Real Estate Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


A

Abstract of Title

A summary of the public records relating to the ownership of a particular piece of land. It represents a short legal history of an individual piece of property and traces the ownership of that property from the time of the first recorded transfer to present.

Acceptance

Consent to an offer to enter into contract.

Adjustable Rate Mortgage

A mortgage that allows the interest rate to be changed periodically; referred to as ARM.

Agency

A legal relationship in which an owner-principal engages a broker-agent in the sale of property or a buyer-principal engages a broker-agent in the purchase of property.

American Society of Home Inspectors (ASHI)

A professional trade association providing training and education in home inspections. Members meet qualification requirements to join.

Amortization

The gradual repayment of a mortgage by periodic installments.

Annual Percentage Rate (APR)

The total finance charge (interest, loan fees, and points) expressed as a percentage of the mortgage amount.

Appraisal

An evaluation of a piece of property used to determine its value.

Appreciation

Increase in value due to any cause.

Asbestos

A mineral fiber used in some building materials, such as flooring, siding, insulation, and roofing. It is presently banned for most uses in real property.

Assessed Value

The valuation placed on property by a public tax assessor as the basis of property taxes.

Assumption of Mortgage

An agreement whereby the buyer assumes responsibility for a mortgage owed by the seller; the seller remains liable to the lender unless lender agrees to release the seller from the liability.

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B

Broker

A licensed individual or firm that charges a fee to serve as the mediator between the buyer and seller. Mortgage brokers are individuals in the business of arranging funding or negotiating contracts for a client, but who does not loan the money. A real estate broker is someone who helps find a house.

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C

Comparables

Properties similar in size and character to the one being bought or sold.

Condominium

Ownership of a unit only, rather than of the entire building with the land.

Consideration

Anything of value to induce another to enter into a contract (i.e. money, services, a promise, etc.).

Contingency

A condition that must be satisfied before a contract is binding.

Contract

An agreement to do or not to do a certain thing.

Conventional Mortgage

A fixed rate, fixed-term mortgage not insured by the federal government.

Counter Offer

A rejection to all or part of a purchase offer that negotiates different terms to reach an acceptable sales contract.

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D

Deed

A legal document conveying title to a property.

Deed (quit claim)

A deed that transfers only that title or right to a property that the holder of that title has at the time of the transfer. It does not warrant or guarantee a clear title.

Department of Housing and Urban Development

A U.S. government agency established to implement certain federal housing and community development programs.

Disclosure Laws

State and federal regulations which require sellers to disclose such conditions as whether a house is located in a flood plain or whether there are known defects in or affecting the property.

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E

Earnest Money

A portion of a down payment given to the seller by a potential buyer indicating the buyer’s intent to complete the purchase of the property.

Easement

A right to use the land of another.

Encroachment

A condition that limits the interest in a title to property, such as a mortgage, deed restrictions, easements, unpaid taxes, etc.

Equity Mortgage

A mortgage based on the borrower’s equity in their home rather than on their credit worthiness.

Escrow

Documents, real estate, money, or securities deposited with a neutral third party (the escrow agent) for safekeeping to be delivered upon fulfillment of certain conditions, as established in a written agreement.

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F

Fair Housing Act

A law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fannie Mae

Nickname for Federal National Mortgage Corp. (FNMA), a tax paying corporation created by Congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages.

Federal Housing Administration (FHA)

An agency within the Department of Housing and Urban Development (HUD) that administers loan guarantee programs and loan insurance programs to make more housing available.

Fixed Rate Mortgage

A loan that fixes the interest rate at a prescribed rate for the duration of the loan.

Foreclosure

Procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default.

Freddie Mac

Nickname for Federal Home Loan Mortgage Corp. (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.

FSBO (For Sale by Owner)

A home that is offered for sale by the owner without the benefit of a real estate professional.

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G

Graduated-Payment Mortgage

A mortgage that starts with low monthly payments and increases at a predetermined rate.

Growing-Equity Mortgage

A mortgage loan in which the monthly payments increase by a specific amount each year, with the “overpayments” applied to the principal.

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H

HUD

The U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement

Also known as the "settlement sheet," or "closing statement" it itemizes all closing costs; must be given to the borrower at or before closing. Items that appear on the statement include real estate commissions, loan fees, points, and escrow amounts.

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I

Installment Debts

Long-term debts that usually extend for more than one month.

Investor

The holder of a mortgage or the permanent lender for whom the mortgage maker services the loan. Any person or institution that invests in mortgages.

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J

Joint Tenancy 

Two or more owners share equal ownership and rights to the property. In joint tenancy, ownership of the property cannot be willed to someone who is not a joint owner.

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K

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L

Lease Purchase Agreement

Buyer makes a deposit for the future purchase of a property with the right to lease the property in the interim.

Lien

A legal claim against a property that must be paid when the property is sold.

Loan-to-Value Ratio

The relationship between the amount of a home mortgage and the total value of the property. Lenders may limit their maximum mortgage to 80- 95 percent of value.

Lock-in Ratio

A commitment made by lenders on a mortgage loan to “lock-in” a civilian rate pending mortgage approval. Lock-in periods vary.

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M

Mitigation

Term usually used to refer to various changes or improvements made in a home; for instance, to reduce the average level of radon.

