| abstract of title (abstract) | History of a parcel of real estate, compiled from public records, listing transfers of ownership and claims against the property. |
| acceleration clause | Provision in a mortgage document stating that if a payment is missed or any other provision violated, the whole debt becomes immediately due and payable. |
| acknowledgment | Formal declaration before a public official that one has signed a document . |
| acre | land measure equal to 43,560 square feet. |
| adjustable-rate mortgage (ARM) | Loan whose interest rate is changed periodically to keep pace with current levels. |
| adjusted basis | Original cost of property plus any later improvements and minus a figure for depreciation claimed. |
| adjusted sales price | Sale price minus commissions, legal fees and other costs of selling. |
| agent | Person authorized to act on behalf of another in dealing with third parties. |
| agreement of sale (purchase agreement, sales agreement, contract to purchase) | Written contract detailing terms under which buyer agrees to buy and seller agrees to sell. |
| alienation clause (due-on-sale, nonassumption) | Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred, sometimes contingent upon other occurrences. |
| amortization | Gradual payment of a debt through regular installments that cover both interest and principal. |
| appraisal | Estimate of value of real estate. |
| appreciation | Increase in value or worth of property |
| "as is." | Present condition of property being transferred, with no guaranty or warranty provided by the seller. |
| assessed valuation | Value placed on property as a basis for levying property taxes; not identical with appraised or market value |
| assignment | Transfer of a contract from one party to another. |
| assumable mortgage | Loan that may be passed to the next owner of the property. |
| assumption | Takeover of a loan by any qualified buyer. |
| automatic renewal clause | Provision that allows a listing contract to be renewed indefinitely unless canceled by the property owner
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| balloon loan | Mortgage in which the remaining balance becomes fully due and payable at a predetermined time |
| balloon payment | Final payment on a balloon loan |
| bill of sale | Written document transferring personal property |
| binder | Preliminary agreement of sale, usually accompanied by earnest money (term also used with property insurance) |
| bond | Roughly the same as promissory note, a written promise to repay a loan, often with an accompanying mortgage that pledges real estate as security |
| broker | Person licensed by the state to represent another for a fee in real estate transactions |
| building code | Regulations of local government stipulating requirements and standards for building and construction |
| buydown | The payment of additional points to a mortgage lender in return for a lower interest rate on the loan |
| buyer's broker | Agent who takes the buyer as client, is obligated to put the buyer's interests above all others, and owes specific fiduciary duties to the buyer |
| buyers' market | Situation in which the supply of homes for sale exceeds the demand
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| cap | Limit (typically about 2 percent) by which an adjustable mortgage rate might be increased at any one time |
| capital gain | Taxable profit on the sale of an appreciated asset |
| caveat emptor | Let the buyer beware |
| ceiling | Also known as a lifetime cap, limit beyond which an adjustable mortgage rate may never be raised |
| certificate of occupancy | Document issued by a local governmental agency stating that the property meets the standards for occupancy |
| chattel | Personal property |
| client | The broker's principal, to whom fiduciary duties are owed |
| closing (settlement, escrow, passing papers) | Conclusion of a real estate sale, at which time title is transferred and necessary funds change hands |
| closing costs | One-time charges paid by the buyer and the seller on the day the property changes hands |
| closing statement | Statement prepared for the buyer and the seller listing debits and credits, completed by the person in charge of the closing |
| cloud (on title) | Outstanding claim or encumbrance that challenges the owner's clear title |
| commission | Fee paid (usually by a seller) for a broker's services in securing a buyer for property; commonly a percentage of sale price |
| commitment (letter) | Written promise to grant a mortgage loan |
| common elements | Parts of a condominium development in which each owner holds an interest (swimming pool, etc.) |
| comparable | Recently sold similar property, used to estimate the market value |
| comparative market analysis | Method of valuing homes using the study of comparables, property that failed to sell and other property that currently on the market |
| conditional commitment | Lender's promise to make a loan subject to the fulfillment of specified conditions |
| conditional offer | Purchase offer in which the buyer proposes to purchase only after certain occurrences (sale of another home, securing of financing, etc.) |
| condominium | Type of ownership involving individual ownership of dwelling units and common ownership of shared areas |
| consideration | Anything of value given to induce another to enter into a contract |
| contingency | Condition (inserted into the contract) which must be satisfied before the buyer purchases a house |
| contract | Legally enforceable agreement to do (or not to do) a particular thing |
