Glossary of Real Estate Words and Terms
ABANDONMENT:
When the owner of real property walks away
from the property and by doing this a
disclaimer of ownership by the trustee or
debtor in property
deemed burdensome or inconsequential. Once property has been "abandoned," it is no longer the property of the estate, and creditors can seek to recover their money.
ABSTRACT OF TITLE: This is a written history of all the transactions on a property that covers the time from when the property was first sold to the present. Used
by the title company to produce a title binder.
deemed burdensome or inconsequential. Once property has been "abandoned," it is no longer the property of the estate, and creditors can seek to recover their money.
ABSTRACT OF TITLE: This is a written history of all the transactions on a property that covers the time from when the property was first sold to the present. Used
by the title company to produce a title binder.
ACCELERATION CLAUSE:
A Clause in a mortgage document
that allows the lender to speed up the payment
date in the event of a default, making the
entire principal
amount due.
amount due.
ACKNOWLEDGEMENT:
This is the confirmation by a party
that is executing
a legal document, that the signature
is actually his or hers. This is normally made
to a
notary public.
ACRE : 43,560
square feet of land.
ADJUSTMENT INTERVAL:
A clause in the mortgage that lets
the borrower know when the loan's interest
will adjust.
ADMINISTRATOR:
This is a person designated by a will or is appointed by the Court to settle the
estate of a person who dies without a will.
ADVERSE POSSESSION:
A way to gain possession of a
property by title by using the land in plain
view and without objection of the owner.
AGENCY: A
term used to describe a relationship between a client
and an agent, normally a real estate agent, in
which the agent represents the client in
transactions with someone else.
AGREEMENT OF SALE:
A Real Estate contract where the
terms of a purchase of a property are
detailed, including the price and other terms
and signed by a
buyer and seller.
AMORTIZATION:
The schedule of repayment of a loan in
installments showing regular payments that cover
the principal and interest and reflects
the number of years till the loan matures.
ANNUAL PERCENTAGE RATE
(A.P.R.): This is the interest rate
that reflects the cost of a loan as a yearly
rate. This rate is normally to be higher than
the stated note rate or advertised rate on the
loan. The APR takes into account it the
borrower had to pay points or other credit
cost to secure the loan. This
makes it easier for a borrower to compare
loans from different companies.
APPRAISAL: An
estimate of the value of property, made by a
qualified professional called an "appraiser."
APPURTENANCE:
This is anything attached to property that
conveys to the new owner.
ASSESSMENT: A
fee or tax that is levied against real
property for a specific purpose. Condo
associations use assessments to bridge a gap
in the amount of funds on hand and what is
needed to keep the association projects fully
funded.
ASSIGN: This
transfers interest .
ASSIGNEE: The
person or entity
who receives transfer of
rights. In the case of real estate when you
make an assignment of a contract, you are transferring
the right to buy property.
ASSIGNOR: The
one who assigns something to another person.
ASSUMPTION:
When a buyer and seller agree that
the buyer will take over the payments on an
existing mortgage from the seller.
ATTACHMENT: A
way to seize property through Court process to
repay a debt.
BALLOON (payment)
mortgage: A loan where there
is a fixed rate for a certain term and at
the end of the term specified, the entire
remaining amount is due and payable.
BANKRUPTCY:
This is a provision of Federal Law whereby a debtor
surrenders his assets to the Bankruptcy
Court and is relieved of the future
obligation to repay his unsecured debts. The
Court appoints a
Trustee who administers the
assets, selling them to pay as much of the
debt as possible.
BID: An
offer.
BLANKET MORTGAGE:
A loan covering two or more
pieces of real estate as security for the
same loan. Found mostly in commercial property or "special
case" loans.
BREACH OF CONTRACT:
The failure
to perform one or more provisions of a contract.
BROKER: This
could refer to a real estate agent or broker
or a mortgage broker.
BUY-DOWN:
This is the term used when an individual
pays a certain amount of money to obtain a lower interest rate.
