A|B|C|D|E|F|G|H|I|J|K|L|MN|O|P|Q|R|S|T|U|V|W|X|Y|Z
A's
Acceleration clause:
A provision that gives a lender the right to collect the balance of a loan if a borrower misses a payment.
Acre:
A measurement of land equal to 43,560 square feet.
Addendum:
An addition or change to a contract.
Adjustable-rate mortgage (ARM):
A loan with an interest rate that is periodically adjusted to reflect changes in a specified financial index.
Adverse possession:
The acquisition of title to property through possession without the owner's consent for a certain period of time.
Adverse use:
The access and use of property without the owner's consent.
A-frame design:
An interior style that features a steeply peaked roofline and a ceiling that is open to the top rafters.
Agency:
The relationship of trust that exists between sellers and buyers and their agents. The agency is formed through a written contract.
Agent:
A person licensed by the state to conduct real estate transactions.
Allowances:
Budgets offered by builders of new homes for the purchase of carpeting and fixtures.
Alternative mortgage:
Any home loan that does not conform to a standard fixed-rate mortgage.
American Society of Home Inspectors (ASHI):
The American Society of Home Inspectors is a professional association of independent home inspectors. Phone: (800) 743-2744.
Amortization:
The process of paying the principal and interest on a loan through regularly scheduled installments.
Amortization tables:
Mathematical tables that lenders use to calculate a borrower's monthly payment.
Annual Percentage Rate (APR):
The cost of the loan expressed as a yearly rate on the balance of the loan.
Application fee:
The fee that a lender charges to process a loan application.
Appraisal:
An opinion of the value of a property at a given point in time.
Appraised value:
An opinion of the current market value of a property.
Appreciation:
An increase in the value of a home or other property.
Asbestos:
A fire-resistant mineral used for insulation and home products that has been found to pose a health hazard.
Assessed value:
A tax assessor's determination of the value of a home in order to calculate a tax base.
Assessment:
The estimated value of a piece of real estate or a levy placed on property in addition to taxes
Assumable mortgage:
A mortgage that can be transferred to another borrower.
Backup offer:
A secondary bid for a property that the seller will accept if the first offer fails.
Balloon-frame construction:
A type of framing used in two-story homes in which studs extend from the ground to the ceiling of the second floor.
Balloon loan:
A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. As a result, the final payment due is the lump sum of the remaining principal.
Bidding war:
Offers from multiple buyers for a piece of property. Agents also sometimes compete to list a house for sale.
Bilateral contract:
A contract in which the parties involved give mutual promises. Also called "reciprocal" contracts.
Binder:
A report issued by a title insurance company that details the condition of a home's title. and provides guidelines for a title insurance policy.
Biweekly
mortgage:
A mortgage that requires payments every two weeks and helps repay the loan over a shorter term.
Blanket insurance policy:
A policy that covers more than one person or piece of property.
Blanket mortgage:
A mortgage that covers more than one property owned by the same borrower.
Breach of contract:
The failure to perform provisions of a contract without a legal excuse.
Bridge loan:
A short-term loan for borrowers who need more time to find permanent financing.
Brokerage:
The act of bringing together two or more parties in exchange for a fee or commission.
Broker:
A person licensed by the state to deal in real estate.
Building code:
A comprehensive set of laws that controls the construction or remodeling of a home or other structure.
Building permit:
A permit issued by a local government agency that allows the construction of home or renovation of a house.
Built-ins:
Appliances or other items that are framed into a home or permanently attached.
Bungalow:
A small one-story house or cottage.
Buyer's market:
A slow real estate market in which buyers have the advantage.
Cancellation clause:
A clause that details the conditions under which each party may terminate the agreement.
Capital gains tax:
A tax placed on the profits from the sale of real estate or investments.
Cash-out refinance:
The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan. The borrower can use the extra funds in any manner.
Certificate of occupancy:
A document which states that a home or other building has met all building codes and is suitable for habitation.
Certificate of title:
A written opinion on the status of a piece of property based on an examination of the public record.
Chain of title:
The official record that details the ownership history of a piece of property.
Closing:
The final procedure in which documents are signed and recorded, and the property is transferred.
