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".
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.