BY-LAWS: A
set of rules and regulations by which an organization
conducts its business.
CAPITAL GAINS:
Profit earned from a sale of real
estate.
CAPS: A
term used in Adjustable Rate
Mortgage (ARM) that limits how much the
interest rate or loan payments may
increase or decrease.
CAVEAT EMPTOR:
Buyer beware. This term
lets the buyer know that they must
inspect the property and satisfy himself
that it is adequate for his needs.
CERTIFICATE OF
ELIGIBILITY: This is the document given
to qualified veterans for loans under the VA guaranteed loans for homes,
business, and mobile homes. To get a
certificate
of eligibility, the borrower may obtain it by sending
DD-214 (Separation Paper) to the local VA
office with VA form 1880 (request for
Certificate of Eligibility).
CERTIFICATE OF
OCCUPANCY: A certificate issued
by a local building inspectors stating that
the building is in a condition that
satisfies local codes and is fit to be
occupied.
CERTIFICATE OF
SATISFACTION: A release of a lien
or mortgage or deed of trust signed
by the Note holder and recorded in the
land records.
CERTIFICATE OF
TITLE: A written opinion by an
attorney setting forth the status of title
to the property as shown on the public
records. The certificate does not certify
as to matters not of record and affords no
protection unless the author was
negligent.
CHAIN OF TITLE:
The series of transactions from
GRANTOR to GRANTEE as evidenced in the
land records.
CLOSING:
This is when both the buyer and seller
come together to sign the papers that
legally transfer the ownership of
property. The closing is where all
the monies change hands to legally settle
all of the other fees associated with the
transfer, such as all closing costs usually
include an origination fee, discount
points, appraisal fee, title search and
insurance, survey, taxes, deed recording
fee, credit report and notary fees.
CLOSING COSTS:
The closing is where all the
monies change hands to legally settle all
of the other fees associated with the
transfer, such as all closing costs usually
include an origination fee, discount
points, appraisal fee, title search and
insurance, survey, taxes, deed recording
fee, credit report and notary fees. depending on the area of
the country.
CLOUD ON TITLE:
Anytime there is conditions revealed by a
title search that affect the
title to real estate in a negative way.
COLLATERAL:
Property pledged as security to a
debt or loan in which the following occurs. If the borrower fails to repay the
loan or defaults, the lender may gain ownership of the
property and sell it to recover the
money still owed and remaining on the loan.
COMMITMENT LETTER:
This is where a lender has looked
at a borrowers and commits to loaning
money to the borrower to buy certain
property. The commitment will cover
terms and interest rate along with,
normally, the property address to be used
as collateral.
CONDEMNATION:
This is the taking of private property for a
public use through exercise of the power
of EMINENT DOMAIN.
CONDOMINIUM:
A name given to a building or
buildings where a group of individuals
have Fee Simple ownership and share common
areas. The owners of these units
have the right to pledge their ownership
as collateral for a loan or sell it to
another. They have all the rights of
ownership as to any real property within
the confines of the deed restrictions for
all owners.
CONSTRUCTION LOAN:
A loan that is used during the
building process to pay for the
construction cost of building a building
or home. Thy are designed to
provide periodic disbursements to the
builder as he progresses.
This allows the builder of the
property to get draws of a specific amount
of money when they reach a certain point
of completion in the building process.
CONTINGENCY:
A condition that must be met
before a contract is legally binding. For
example, the borrower has to be approved
for a loan or the contract is subject to
loan approval. It can also be that
the contract is subject to a home
inspections, These have to me
completed and the contingency removed to
continue with the sale of the property.
CONTRACT:
A legally binding and enforceable agreement between
two or more parties
CONTRACT FOR DEED:
A method of
financing where title remains in the
Seller's name until the Buyer has paid the
full purchase price or has been able to
get their own financing.
CONVENTIONAL
MORTGAGE OR LOAN: These are normally
15 or 30 year fixed-rate mortgages.