Closing costs:
Expenses incidental to the sale of real estate, including loan, title and appraisal fees.
Closing statement:
A document which details the final financial settlement between a buyer and seller and the costs paid by each party.
Cloud on title:
An invalid encumbrance on real property.
Commission:
The negotiable percentage of the sales price of a home that is paid to the agents of the buyer and seller.
Commitment fee:
The fee a lender charges for promising to make a loan.
Common area:
An area inside a housing development that is owned by all residents.
Comparables:
Properties used as comparisons to determine the value of a certain property.
Comparative market analysis:
An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.
Compound interest:
The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.
Contingency:
A condition specified in a purchase contract, such as a satisfactory home inspection.
Contract to purchase:
A contract the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller. Also known as an agreement of sale.
Conventional loan:
A long-term loan a lender makes for the purchase of a home.
Counteroffer:
A response to an offer.
Covenant:
A legal assurance or promise in a deed or other document, or implied by the law.
Curb appeal:
The first impression of a house as seen from the street.
Deed:
The legal document that transfers ownership of a piece of property.
Deed of trust:
A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.
Default:
The failure to fulfill a duty or promise or discharge an obligation, such as making monthly mortgage payments.
Discount points:
Fees that a borrower pays at the time the lender makes the loan. A point equals 1 percent of the total loan amount.
Dual agency:
A relationship in which a real estate agent or broker represents both parties in a transaction.
Due-on-sale clause:
Standard language in a mortgage which states that the loan must be paid when a house is sold.
E's
Earnest money:
Money a buyer gives with an offer to purchase a property.
Easement:
A right given to a third party to use a portion of the property for certain purposes, such as power lines or water mains.
Effective age:
The age of a structure estimated by its condition rather than its actual age.
Encroachment:
Fences or other structures that extend into the property of another owner.
Encumbrance:
A claim or lien on a property which complicates the title process.
Equity:
A determination of the value of a property after existing liens are deducted.
Escrow:
A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met.. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.
Escrow account:
An account that a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes.
F's
Fannie Mae:
The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.
Fiduciary duty:
The relationship of trust that buyers and sellers expect from a real estate agent. The term also applies to legal and business relationships.
First mortgage:
The primary mortgage on a property that has priority over all other voluntary liens.
Fixed-rate mortgage:
A home loan with an interest rate that will remain at a specific rate for the term of the loan. About 75 percent of all home mortgages have fixed rates.
Fixture:
Personal property permanently attached to a house, such as drapery rods, toilets, built-in bookcases or a furnace.
Flood plain:
Flat, flood-prone areas located along waterways.
Foreclosure:
The legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted. When the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. Any excess proceeds may be used to satisfy other liens or be returned to the borrower.
Fully amortized adjustable-rate mortgage:
A mortgage that amortizes, or pays down, the balance of a loan.
Good-faith estimate:
An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.
Graduated-payment mortgage (GPM):
A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.
Grantee:
A person conveyed an interest in a piece of property.
Grantor:
The person who conveys an interest in a piece of property to another person.
Growing-equity mortgage:
A fixed rate mortgage that increases payments over a specific period of time. The extra funds are applied to the principal.
Guarantee mortgage:
A loan guaranteed by a third party, such as a government institution.
Hazard insurance:
This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.
HOA see homeowner’s association
Home equity loan:
A loan that allows owners to borrow against the equity in their homes.
Home inspection:
An examination of a home's construction, condition and internal systems by an inspector or contractor prior to purchase.
Homeowners' association:
A group that governs a modern subdivision or planned community. An association collects monthly fees from all owners to pay for maintenance of common areas, handle legal and safety issues, and enforce the covenants, conditions and restrictions set by the developer.
Homeowners' insurance:
This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.
Home warranty:
A type of insurance that covers repairs to certain parts of a house and some fixtures.
HUD-1 Uniform Settlement Statement:
A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.
Impact fees:
Fees collected from developers of new homes to pay for schools, parks and other facilities.
Initial interest rate:
The original interest rate on an adjustable mortgage.
Inspection report:
An examination of a home's exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathroom, roofing and interior.