| contract for deed (land contract) | Method of selling by which the buyer receives possession but the seller retains title |
| conventional mortgage | Loan arranged between lender and borrower with no governmental guarantee or insurance |
| cost basis | Accounting figure that includes original cost of property plus certain expenses to purchase, money spent on permanent improvements and other costs, minus any depreciation claimed on tax returns over the years |
| curtesy | In some states, rights a widower obtains to a portion of his deceased wife's real property |
| customer | Typically, the buyer, as opposed to the principal (seller)
|
| days on market (DOM) | Number of days between the time a house is put on the market and the date of a firm sale contract |
| deed | Formal written document transferring title to real estate; a new deed is used for each transfer |
| deed of trust | Document by which title to property is held by a neutral third party until a debt is paid; used instead of a mortgage in some states |
| deed restriction (restrictive covenant) | Provision placed in a deed to control the use and occupancy of the property by future owners |
| default | Failure to make mortgage payment |
| deferred maintenance | Needed repairs that have been put off |
| deficiency judgment | Personal claim against the debtor, when foreclosed property does not yield enough at sale to pay off loans against it |
| delivery | Legal transfer of a deed to the new property owner, the moment at which transfer of title occurs |
| depreciation | Decrease in value of property because of deterioration or obsolescence; sometimes, an artificial bookkeeping concept valuable as a tax shelter |
| direct endorsement | Complete processing of an FHA mortgage application by an authorized local lender |
| documentary tax stamp | Charge levied by state or local governments when real estate is transferred or mortgaged |
| dower | In some states, the rights of a widow to a portion of her deceased husband's property |
| down payment | Cash to be paid by the buyer at closing |
| DVA | Department of Veterans Affairs. Formerly VA, Veterans Administration |
| earnest money | Buyer's "good faith" deposit accompanying purchase offer |
| easement | A permanent right to use another's property (telephone line, common driveway, footpath, etc.) |
| encroachment | Unauthorized intrusion of a building or improvement onto another's land |
| encumbrance | Claim against another's real estate (unpaid tax, mortgage, easement, etc.) |
| equity | The money realized when property is sold and all the claims against it are paid; commonly, sale price minus present mortgage |
| escrow | Funds given to a third party to be held pending some occurrence; may refer to earnest money, funds collected by a lender for the payment of taxes and insurance charges, funds withheld at closing to ensure uncompleted repairs or in some states the entire process of closing |
| exclusive agency | Listing agreement under which only the listing office can sell the property and keep the commission except if the owner sells the house, in which case no commission is paid |
| exclusive right-to-sell | Listing agreement under which the owner promises to pay a commission if the property is sold during the listing period by anyone, even the owner
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| fair market value | See market value |
| fee simple (absolute) | Highest possible degree of ownership of land |
| FHA | Federal Housing Administration (HUD), which insures mortgages to protect the lending institution in case of default |
| FHA mortgage | Loan made by a local lending institution and insured by the FHA, with the borrower paying the premium |
| fiduciary | A person in a position of trust or responsibility with specific duties to act in the best interest of the client |
| first mortgage | Mortgage holding priority over the claims of subsequent lenders against the same property |
| fixture | Personal property that has become part of the real estate |
| foreclosure | Legal procedure for enforcing payment of a debt by seizing and selling the mortgaged property |
| front foot | Measurement of land along a street or waterfront each front foot is one foot wide and extends to the depth of the lot |
| grantee | The buyer, who receives a deed |
| grantor | The seller, who gives a deed |
| guaranteed sale | Promise by the listing broker that if the property cannot be sold by a specific date, the broker will buy it, usually at a sharply discounted price |
| hazard insurance | insurance on a property against fire and similar risks |
| homeowner's policy | Policy which puts many kinds of insurance together into one package
|
| improvements | Permanent additions that increase the value of a home |
| index | Benchmark measure of current interest levels, used to calculate periodic changes in rates charged on adjustable rate mortgages |
| joint tenancy | Ownership by two or more persons, each with an undivided ownership if one dies, the property goes automatically to the survivor |
| junior mortgage | A mortgage subordinate to another |
| land contract | Type of layaway installment plan for buying a house; sought by a buyer who does not have enough down payment to qualify for a bank loan or to persuade the seller to turn over title |
| lien | A claim against property for the payment of a debt; mechanic's lien, mortgage, unpaid taxes, judgments |
| lis pendens | Notice that litigation is pending on property |
| listing agreement (listing) | Written employment agreement between a property owner and a real estate broker, authorizing the broker to find a buyer |
