorizing the agent to perform services for the owner in order to secure a buyer
for that property. |
| Market Value. |
The price at which a willing buyer would buy and a willing
seller would sell when neither are subject to undue pressure. |
| MLS. |
The Multiple Listing Service where members post their
clients properties for sale so that other members have the opportunity to find buyers. |
| Mortgage. |
A legal instrument wherein property is used to secure
the payment of a debt. |
| Notary Public. |
An officer who is authorized to take the acknowledgement
of persons executing documents, to sign the certificate and affix his seal. |
| Option. |
A right given (in exchange for a fee) to purchase or lease
a property according to specified terms and conditions. |
| Origination Fee. |
The fee lenders charge to borrowers to prepare documents,
process and close the loan. Usually stated as a percentage of the loan. |
| PITI. |
Acronym for items included in a monthly mortgage payment:
principal, interest, taxes and insurance. |
| PMI. |
Private Mortgage Insurance is provided to protect lenders
against loss if a borrower defaults. Most lenders generally require PMI for a loan
with a loan-to-value ratio in excess of 80%. |
| Prepayment Penalty. |
A fee that may be charged to a borrower who pays off a loan
before it is due. |
| Proration of Taxes. |
To divide the taxes in proportion to the time in use. |
| Rate Lock. |
A commitment issued by a lender to a borrower guaranteeing
specified interest rate for a specified period of time. |
| REALTOR. |
A member of the National Association of Realtors. realtors
subscribe to a higher code of ethics. |
| Secondary Financing. |
An additional loan secured by a second mortgage or trust
deed on real property, could apply to any loan other than the first one. |
| Septic Tank. |
An underground tank in which sewage from the house is
reduced to liquid by bacterial action and then drained away. |
| Special Assessment. |
A charge by a public authority against Real Estate to pay
the cost of public works such as street lighting and improvements. |
| Subdivision. |
A housing development that is created by dividing a tract
of land into individual lots for sale or lease. |
| Tenancy in Common. |
Ownership by two or more people who hold undivided
interests (not necessarily equal). There is no right of survivorship. |
| Termites. |
Wood eating insects. |
| Title. |
An instrument which provides evidence of ownership |
| Title Insurance. |
Insurance written by a title company to protect property
owner against loss in the event that title is found to be flawed. |
| Transfer Fee. |
Fees charged by a municipality to defray the cost of
recording a transfer of ownership. |
| Trust Deed. |
A legal document wherin a buyer pledges real property as
a guarantee for the repayment of a loan. |
| Underwriter. |
One who analyzes a potential borrowers ability to repay a loan. |
| Zoning. |
An act by a city or county which specifies the type of use
to which a property may be put. |