Insurance:
Owners and buyers can purchase various types of insurance: hazard, private mortgage and earthquake. The policies guarantee compensation for specific losses.
Insurance binder:
A temporary insurance arrangement usually put in force until a permanent policy can be obtained.
Interest:
The fee borrowers pay to obtain a loan. It is calculated based on a percentage of the total loan.
Interest accrual rate:
The rate at which interest accrues on a mortgage.
Interest-only loan:
The borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.
Jumbo mortgage:
Loans that exceed limits set by Fannie Mae and Freddie Mac. The current limit is $300,700.
Junior mortgage:
A loan that subordinate to the primary loan.
Lease option:
A lease that contains the right to purchase the property for a specific price within a certain time frame.
Legal description:
A specific way of identifying and locating a piece of real estate that is acceptable to a court.
Lien:
A claim laid by one person or company on the property of another as security for money owed.
Listing:
A piece of property placed on the market by a listing agent.
Loan commitment:
A promise by a lender or other financial institution to make or insure a loan for a specified amount and on specific terms.
Loan origination fee:
Most lenders charge borrowers an origination fee--or points--for processing a loan. A point is 1 percent of the total loan amount.
Loan -to-value ratio:
A technical measure used by lenders to assess the relationship of the loan amount to the value of the property
Market value:
The price that a piece of property sells for at a particular point in time.
Mechanic's lien:
Subcontractors or suppliers sometimes will file an encumbrance, or mechanic's lien, against a property to seek payment.
Mortgage:
A legal document specifying a certain amount of money to purchase a home at a certain interest rate, and using the property as collateral.
Mortgagee:
A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.
Mortgagor:
The person who borrows money to purchase a house. The lender is called the mortgagee.
Mortgage acceleration clause:
A clause which allows a lender to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances. The acceleration clause is usually triggered if the home is sold, title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.
Mortgage banker:
A company that provides home loans using its own money. The loans are usually sold to investors such as insurance companies and Fannie Mae.
Mortgage broker:
A company that matches lenders with prospective borrowers who meet the lender's criteria. The mortgage broker does not make the loan, but receives payment from the lender for services.
Mortgage insurance:
Required by lenders in some loans to protect them from a possible default . All conventional loans with less than a 20 percent down payments require private mortgage insurance, or PMI.
Mortgage-interest deduction:
The tax write-off that the Internal Revenue Service allows most owners to claim for the annual interest payments they make on their real estate loans.
Multiple listing service (MLS):
The service combines the listings for all available homes in an area, except For-Sale-By-Owner (FSBO) properties, in one directory or database.
Negative amortization:
The situation occurs when a borrower's monthly payment is not large enough to cover both the principal and interest of a loan. As a result, the outstanding balance of the loan actually grows larger with each payment rather than smaller. Most fixed-rate loans are not subject to negative amortization, but many adjustable-rate mortgages are susceptible.
No-documentation loan:
A loan application that does not require verification of income but typically is granted in cases of large down payments.
Note:
The legal document that requires a borrower to repay a mortgage at a certain interest rate over a specified period of time.
Offer to Purchase and Contract:
the standard document use in North Carolina to buy residential property.
Open house:
A marketing tool in which a listing agent opens a house for view.
Origination fee:
A fee charged by most lenders--also called points--for processing a loan. A point is 1 percent of the total loan amount.
Owner financing:
A transaction in which the seller of a property agrees to finance all or part of the purchase.
Percolation (perc) test:
A test used to determine the ability of soil to accommodate a septic system.
Personal property:
Any moveable property in a house such as furniture or appliances.
PITI (Principal, Interest, Taxes, Insurance):
When a buyer applies for a loan, the lender will calculate the principal, interest, taxes and insurance. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.
Planned-unit development:
Residents own the home and the land, and share the use and financial responsibility for common areas.
Possession:
After an attorney records deeds, and the buyer signs the papers and receives the keys to the house, the buyer officially takes possession.
Pre-approval letter:
A letter from a lender that informs a seller about the amount of money that a potential buyer can obtain.
Prepayment penalty:
Lenders can impose a penalty on a borrower who pays a loan off before its expected end date.
