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Real Estate

Vocab #2

TermDefinition
Acceleration clause A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons.
Adjustable-rate mortgage (ARM) A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes
Adjustment date The date the interest rate changes on an adjustable-rate mortgage
Amortization The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal.
amortization schedule A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero
annual percentage rate (APR) It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage.
application The form used to apply for a mortgage loan, containing information about a borrower's income, savings, assets, debts, and more.
appraisal A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.
appraised value An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales.
appraiser An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent+
appreciation The increase in the value of a property due to changes in market conditions, inflation, or other causes.
assessed value The valuation placed on property by a public tax assessor for purposes of taxation.
assessment The placing of a value on property for the purpose of taxation.
assessor A public official who establishes the value of a property for taxation purposes.
asset Items of value owned by an individual. Assets that can be quickly converted into cash are considered "liquid assets." These include bank accounts, stocks, bonds, mutual funds, and so on.
assignment When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.
assumable mortgage A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.
assumption The term applied when a buyer assumes the seller's mortgage.
balloon mortgage A mortgage loan that requires the remaining principal balance be paid at a specific point in time.
balloon payment The final lump sum payment that is due at the termination of a balloon mortgage
bankruptcy Bankruptcies are of various types, but the most common for an individual seem to be a "Chapter 7 No Asset" bankruptcy which relieves the borrower of most types of debts
bill of sale A written document that transfers title to personal property.
biweekly mortgage A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen
bond market Usually refers to the daily buying and selling of thirty year treasury bonds. Lenders follow this market intensely because as the yields of bonds go up and down, fixed rate mortgages do approximately the same thing.
bridge loan Not used much anymore, bridge loans are obtained by those who have not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment.
broker Broker has several meanings in different situations. Most Realtors are "agents" who work under a "broker." Some agents are brokers as well, either working form themselves or under another broker.
buydown Usually refers to a fixed rate mortgage where the interest rate is "bought down" for a temporary period.
call option Similar to the acceleration clause.
cap Adjustable Rate Mortgages have fluctuating interest rates, but those fluctuations are usually limited to a certain amount.
cash-out refinance When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of pulling out money for personal use, it is referred to as a "cash out refinance."
certificate of deposit A time deposit held in a bank which pays a certain amount of interest to the depositor.
certificate of deposit index One of the indexes used for determining interest rate changes on some adjustable rate mortgages. It is an average of what banks are paying on certificates of deposit.
Certificate of Eligibility A document issued by the Veterans Administration that certifies a veteran's eligibility for a VA loan.
Certificate of Reasonable Value (CRV) Once the appraisal has been performed on a property being bought with a VA loan, the Veterans Administration issues a CRV
chain of title An analysis of the transfers of title to a piece of property over the years
clear title A title that is free of liens or legal questions as to ownership of the property.
closing This has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office.
closing costs Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan.
closing statement See Settlement Statement.
cloud on title Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by deed, release, or court action.
co-borrower IAn additional individual who is both obligated on the loan and is on title to the property.
collateral In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.
collection When a borrower falls behind, the lender contacts them in an effort to bring the loan current. The loan goes to "collection.
commission The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction. Realtors generally earn the largest commissions, followed by lenders, then the others.
common area assessments They are charges paid to the Homeowners Association by the owners of the individual units in a condominium or planned unit development (PUD) and are generally used to maintain the property and common areas.
common areas Those portions of a building, land, and amenities owned (or managed) used by all of the unit owners, who share in the common expenses of their operation and maintenance.
common law An unwritten body of law based on general custom in England and used to an extent in some states
community property In some states, especially the southwest, property acquired by a married couple during their marriage is considered to be owned jointly, except under special circumstances.
comparable sales Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as "comps."
condominium A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title.
condominium conversion Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.
condominium hotel A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.
construction loan A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
contingency A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection.
contract An oral or written agreement to do or not to do a certain thing.
conventional mortgage conventional mortgage
convertible ARM IAn adjustable-rate mortgage that allows the borrower to change the ARM to a fixed-rate mortgage within a specific time.
cooperative (co-op) A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.
cost of funds index (COFI) One of the indexes that is used to determine interest rate changes for certain adjustable-rate mortgages. It represents the weighted-average cost of savings, borrowings.
credit An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
credit history A record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.
creditor A person to whom money is owed.
credit report .A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.
credit repository An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.
debt An amount owed to another.
