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Agent
- A person acting on behalf of another, called the principal.
Appraisal - An expert judgment or estimate of the quality
or value of real estate as of a given date.
Assessed Value - The valuation
placed upon property by a public tax assessor as the basis
for taxes.
Bill of Sale
- An instrument which transfers title to personal property
(chattels); a "Deed" transfers real property.
CC&R's: Covenants,
conditions and restrictions - A document that controls the
use, requirements and restrictions of a property.
Certificate of Reasonable Value (CRV)
- A document that establishes the maximum value and loan
amount for a VA guaranteed mortgage.
Certificate of Title - A document
signed by a title examiner or attorney stating that the
seller has a good marketable and insurable title.
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."
Commission - Payment to a real
estate broker for services performed.
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.
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.
Deed - A formal
written instrument by which title to real property is transferred
from one owner to another. Also, "conveyance".
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).
Due-On-Sale Clause - An acceleration
clause that requires full payment of a mortgage or deed
of trust when the secured property changes ownership.
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.
Equity - The interest or value
which owner has in real estate over and above the debts
against it. (Sales Price - Mortgage Balance - Equity).
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.
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.
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.
Fixture - What was formerly personal
property which is now permanently attached to real property
and goes with the property when it is sold.
Graduated Payment
Mortgage - A residential mortgage with monthly payments
that start at a low level and increase at a predetermined
rate.
Hazard Insurance
- Protects against damages caused to property by fire, windstorms,
and other common hazards.
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.
Home Warranty Plan - Protection
against failure of mechanical systems within the property.
Usually includes plumbing, electrical, heating systems and
installed appliances.
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.
Lien - A legal
hold or claim on property as security for a debt or charge.
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".
Loan Commitment - A written promise
to make a loan for a specified amount on specified terms.
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.
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".
MIP - Mortgage Insurance Premium.
Mortgage - A lien or claim against
real property given by the buyer to the lender as security
for money borrowed.
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.
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."
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.
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.
PITI - Principal,
interest, taxes and insurance.
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.
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.
Prepayment Penalty - A fee charged
to a mortgagor who pays a loan before it is due. Not allowed
for FHA or VA loans.
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.
Private Mortgage Insurance (PMI) - Insurance written
by a private company protecting the lender against loss
if the borrower defaults on the mortgage.
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.
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.
Realtor - A real estate broker
or associate active in a local real estate board affiliated
with the National Association of Realtors®.
Regulation Z - The set of rules governing consumer
lending issued by the Federal Reserve Board of Governors
in accordance with the Consumer Protection act.
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.
Tenancy in Common - A type of
joint ownership of property by two or more persons with
no right of survivorship.
Title Insurance - Protects lenders and home owners
against loss of their interest in property due to legal
defects in title.
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.
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.
Calculators