Not FHA or VA type of mortgages.
COOPERATIVE:
A share holder type of ownership
of, normally, an apartment building multiple ownership in
which a corporation owns property
and each owner owns an equal share of the
corporation equal to
their portion of the building.
COST APPROACH:
An appraisal method to
estimate replacement costs of improvements
less depreciation of real property.
Used most often in apartment buildings and
commercial property.
CO-TENANCY:
Ownership in the same property by
more than one person.
COVENANT:
A clause that normally restricts the use
of the property by the borrower and
is part of the mortgage. This clause
also shows the penalty for violating these
restrictions and
can result in foreclosure. This is
normally found in deed restricted
neighborhoods, but For example,
it can be subject to
restrictive covenants even if there is no
homeowner's association.
CREDIT REPORT:
A report from one or more of the
credit reporting companies that shows who
and what a borrower owes and the type of
payment history that they might have as
well as a rating of them as a credit risk.
This rating takes into consideration the borrowing habits,
payment history, debt ratio
and money-managing skills.
CREDITOR:
One who is owed money.
DEBT:
An amount owed to another.
DEBT RATIO:
Monthly loan payment divided by
gross monthly income.
DEED: A
legal document which shows ownership of real estate
and is used to transfer ownership from the seller to the buyer
in a real estate transaction.
DEED OF TRUST:
Document used in place of a
mortgage to secure the payment of a
note.
DEFAULT:
Anything that occurs that affects the
loan. Normally a failure to make mortgage payments on a
timely basis or to comply with other
requirements of a mortgage will cause a
default.
DEFERRED
INTEREST: A mortgage
where the payment of interest is delayed
or deferred until a later date.
DEFICIENCY
JUDGMENT: If a lender goes to
court when you default on your loan and
the property is sold, but the sale does
not bring enough to pay
the balance owed on a loan, the the
lender ask for the remaining balance and
if you are unable or unwilling to pay it
at this time, the the court will will
order the balance of the remaining money
to be a judgment where you will be
ordered to pay the remaining balance.
The lender may work out a payment
schedule of payment.
DELINQUENCY:
Failure to make required
payments in a timely manner and on time as agreed in the loan
agreement.
DEPRECIATION:
A decline in the market value of a
real
property.
DISCOUNT POINTS:
Fees that are collected by the
lender in exchange for a lower interest
rate.
DISPOSABLE
INCOME: This is the amount of monthly
income minus the monthly minimum
obligations.
DOWN PAYMENT:
The amount of money used as part of the purchase price
of a property that is
cash and does not finance with a
mortgage.
EARNEST MONEY:
The deposit money placed in
escrow or given to
the seller by the potential buyer upon
signing the agreement of sale to show
buyers intention to purchase the house.
EASEMENT:
A right of way giving persons
other than the property owner access
to or over a property. Such as a
utility easement that allows utility
companies access to certain areas of
the property for repairs or to install
new service.
EMINENT DOMAIN:
A term that gives the government right to acquire
private property for public use by
condemnation. A fair market
price is required as payment for the
property.
ENCUMBRANCE:
Anything that affects the
title to a property such as a
mortgage, judgment, or easement.
ENDORSER:
A person who signs ownership
interest over to another party.
EQUITY:
The difference between the
current market value of a property
less any outstanding loans or liens.
ESCROW:
An item of value, money, or
documents deposited with a third party
to be delivered upon the fulfillment
of a condition. Normally this is
also call consideration. In a
real estate contract this must be
consideration and acceptance to seal
deal and make it binding. The
consideration is placed with a third
party, such as a title company or in a
real estate company escrow account
that will be brought to closing to
satisfy a condition of the contract.
ESTATE:
The ownership interest an
individual holds in real property.
EVICTION:
The lawful way to remove
someone fro real property if they have
been an
occupant of that real property.
FEE SIMPLE:
The greatest possible
interest a person can have in real
estate.