| listing presentation | Proposal submitted orally or in writing by a real estate agent who seeks to put a prospective seller's property on the market |
| loan servicing | Handling paperwork of collecting loan payments, checking property tax and insurance coverage, handling delinquencies |
| lock-in | Guarantee that the borrower will receive the rate in effect at the time of loan application
|
| maintenance fees | Payments made by the unit owner of a condominium to the homeowners' association for expenses incurred in the upkeep of the common areas |
| margin | Percentage (typically about 2.5 percent) added to the index to calculate the mortgage rate |
| marketable title | Title free of liens, clouds and defects; a title that will be freely accepted by a buyer |
| market value | The most likely price a given property will bring if widely exposed on the market, assuming fully informed buyer and seller |
| mechanic's lien | Claim placed against a property by unpaid workers or suppliers |
| meeting of the minds | Agreement by a buyer and the seller on the provisions of a contract |
| mortgage | A lien or claim against real property given as security for a loan; the homeowner "gives" the mortgage; the lender "takes" it |
| mortgagee | The lender |
| mortgagor | The borrower |
| multiple-listing service (MLS) | Arrangement by which brokers work together on the sale of each other's listed homes, with shared commissions |
| negative amortization | Arrangement under which the shortfall in a mortgage payment is added to the amount borrowed; gradual raising of a debt |
| net listing | Arrangement under which the seller receives a specific sum from the sale price and the agent keeps the rest as sales commission (open to abuses, illegal in most states) |
| note | See bond
|
| PITI | Abbreviation for principal, interest, taxes and insurance, often lumped together in a monthly mortgage payment |
| plat | A map or chart of a lot, subdivision or community, showing boundary lines, buildings and easements |
| PMI | Private mortgage insurance |
| point (discount point) | One percent of a new mortgage being placed, paid in a one-time lump sum to the lender |
| portfolio loans | Loans made by a bank that keeps its mortgages as assets in its own portfolio (also called nonconforming loans) |
| prepayment | Payment of a mortgage loan before its due date |
| prepayment penalty | Charge levied by the lender for paying off a mortgage before its maturity date |
| principal | The party (typically the seller) who hires and pays an agent |
| procuring cause | Actions by a broker that bring about the desired results |
| prorations | Expenses that are fairly divided between the buyer and the seller at closing |
| purchase-money mortgage | Mortgage for the purchase of real property, commonly a mortgage "taken back" by the seller |
| quitclaim deed | Deed that completely transfers whatever ownership the grantor may have had, but makes no claim of ownership in the first place
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| real property | Land and the improvements on it |
| Realtist | Member of the National Association of Real Estate Brokers |
| REALTOR | Registered name for a member of the National Association of REALTORS |
| REALTOR-ASSOCIATE | Salesperson associated with a broker who is a member of a Board of REALTORS |
| redlining | The practice of refusing to provide loans or insurance in a certain neighborhood |
| RESPA | Real Estate Settlement Procedures Act, requiring advance disclosure to the borrower of information pertinent to the loan |
| restrictive covenant | See deed restriction |
| reverse mortgage | Arrangement under which an elderly homeowner, who does not need to meet income or credit requirements, can draw against the equity in the home with no immediate repayment |
| salesperson | Holder of an entry-level license who is allowed to assist a broker who is legally responsible for the salesperson's activities (synonymous in some areas with agent) |
| seller's broker | Agent who takes the seller as a client, is legally obligated to a set of fiduciary duties, and is required to put the seller's interests above all others' |
| sellers' market | Situation in which the demand for homes exceeds the supply offered for sale |
| settlement | See closing |
| specific performance | Lawsuit requesting that a contract be exactly carried out, usually asking that the seller be ordered to convey the property as previously agreed |
| subagency | Legal process by which the seller who lists property for sale with a broker takes on the broker's associates and cooperating firms in a multiple listing system as agents |
| survey | Map made by a licensed surveyor who measures the land and charts its boundaries, improvements and relationship to the property surrounding it
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| time is of the essence | Legal phrase in a contract, requiring punctual performance of all obligations |
| title | Rights of ownership, control and possession of property |
| title insurance | Policy protecting the insured against loss or damage due to defects in the title: The "owner's policy" protects the buyer, the "mortgagee's policy" protects the lender; paid with a one-time premium |
| title search | Check of the public records, usually at the local courthouse, to make sure that no adverse claims affect the value of the title |
This article is an excert from Guide To Buying Your Own Home, CENTURY 21(R); Dearborn Financial Publishing, Inc.(R), 1995. THIS BOOK CAN BE FOUND IN YOUR LOCAL BOOK STORE
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