Deed The legal document conveying title to a property.
deed-in-lieu "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure.
deed of trust Some states, like California, do not record mortgages. Instead, they record a deed of trust which is essentially the same thing.
default Failure to make the mortgage payment within a specified period of time. For first mortgages or first trust deeds, if a payment has still not been made within 30 days of the due date, the loan is considered to be in default.
delinquency Failure to make mortgage payments when mortgage payments are due. For most mortgages, payments are due on the first day of the month.
deposit A sum of money given in advance of a larger amount being expected in the future. Often called in real estate as an "earnest money deposit."
depreciation A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income
discount points Refer to any "points" paid in addition to the one percent loan origination fee. A "point" is one percent of the loan amount.
down payment The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage
due-on-sale provision A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage.
earnest money deposit A deposit made by the potential home buyer to show that he or she is serious about buying the house.
easement A right of way giving persons other than the owner access to or over a property
effective age An appraiser's estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age.
eminent domain The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.
encroachment An improvement that intrudes illegally on another's property.
encumbrance Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
Equal Credit Opportunity Act (ECOA) A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs
equity A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
escrow An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition.
escrow account Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest.
escrow analysis Once each year your lender will perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures.
escrow disbursements The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
estate The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
eviction The lawful expulsion of an occupant from real property.
examination of title The report on the title of a property from the public records or an abstract of the title.
exclusive listing A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time
executor A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form.
Fair Credit Reporting Act A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.
fair market value The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae (FNMA) The Federal National Mortgage Association, which is a congressionally chartered, shareholder-owned company that is the nation's largest supplier of home mortgage funds.
Fannie Mae's Community Home Buyer's Program An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderateincome family's buying power and to decrease the total amount of cash needed
to purchase a home. An income-based community lending model, under which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase a low- or moderateincome family's buying power and to decrease the total amount of cash needed
Federal Housing Administration (FHA) An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders.
fee simple The greatest possible interest a person can have in real estate.
fee simple estate An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration
FHA mortgage A mortgage that is insured by the Federal Housing Administration (FHA). Along with VA loans, an FHA loan will often be referred to as a government loan.
firm commitment A lender's agreement to make a loan to a specific borrower on a specific property.
first mortgage The mortgage that is in first place among any loans recorded against a property. Usually refers to the date in which loans are recorded, but there are exceptions.
fixed-rate mortgage A mortgage in which the interest rate does not change during the entire term of the loan.
fixture Personal property that becomes real property when attached in a permanent manner to real estate.
flood insurance Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.
foreclosure The legal process by which a borrower in default under a mortgage is deprived of
his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. The legal process by which a borrower in default under a mortgage is deprived of
401(k)/403(b) An employer-sponsored investment plan that allows individuals to set aside taxdeferred income for retirement or emergency purposes.
401(k)/403(b) loan Some administrators of 401(k)/403(b) plans allow for loans against the monies you have accumulated in these plans. Loans against 401K plans are an acceptable source of down payment for most types of loans.
government loan (mortgage) A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.
Created by Congress on September 1, 1968 Government National Mortgage Association (Ginnie Mae) A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD).,
GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans. The difference is that Ginnie Mae provides funds for government loans (FHA and VA)
grantee The person to whom an interest in real property is conveyed.
grantor The person conveying an interest in real property.
hazard insurance Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.
Home Equity Conversion Mortgage (HECM) Reverse Mortgage, instead of making payments to a lender, the lender makes payments to you. It enables older home owners to convert the equity they have in their homes into cash, usually in the form of monthly payments.
home equity line of credit A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount.
home inspection A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.
homeowners' association A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.
homeowner's insurance An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
homeowner's warranty A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period.
HUD median income Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).
HUD-1 settlement statement A document that provides an itemized listing of the funds that were paid at closing. The HUD1 statement is also known as the "closing statement" or "settlement sheet."
joint tenancy A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.
judgment A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.
judicial foreclosure A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. Other states use non-judicial foreclosure.
jumbo loan A loan that exceeds Fannie Mae's and Freddie Mac's loan limits, currently at $227,150. Also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans.
late charge The penalty a borrower must pay when a payment is made a stated number of days. On a first trust deed or mortgage, this is usually fifteen days.
lease A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.
leasehold estate A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.
lease option An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.
legal description A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.
lender A term which can refer to the institution making the loan or to the individual representing the firm. For example, loan officers are often referred to as "lenders."
liabilities A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
liability insurance Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party. It is usually part of a homeowner's insurance policy.
lien A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.
life cap For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate can increase or decrease over the life of the mortgage.
line of credit An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower.
liquid asset A cash asset or an asset that is easily converted into cash.
loan A sum of borrowed money (principal) that is generally repaid with interest.
loan officer Also referred to by a variety of other terms, such as lender, loan representative, loan "rep," account executive, and others.