Market Value

The highest price a buyer will pay for property and the lowest price the seller will accept.

Mortgage

One type of document used to make property the security for the payment of a loan.

Mortgage Broker

An individual or company that obtains mortgages for others by finding lending institutions, insurance companies, or private sources to lend the money; may also handle collections and disbursements.

Mortgagee

The lender of money or the receiver of the mortgage.

Mortgagor

The borrower of money or the giver of the mortgage document.

Multiple Listing Service (MLS)

Realtors submit listings and agree to attempt to sell all properties in the MLS. The local MLS has a protocol for updating listings and sharing commissions. The MLS offers the advantage of more timely information, availability, and access to houses and other types of property on the market.

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N

Negative Amortization

An increase in the outstanding balance of a mortgage resulting from the failure of periodic debt service payment to cover required interest charges on the loan.

Note

A written promise to pay a certain amount of money.

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O

Origination Fee

A fee or charge for work involved in the evaluation, preparation, and submission of a proposed mortgage loan.

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P

Power of Attorney

A legal document that authorizes another person to act on your behalf. A power of attorney can grant complete authority or can be limited to certain acts or certain periods of time or both.

Prepayment Penalty

A fee paid to the mortgagee for paying the mortgage before it becomes due. Also know as prepayment fee or reinvestment fee.

Pre-Qualify

A lender informally determines the maximum amount an individual is eligible to borrow. This is not a guaranty of a loan.

Promissory Note

A written contract containing a promise to pay a definite amount of money at a definite future time.

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Q

Qualifying Ratios

Guidelines utilized by lenders to determine how much money a homebuyer is qualified to borrow. Lending guidelines typically include a maximum housing expense to income ratio and a maximum monthly expense to income ratio.

Quitclaim Deed

A deed transferring ownership of a property but does not make any guarantee of clear title.

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R

Radon

A colorless, odorless gas formed by the breakdown of uranium in subsoils. It can enter a house through cracks in the foundation or in water and is considered to be a health hazard.

Real Estate Settlement Procedures Act (RESPA)

A law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships

REALTOR and REALTOR-Associate

Registered collective membership marks that identify real estate professionals who are members of the National Association of REALTORS and who subscribe to its strict Code of Ethics.

Rent with Option

A contract which gives one the right to lease property at a certain sum with the option to purchase at a future date.

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S

Savings and Loan Association (S&Ls)

Depository institutions that specialize in originating, servicing, and holding mortgage loans, primarily on owner-occupied residential property.

Savings Bank

A financial institution organized to hold individual depositors’ funds in interest-bearing accounts and to make long-term investments, such as home mortgage loans.

Second Mortgage/Second Deed of Trust/Junior Mortgage or Lien

An additional loan imposed on a property with a first mortgage; generally a higher interest rate and shorter term than a “first” mortgage.

Settlement Statement

A document required by the Real Estate Settlement Procedures Act (RESPA). It is an itemized statement of services and charges relating to the closing of a property transfer. The buyer has the right to examine the settlement statement 1 day before the closing. This is called the HUD 1 Settlement Statement.

Severalty Ownership

Ownership by one person only; sole ownership.

Shared-Equity Mortgage

A home loan in which an investor is granted a share of the equity, thereby allowing the investor to participate in the proceeds from resale.

Survey

The process by which a parcel of land is measured and its area ascertained.

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T

Tenancy in Common

Ownership by two or more persons who hold an undivided interest without right of survivorship (in the event of the death of one owner, his/her share will pass to the heirs).

Third Party Origination

Aprocess by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

Title

A document that is evidence of ownership.

Title Defect

An outstanding claim or encumbrance on property that affects marketability.

Title Insurance

Protection for lenders and homeowners against financial loss resulting from legal defects in the title.

Treasury Index

Can be used as the basis for adjustable rate mortgages (ARMs) It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities.

Truth-in-Lending

A federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.

Two Step Mortgage

An adjustable-rate mortgage (ARM) that has one interest rate for the first five to seven years of its term and a different interest rate for the remainder of the term.

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U

Underwriting

The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.

Up Front Charges

The fees charged to homeowners by the lender at the time of closing a mortgage loan. This includes points, broker's fees, insurance, and other charges.

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V

Veterans Administration (VA)

A government agency that provides services for eligible veterans of the armed forces. It guarantees mortgage loans made by private lenders to veterans.

Variable Expenses

Costs or payments that may vary from month to month, for example, gasoline or food.

Variance

A special suspension of zoning laws to allow the use of property in a manner not in accord with existing laws.

Vested

A point in time when you may withdraw funds from an investment account, such as a retirement account, without penalty.

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W

Walk Through

The final inspection of a property being sold by the buyer to confirm that any contingencies specified in the purchase agreement such as repairs have been completed, fixture and non-fixture property is in place and confirm the electrical, mechanical, and plumbing systems are in working order.

Warranty Deed

A legal document that includes the guarantee the seller is the true owner of the property, has the right to sell the property and there are no claims against the property.

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X

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Y

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Z

Zoning Restrictions

Local municipal ordinances that classify property according to specific uses such as single family, residential, commercial, or industrial.

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IDX information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.

Listing data is deemed reliable but it not guaranteed accurate by the MLS.

Listing information is provided by the Staten Island Multiple Listing Service, Inc.