| Real
Estate Glossary |
| Agent |
Get pre-approved for
the purchase: This takes very little time and is of great value.
At this time, you will identify the price range for which you qualify
and what kind of home/amenities fit your lifestyle.
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| Appraisal |
An expert judgment or
estimate of the quality or value of real estate as of a given date.
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| Bill
Of Sale |
An instrument which
transfers title to personal property (chattels); a "Deed" transfers
real property.
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| CCR
Covenants Conditions and Restrictions |
| A document that controls the use,
requirements and restrictions of a property. |
Certificate or Reasonable Value (CRV) |
A document that establishes
the maximum value and loan amount for a VA guaranteed mortgage.
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| Certificate
Of Title |
A document signed by
a title examiner or attorney stating that the seller has a good
marketable and insurable title.
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| Closing
Statement (settlement) |
The computation of
financial adjustments between buyer and seller as of the day of
closing a sale to determine the net amount of money which buyer
must pay to seller to complete purchase of the real estate and
seller's net proceeds. Also, "settlement sheets," "HUD-1."
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| Commission |
Payment to a real estate
broker for services performed.
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| Condominium |
A form of real estate
ownership where the owner receives title to a particular unit and
has a proportionate interest in certain common areas. The unit
itself is generally a separately owned space whose interior surfaces
(walls, floors and ceilings) serve as its boundaries.
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| Contingency |
A condition that must
be satisfied before a contract is binding. For instance, a sales
agreement may be contingent upon the buyer obtaining financing.
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| Deed |
A formal written instrument
by which title to real property is transferred from one owner to
another. Also, "conveyance".
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| Deed
Of Trust |
Like a mortgage, a
security instrument whereby real property is given as security
for a debt. However, in a deed of trust there are three parties
to the instrument; the borrower, the trustee, and the lender (or
beneficiary).
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| Due-On-Sale
Clause |
An acceleration clause
that requires full payment of a mortgage or deed of trust when
the secured property changes ownership.
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| Earnest
Money |
The portion of the
down payment delivered to the seller or escrow agent by the purchaser
with a written offer as evidence of good faith.
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| Equity |
The interest or value
which owner has in real estate over and above the debts against
it. (Sales Price - Mortgage Balance - Equity).
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| Escrow |
A procedure in which
a third party acts as a stakeholder for both the buyer and the
seller, carrying out both parties' instructions and assumes responsibility
for handling all of the paperwork and distribution of funds.
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| Federal
National Mortgage Association (FNMA) |
Popularly known as
Fannie Mae. A privately owned corporation created by Congress to
support the secondary mortgage market. It purchases and sells residential
mortgages insured by FHA or guaranteed by the VA, as well as conventional
home mortgages.
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| Fee
Simple |
An estate in which
the owner has unrestricted power to dispose of the property as
he wishes, including leaving by will or inheritance. It is the
greatest interest a person can have in real estate.
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| Fixture |
What was formerly personal
property which is now permanently attached to real property and
goes with the property when it is sold.
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| Graduated
Payment Mortgage |
A residential mortgage
with monthly payments that start at a low level and increase at
a predetermined rate.
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| Hazard
Insurance |
Protects against damages
caused to property by fire, windstorms, and other common hazards.
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| Home
Inspection Report |
A qualified inspector's
report on a property's overall condition. The report usually includes
an evaluation of both the structure and mechanical systems.
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| Home
Warranty Plan |
Protection against
failure of mechanical systems within the property. Usually includes
plumbing, electrical, heating systems and installed appliances
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| Joint
Tenancy |
An equal undivided
ownership of property by two or more persons. Upon the death of
any owner, the survivors take the decedent's interest in the property.
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| Listing
Contract |
Between a home owner
(as principal) and a licensed real estate broker (as agent) by
which the broker is employed to market the real estate within a
given time for which service the owner agrees to pay a commission.
Also, "listing agreement".
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| Loan
Commitment |
A written promise to
make a loan for a specified amount on specified terms.
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| Loan-To-Value
Ratio |
The relationship between
the amount of the mortgage and the appraised value of the property,
expressed as a percentage of the appraised value.
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| Market
Value |
The highest price which
a buyer, ready, willing and able but not compelled to buy, would
pay, and the lowest price a seller, ready, willing and able but,
not compelled to sell, would accept. Basis for "listing price',
or "asking price".
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| Mortgage |
A lien or claim against
real property given by the buyer to the lender as security for
money borrowed.
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| Mortgage
Life Insurance |
A type of term life
insurance often bought by mortgagors. The coverage decreases as
the mortgage balance declines. If the borrower dies while the policy
is in force, the debt is automatically covered by insurance proceeds.
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| Mortgage
Note |
A written agreement
to repay a loan. The agreement is secured by a mortgage, serves
as proof of an indebtedness, and states the manner in which it
shall be paid. Also, "deed of trust note."
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| Negative
Amortization |
Negative amortization
occurs when monthly payments fail to cover the interest cost. The
interest that isn't covered is added to the unpaid principal balance,
which means that even after several payments you could owe more
than you did at the beginning of the loan. Negative amortization
can occur when an ARM has a payment cap that results in monthly
payments that aren't high enough to cover the interest.
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| Origination
Fee |
A fee or charge for
work involved in evaluating, preparing, and submitting a proposed
mortgage loan. The fee is limited to 1 percent of FHA and VA loans.
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| PITI |
Principal, Interest,
Taxes and Insurance.
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| Planned
Unit Development (PUD) |
A zoning designation
for property developed at the same or slightly greater overall
density than conventional development, sometimes with improvements
clustered between open, common areas. Uses may be residential,
commercial or industrial.
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| Point |
An amount equal to
1 percent of the principal amount of the investment or note. The
lender assesses loan discount points at closing to increase the
yield on the mortgage to a position competitive with other types
of investments.
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| Pre-Payment
Penalty |
A fee charged to a
mortgagor who pays a loan before it is due. Not allowed for FHA
or VA loans.
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Principal |
This
word has several meanings - a) to denote the most important;
- b) a capital sum lent on interest; - c) one who appoints an
agent to act on their behalf; - d) either party to a contract.
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| Prorate |
To allocate between
seller and buyer their proportionate share of an obligation paid
or due. For example a prorate on real property taxes, fire insurance,
or condominium fee.
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| Purchase
Agreement |
A written document
in which the purchaser agrees to buy certain real estate and the
seller agrees to sell under stated terms and conditions. Also called
a sales contract, earnest money contract, or agreement for sale.
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| Realtor |
A real estate broker
or associate active in a local real estate board affiliated with
the National Association of Realtors®.
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| Regulation
Z |
The set of rules governing
consumer lending issued by the Federal Reserve Board of Governors
in accordance with the Consumer Protection act.
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| Survey |
A map or plat made
by a licensed surveyor showing the results of measuring the land
with its elevations, improvements, boundaries, and its relationship
to surrounding tracts of land. A survey is often required by the
lender to assure a building is actually sited on the land according
to its legal description.
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| Tenancy
In Common |
A type of joint ownership
of property by two or more persons with no right of survivorship.
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| Title
Insurance |
Protects lenders and
home owners against loss of their interest in property due to legal
defects in title.
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| Title
Search or Examination |
A check of the title
records, generally at the local courthouse, to make sure the buyer
is purchasing a house from the legal owner and there are no liens,
overdue special assessments, or other claims.
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| Transfer
Tax |
State tax, local tax
(where applicable) and tax stamps (in some areas) required by law
when title passes from one owner to another.
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