FIRST
MORTGAGE: The primary lien
on a property. The first
mortgage or first lien holder is in
first position to get money in case
of a default on a loan.
FIXED RATE
MORTGAGE: Fixed-rate loans
have interest rates and payment that
remain the same during the life of the
loan.
FORBEARANCE:
This is an agreement with
the lender where a borrower is
behind on a loan and the lender's postponement
of foreclosure to give the borrower
time to catch up on overdue
payments.
FORECLOSURE:
A legal procedure in which
real estate is sold by the lender to
pay a defaulting borrower's debt
GIFT LETTER:
Letter verifying that funds
given to a borrower are a gift and
need not be repaid.
GRADUATED
PAYMENT MORTGAGE (GPM): A
mortgage that starts with low monthly
payments. These payments will increase at a
predetermined rate and a predetermined
time.
GRANTEE:
The person to whom an
interest in real property is conveyed.
GRANTOR:
The person conveying an
interest in real property.
GROSS INCOME:
Total before tax income or
before expenses are deducted.
GUARANTEE
MORTGAGE: A mortgage that is
guaranteed by a third party
HAZARD
INSURANCE: A form of
insurance that protects the insured
from certain losses, such as fire,
vandalism, storms or certain other
natural causes such as hurricanes.
HOME EQUITY
LOAN: A revolving line of
credit or loan based on the equity
in the mortgagor's house.
HOME
INSPECTION: A thorough
assessment of condition of a
property by a professional
regarding the structural and
mechanical condition of a property.
HOMEOWNERS
INSURANCE: This is
insurance that protects the property
against claims made by anyone hurt
on the property or other hazards as
in hazard insurance. Required by all
lenders to protect their investment.
Must be obtained before closing,
equal to the loan balance or the
value of the home.
HUD:
The U.S. Department of Housing and
Urban Development (HUD). Insures
home mortgage loans made by lenders
meet minimum standards for such
homes
INSURABLE
TITLE: A property title
that is a clear title, that a title insurance company
agrees to insure against defects
and disputes.
INTEREST
RATE CEILING: For an
adjustable-rate mortgage (ARM),
the maximum interest rate that can
be charged during the life of a
loan.
INTEREST
RATE FLOOR: For an
adjustable-rate mortgage (ARM),
the minimum interest rate than can
be charged during the life of a
loan..
JOINT
TENANCY: When two
or more joint tenants have an
undivided interest in real property. Upon death of
a joint tenant, the interest passes
to the surviving joint tenants.
JUDGMENT
LIEN: A lien on the
property of a debtor resulting from
the decree of a court.
JUMBO LOAN:
A loan for $417,000 or more
in the continental United States
(Alaska and Hawaii limits are
higher).
JUNIOR
MORTGAGE: Commonly known as
a second or more loan that is not in
first mortgage place.
LENDER:
Any company or individual entity that extends
credit.
LEVERAGE:
Using someone else's
money for the purchase of
property.
LIEN:
A legal claim by one
party against the property of
another as security for a debt.
LIFETIME
CAP: A provision of an
ARM that limits the total increase
in interest rates over the life of
the loan.
LOAN:
The total amount money
borrowed to buy property, that is repaid
with interest over a specified
time.
LOAN
APPLICATION: A form that
gives financial and personal information required to
apply for a loan.
LOAN
OFFICER: A person who
helps borrowers through the loan
selection, processing and closing
of a mortgage loan. This can
be an employee of the lender or a
mortgage broker.
LOAN TERM:
The number of months that
you will make monthly payments.
LOAN-TO-VALUE RATIO (LTV):
The percentage of loan
amount to the actual appraised
value of the property.
LOCK
PERIOD: The number of
days that the lender will
guarantee the interest rate
offered for a loan.
MARKET
VALUE: The current market price
of a given piece of property.
MARKETABLE TITLE: A
property that is free and clear of
objectionable liens, clouds, or
other title defects.
