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[ Home ] [ Our Services ] [ Self Help Library ] [ Maps ]
[ Home ] [ Our Services ] [ Self Help Library ] [ Maps ]
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Real Estate Terms & Definitions
 | Abstract (Of Title) An abstract is a history of a piece of property including a summary of the public records relating to that land. Some people mistakenly believe that an abstract is like a motor vehicle title certificate. That belief is wrong. An abstract is simply a summary of the history of property. With that history it is possible to draw conclusions about ownership and liens. |
| Acceleration The right of a lender to demand immediate repayment of a loan, usually because of some kind of default on the part of the borrower. |
| Agent Someone who acts for another. A real estate agent acts on behalf of the either the buyer or the seller. |
| Agreement of Sale / Purchase Agreement A written contract setting out the terms of a sale. |
| Appraisal An estimate of the value of property. |
| ARM-Adjustable Rate
Mortgage A loan in which the interest rate changes, usually as a result on a change in one or more government statistical index rates. |
| Assessment A local tax "assessed" against property, usually for a specific purpose, such as for sewer or water improvements. |
| Assessor A person who values real estate for tax purposes. |
| Assignment A transfer of a right to another person. |
| Assumption An agreement whereby one party takes over the responsibilities of another. For example, one party may sometimes assume a loan or mortgage originally agreed to by another party. |
| Balloon Mortgage A mortgage for a term shorter than necessary to fully repay the debt. As a result, a large lump sum or "balloon payment" is due at the end of the loan. |
| Bridge Loan A short term loan used to help finance the purchase of a new home when a buyer has not sold his old home. The bridge loan is paid off when the old home is sold. |
| Building Code A set of laws that control the construction of buildings. |
| Capital Gain Income from the sale of a capital (tangible) asset. A capital gain is usually the difference between the original purchase price and the later sale price. |
| Chain Of Title A history of the ownership and liens affecting the title as far back as records are available. |
| Closing The end of the transaction when the seller hands over the title to the buyer in exchange for payment. Also called settlement. |
| Closing Costs Costs the buyer or seller must pay at the time of the closing. |
| Cloud (On Title) A title defect which undermines the marketability of real estate. |
| Commission Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price: 4 to 7 percent on houses, 10 percent on land. |
| Construction Loan A short term loan to pay for the construction of building or homes. Usually at the end of construction, the construction loan is paid off with financing from a longer term loan. |
| Contingency A condition that must be met before a contract is binding. Contingencies include: the property must appraise for sales price or buyers approving of various inspections. |
| Contract for Deed A contract between purchaser and a seller of real estate to give a deed after it is paid for. |
| Conventional Loan A fixed rate and fixed term loan that is made without government insurance. |
| Conveyance The transfer of the title to land from one to another. |
| Covenants Agreements written into deeds and other instruments stating performance or non-performance of certain acts or noting certain uses or non-uses of property. |
| Deed A legal document by which property title is transferred from one owner to another. |
| Default Failure to meet legal obligations in a contract. For example, the failure to make the monthly payments on a mortgage. |
| Depreciation Decline in value of a house due to wear and tear or any other reason. |
| Down Payment The down payment is the percentage of the purchase price that the buyer must pay in cash and may not borrow from the lender. The down payment amount in addition to the mortgage equals the purchase price of a property. They can vary from 0% to over 50%. The less your down payment the better your credit has to be. Lower down payments generally result in higher interest rates. |
| Due-on-Sale Clause A provision in a mortgage that allows the lender to demand immediate payment of the balance of the mortgage if the borrower sells the home. |
| Earnest Money The deposit money given to the seller by the potential buyer as evidence of good faith in purchasing real estate. The broker places the money in an escrow or trust account until closing, when it becomes part of the down payment. |
| Easement A right- of- way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right- of- way across private property is a common example. |
| Encroachment An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line. |
| Encumbrance A legal right or interest in land that affects a good or clear title, and diminishes the land's value. |
| Equity The value of the property less the amount of unpaid mortgages and any outstanding liens. |
| Escrow Money or other valuables given to a third party with directions to deliver them to another party upon the fulfillment of a specific act or condition. Often a lender will escrow taxes and insurance. |
| Fair Market Value That price a property will bring given that both buyer and seller are fully aware of market conditions and comparable properties. |