Prequalification:
Many lenders will prequalify a borrower who is shopping for a loan by completing a preliminary assessment of the buyer's ability to pay for a home.
Principal:
The amount of money that the borrower owes on a mortgage.
Private mortgage insurance (PMI):
A special type of loan insurance that many lenders require borrowers to purchase if the borrower's down payment is less than 20 percent of the home's purchase price.
Property tax:
Property taxes are calculated at about 1.5 percent of the current market value.
Property value:
The value of a piece of property is based on the price a buyer will pay at a certain time.
Proration:
Agreed-upon percentages of certain expenses associated with a piece of property that must be paid by the buyer or the seller at the time of closing.
Purchase agreement:
A document which details the purchase price and conditions of the transaction.
Purchase-money mortgage:
A mortgage that a borrower obtains to acquire a property.
Quit-claim deed:
A document that releases a party from any interest in a piece of real estate.
R's
Radon:
A ground-generated radioactive gas that seeps into some homes through sump pumps, cracks in the foundation and other inlets. A leading cause of lung cancer , radon is found in mostly the northern half of the country.
Rate lock:
When interest rates are volatile, many borrowers want to "lock in" an interest rate and many lenders will oblige, setting a limit on the amount of time the guaranteed interest rate is in effect.
Real estate agent:
A real estate agent has a state license to represent a buyer or a seller in a real estate transaction in exchange for a commission. Most agents work for real estate brokers.
Real estate attorney:
A lawyers who specializes in real estate transactions.
Real estate broker:
A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction in exchange for a commission. Most brokers also have agents working for them, and are entitled to a portion of their commissions.
Real property:
Land and any permanent fixtures on it, including buildings, trees and minerals.
Realtor:
A designation for an agent or broker who is a member of the National Association of Realtors.
Recording:
The filing of a specific document to the appropriate government entity.
Reverse mortgage:
A special type of loan available to equity-rich, older owners. Repayment is not necessary until the borrower sells the property or moves into a retirement community.
Second mortgage:
Another loan placed upon a piece of property.
Seller's market:
A hot real estate market in which sellers have the advantage and multiple offers are common.
Septic system:
A self-contained sewage treatment system that distributes wastewater to an underground storage area and relies on bacterial action to decompose solid waste matter.
Special assessment:
When a homeowners' association needs or wants extra funds, it levies a special assessment upon the owners.
Step-rate mortgage:
A loan that allows a gradual increase in the interest rate during the first few years of the loan.
Subagent:
When an agent brings a buyer to a property, they in effect act as a subagent to the listing agent.
Subordinate loan:
A second or third mortgage.
Survey:
A precise measurement of a piece of property by a licensed surveyor.
Sweat equity:
The non-cash value put into a piece of property by the owner, such as do-it-yourself home improvements.
Tax lien:
An impediment placed against a property, such as back taxes.
Title:
The actual legal document conferring ownership of a piece of real estate.
Title company:
Firms that ensure that the title to a piece of property is clear and provide title insurance.
Title insurance:
A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property.
Title search:
A check of public title records to ascertain that the seller is the legal owner and that there are no claims or liens against the property.
Trust account:
Special accounts used by brokers and escrow agents to safeguard funds for a buyer or seller.
Trustee:
A legally empowered person who holds or controls a piece of property for another person.
Underwriting:
The process that lenders go through to evaluate the risks posed by a particular borrower and to set appropriate conditions for the loan.
U.S. Department. of Housing and Urban Development (HUD):
A federal agency that oversees the Federal Housing Administration and a variety of housing and community development programs.
Unsecured loan:
Any loan that is not backed by collateral.
Variable interest rate:
A loan rate that moves up and down based on factors including changes in the rate paid on bank certificates of deposit or Treasury bills.
Variable rate mortgage:
A loan with an interest rate that hinges on factors such as the rate paid on bank certificates and Treasury bills.
Veterans Administration (VA):
The U.S. Department of Veterans Affairs operates a variety of programs to help veterans. One of the key plans it oversees is the VA loan program, which allows most veterans to purchase a house without a down payment.
Wraparound mortgage:
A loan to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both loans are made to the lender who holds the wraparound loan
Zoning:
Regulations that control the use of land within a jurisdiction.