MODIFICATION: Any
change to the original terms of
a mortgage.
MORTGAGE:
A legal document that
pledges a property to the lender
as security for payment of a
debt.
MORTGAGE
BANKER: A company that
originates mortgages exclusively
for resale in the secondary
market.
MORTGAGE
BROKER: A company or
individual that
for a fee matches borrowers with
lenders.
MORTGAGE
INSURANCE: Insurance
purchased by a buyer to cover
the lender’s risk of loss.
Generally required by lenders
when the down payment is less
than 20% of the purchase price.
MORTGAGE
INSURANCE PREMIUM: The
amount paid by a mortgagor for
mortgage insurance.
Generally required by lenders
when the down payment is less
than 20% of the purchase price.
MORTGAGEE: The lender
in a mortgage agreement.
MORTGAGOR: The borrower
in a mortgage agreement.
NEGATIVE AMORTIZATION:
A gradual increase in
mortgage debt that occurs when
the monthly payment is not
large enough to cover the
entire principal and interest
due.
NET
WORTH: The total
value of all assets minus all
debts of an individual.
NON-ASSUMPTION CLAUSE:
A provision in a
mortgage contract prohibiting
the assumption of the mortgage
by another borrower without
the lenders permission.
NOTE:
A legal document that
obligates a borrower to repay
a mortgage loan at a stated
interest rate over a
specified period of time.
NOTE
RATE: The interest
rate stated on a mortgage
note.
OPTION: A legal
agreement giving someone the
right to buy, sell or lease
a property at specified
terms for a specified
period.
ORIGINATION FEE: A
fee paid to a lender for
processing a loan
application
PACKAGE MORTGAGE:
A mortgage including
equipment and appliances
located on the premises in
addition to the property
itself.
PARCEL: A
separately assessed for
tax purposes lot or piece
of real property.
P.I.T.I.: An acronym
That stands for Principal,
Interest,
Taxes and Insurance.
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: A one-time
charge by the lender for
originating a loan. A
point is 1 percent of the
amount of the mortgage.
PORTFOLIO LOAN:
Loans held as an
investment by a bank,
savings and loan or a
credit union.
POWER OF ATTORNEY:
A document in
which the signer
authorizes someone to
conduct business in his or
her name.
PRE-APPROVAL :The
process of determining how
much money you will be
eligible to borrow before
you apply for a loan.
PRE-PAIDS: The
amounts that are put into
an escrow account at
closing, usually including
real estate taxes and
insurance.
PREPAYMENT PENALTY:
A charge imposed
by a mortgage lender on a
borrower who wants to pay
off part or all of a
mortgage loan in advance
of schedule.
PRIMARY RESIDENCE:
This is considered the
permanent location of
residency or an individual.
PRIME RATE:
the interest charged by
financial institutions to
top-rate borrowers.
PRINCIPAL: The
amount of debt, not
counting interest, left on
a loan.
PRIVATE MORTGAGE INSURANCE
(PMI): Mortgage
insurance provided by a
private mortgage insurance
company to protect lenders
against loss if a borrower
defaults.
PRORATE: To
take an amount for a
certain period and divide in proportionate
shares.
PUBLIC RECORD:
Legal documents that are
filed with the local
government so that the
public will know what
liens, encumbrances or
judgments may affect any
piece of real estate
QUALIFYING RATIOS:
Guidelines that
determine how large a
loan to grant a
homebuyer.
QUITCLAIM DEED:
A deed that transfers,
without warranty,
whatever interest or
title a grantor may have
at the time the
conveyance is made.
REALTOR:
A person
licensed work on the
sale of real property.
They may work for
either the buyer or
seller or in some
states both to negotiate
and transact the sale
of real estate.
REFINANCE:
To pay off
one loan with the
proceeds from a new
loan, using the same
property as security.
REINSTATEMENT:
Paying up all
delinquent mortgage
payments and late
charges and having the
loan back in good
standing and up to
date.
