| Real
Estate Market 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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