| FHA - Federal Housing
Administration Part of the US Department of Housing and Urban Development (HUD). It was established in 1934 to encourage improvement in housing standards and communities. The FHA insures mortgage loans. |
| FHA Mortgage A mortgage loan insured by the Federal Housing Administration. |
| Foreclosure A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property. |
| Grantee That party in the deed who is the buyer or recipient. |
| Grantor That party in the deed who is the seller or giver. |
| Home or Property
Inspection A detailed inspection of the physical structure, the plumbing, electrical and heating systems and the overall condition of the home. Typically the cost is $150-$300 and the results are detailed in a multiple page report. |
| Homeowners Insurance Insurance that protects the homeowners from Casualty losses or damage to the home or personal property and from liability damages to other people or property. Homeowners insurance is required by the lender and may be included in the monthly mortgage payment. |
| Interest A charge paid for borrowing money. |
| Joint Tenancy Joint ownership by two or more persons with right of survivorship. Upon the death of a joint tenant, his interest does not go to his heirs, but to the remaining joint tenants. |
| Legal Description The geographical identification of a parcel of land. |
| Lien A hold or claim on the property of another to satisfy an unpaid debt or obligation. |
| Listing Agreement An agreement between a homeowner and a licensed real estate broker that authorizes the broker to sell real estate during a given time period, usually for a commission. |
| Loan Origination Fee A fee charged by the lender for evaluating, preparing and submitting a proposed mortgage loan. |
| Loan-to-Value Ratio The ratio of a mortgage loan principal to the property's appraised value or its sales price, whichever is lower. Loan-to-value ratios vary depending upon the individual lender's policy. |
| Lock-in Rate A commitment made by a lender to make a mortgage loan at a specified rate, pending loan approval, on or prior to a specified date. |
| Market Value The highest price a buyer will pay for a property and the lowest price the seller will accept in a typical market. |
| Mechanic's Lien A lien created by statute on a specific property for labor or materials contributed to an improvement on that property. |
| Mortgage A lien on real estate given by a borrower as collateral for the loan . |
| Mortgage Insurance An insurance policy that provides protection for the lender in case of default and or which guarantees repayment of the loan. Mortgage insurance does not give insurance benefits to the borrower. |
| Non Assumption Clause A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. |
| Note or promissory note A written promise to repay a debt. In the nature of an I.O.U. |
| Offer A proposal to purchase real estate at a particular price, subject to other specified terms and conditions. Acceptance of the offer by the seller creates a purchase contract. A counteroffer is a different offer made in response to the initial offer. |
| Origination Fee Application fee(s) for processing a proposed mortgage. |
| Plat A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements. |
| Point An amount equal to one percent of the loan amount paid to a lender for making the loan. A lender may charge the borrower several points in order to provide the loan. |
| Prepayment A privilege in a mortgage permitting the borrower to make payments in advance of their due date. |
| Prepayment Penalty Money charged for an early repayment of debt. Prepayment penalties are allowed in some form, but are not necessarily imposed in many states. |
| Principal The amount of debt, not counting interest, left on a loan. |
| Purchase Agreement An agreement between buyer and seller setting out the price and terms of the sale. |
| Real Estate Agent A licensed person who works under the direction of a broker selling and renting real estate. |
| Real Estate Broker A middle man or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner. |
| Refinance Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property. |
| Restrictive Covenants Private restrictions limiting the use of real estate. |
| Second Mortgage A mortgage made subsequent to another mortgage and subordinate to the first one. |
| Secondary Mortgage
Market The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. |
| Special Assessments A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc. |
| 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. |
| Title Ownership of real property. Title is transferred from one party to another through a document called a deed. |
| Title Insurance Protection for lenders and homeowners against financial loss resulting from legal defects in or other claims against the property's title. The cost of the policy is usually a function of the value of the property and is often borne by the purchaser and or seller. |
| Title Search An examination of municipal records to determine the legal ownership of property. Usually is performed by a title company or attorney. |
| Variable Interest
Rate A fluctuating interest rate which can go up or down depending on the going market rate. |
| Waive To relinquish, or abandon. To forego a right to enforce or require anything. |
| Zoning Ordinances The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage. |