RELEASE:
An document
releasing property
from the lien of the
mortgage, judgment,
etc.
RESERVES:
The amount of
money that an
association has to pay
for current and future
bills for the good of
a complex or what is left in a
borrowers possession
after settlement.
RESPA:
Real
Estate
Settlement Procedures
Act. RESPA is a
federal law that gives
consumers the right to
review estimated
closing costs.
SECOND HOME:
Commonly known as a
vacation home. This home
is not rented and is
occupied occasionally by
the owners.
SECOND MORTGAGE:
A mortgage that
has a junior lien position
to the first
mortgage.
SECONDARY MARKET:
A system where
existing mortgages are
bought and sold,
normally the stock
market.
SECURED LOAN: A
loan that is backed by
collateral.
SECURITY: The
property that will be
pledged as collateral
for a loan.
SETTLEMENT:
Normally the closing. a meeting of parties
involved in a real
estate transaction to
finalize the process.
SPECIAL ASSESSMENT:
A special tax
imposed on property,
individual lots or all
property in the
immediate area.
SUBORDINATION AGREEMENT:
Sacrificing a
lien position to another
mortgage.
TAX LIEN: Lien
for nonpayment of taxes.
TENANTS BY THE ENTIRETY:
A type of joint
ownership of a property
available only to a
husband and wife.
TENANTS IN COMMON:
A type of joint
ownership in a property
without right of
survivorship.
TITLE: A legal
document showing a
person's right to or
ownership of a property.
TITLE INSURANCE:
Insurance which
protects a lender or a
buyer against loss due
to title error or
disputes over ownership
of a property.
TITLE SEARCH: A
check of the title
records to make sure
that the seller is the
actual legal owner of
the property, and that
there are no liens or
other claims
outstanding.
TRUST: A
property interest held
by one person for the
benefit of another.
TRUSTEE: A
party who is given legal
responsibility to hold
property in the best
interest of or "for the
benefit of" another.
TRUTH-IN-LENDING:
A document
commonly called the TIL.
The federal law
that requires lenders to
fully disclose, in
writing, the terms and
conditions of a
mortgage.
TWO-STEP MORTGAGE:
Commonly called
an ARM(Adjustable Rate
Mortgage) that has one
interest rate for the
first five or seven
years of its mortgage
term and a different
interest rate for the
remainder of the
amortization term.
UNDERWRITING:
The process of verifying
data and evaluating a
loan for approval.
VA LOAN: A
mortgage that is
guaranteed by the
Department of Veterans
Affairs.
VARIABLE RATE MORTGAGE (VRM):
A mortgage
where interest rates can
be adjusted periodically
WAIVER:
Voluntary relinquishment
some right or privilege.
WARRANTY DEED:
Most valuable type of
deed in which the
grantor makes a formal
assurance of title.
WRAPAROUND MORTGAGE:
A refinanced
home loan in which the
balances on all
mortgages are combined
into one loan.
YIELD SPREAD: Points paid to a broker due to the broker selling a higher interest rate than the par rate the lender has approved.
YIELD SPREAD: Points paid to a broker due to the broker selling a higher interest rate than the par rate the lender has approved.
ZERO PERCENT FINANCING:
A loan with no
interest in the
contract.
ZONING: The
right of a community to
dictate the use of
property within its
boundaries.
ZONING ORDINANCES:
The acts of an
authorized local
government establishing
building codes, and
setting forth
regulations for property
land usage.
All the information on this short sales module is published in good faith and for general information purposes only. There are no warranties publishers and providers of this content about the completeness, reliability and accuracy of this information. We suggest that you contact an attorney with any legal questions and your CPA for any financial questions concerning how a short sale might affect you. Any action you take upon using the information on this module is strictly at your own risk and the publishers and providers will not be liable for any losses and damages in connection with the use of our website. The information contained on these pages are for general information based on current research and person experiences.