The loan officer serves several functions and has various responsibilities the soliciting of loans, they are the representative of the lending institution, and they represent the borrower to the lending institution.
loan origination How a lender refers to the process of obtaining new loans.
loan servicing After you obtain a loan, the company you make the payments to is "servicing" your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are
loan-to-value (LTV) The percentage relationship between the amount of the loan and the appraised value or sales price (whichever is lower).
lock-in An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
lock-in period The time period during which the lender has guaranteed an interest rate to a borrower.
margin The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index which moves up and down.
maturity The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.
merged credit report A credit report which reports the raw data pulled from two or more of the major credit repositories. Contrast with a Residential Mortgage Credit Report (RMCR) or a standard factual credit report.
modification Occasionally, a lender will agree to modify the terms of your mortgage without requiring you t refinance. If any changes are made, it is called a modification.
mortgage A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.
mortgage banker A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae.
mortgage broker A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.
mortgagee The lender in a mortgage agreement.
mortgage insurance (MI) Insurance that covers the lender against some of the losses incurred as a result of a default on a home loan. Mortgage insurance is usually required in one form or another on all loans that have a loan-to-value higher than eighty percent. Mortgages above
mortgage insurance premium (MIP) The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
mortgage life A type of term life insurance often bought by borrowers. The amount of coverage decreases as the principal balance declines. Some policies also cover the borrower in the event of disability. In the event that the borrower dies while the policy is in force
disability insurance the insurance will make the mortgage payment for a specified amount of time during the disability.
mortgagor The borrower in a mortgage agreement.
multidwelling units Properties that provide separate housing units for more than one family, although they secure only a single mortgage.
negative amortization Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate. In essen
no cash-out refinance A refinance transaction which is not intended to put cash in the hand of the borrower. Instead, the new balance is calculated to cover the balance due on the current loan and any costs associated with obtaining the new mortgage. Often referred to as a "ra
no-cost loan Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions.
title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associate
note A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
note rate The interest rate stated on a mortgage note.
no-cost loan Almost all lenders offer loans at "no points." You will find the interest rate on a "no points" loan is approximately a quarter percent higher than on a loan where you pay one point.
notice of default A formal written notice to a borrower that a default has occurred and that legal action may be taken
original principal balance The total amount of principal owed on a mortgage before any payments are made.
origination fee On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points." One point equals one percent of the loan amount. On a conventional loan, the loan origination fee ref
owner financing A property purchase transaction in which the property seller provides all or part of the financing.
partial payment A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. Normally, a lender will not accept a partial payment, but in times of hardship you can make this request of the loan servicing collection department.
payment change date The date when a new monthly payment amount takes effect on an adjustablerate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.
periodic payment cap For an adjustable-rate mortgage where the interest rate and the minimum payment amount fluctuate independently of one another, this is a limit on the amount that payments can increase or decrease during any one adjustment period.
periodic rate cap For an adjustable-rate mortgage, a limit on the amount that the interest rate can increase or decrease during any one adjustment period, regardless of how high or low the index might be.
personal property Any property that is not real property.
PITI This stands for principal, interest, taxes and insurance. If you have an "impounded" loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well.
PITI reserves A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay fo
planned unit development (PUD) A type of ownership where individuals actually own the building or unit they live in, but common areas are owned jointly with the other members of the development or association.
Contrast with condominium where an individual actually owns the airspace of his unit, but the buildings and common areas are owned jointly with the others in the development or association.
point A point is 1 percent of the amount of the mortgage.
power of attorney A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
pre-approval A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved.
prepayment Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure.
prepayment penalty A fee that may be charged to a borrower who pays off a loan before it is due.
pre-qualification This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presen
prime rate The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity lines of credit.
principal The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
principal balance The outstanding balance of principal on a mortgage.
principal, interest, taxes, and insurance (PITI) The four components of a monthly mortgage payment on impounded loans.
Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage.
Interest is the fee charged for borrowing money.
Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
private mortgage insurance (MI) Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
promissory note A written promise to repay a specified amount over a specified period of time.
public auction A meeting in an announced public location to sell property to repay a mortgage that is in default.
Planned Unit Development (PUD) A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.
purchase agreement A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
purchase money transaction The acquisition of property through the payment of money or its equivalent.
qualifying ratios Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The "top" or "front" ratio is a calculation of the borrower's monthly housing costs (principle, taxes, insurance, mortgage insurance, homeowner'
quitclaim deed A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
rate lock A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.
real estate agent A person licensed to negotiate and transact the sale of real estate.
Real Estate Settlement Procedures Act (RESPA) A consumer protection law that requires lenders to give borrowers advance notice of closing costs.
real property Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.
RealtorĀ® A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
recorder The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."
recording The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.
refinance transaction The process of paying off one loan with the proceeds from a new loan using the same property as security.
remaining balance The amount of principal that has not yet been repaid. See principal balance.
remaining term The original amortization term minus the number of payments that have been applied.
rent loss insurance Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.
repayment plan An arrangement made to repay delinquent installments or advances.
replacement reserve fund A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.
revolving debt A credit arrangement, such as a credit card, that allows a customer to borrow against a preapproved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.
right of first refusal A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.
right of ingress or egress The right to enter or leave designated premises.
right of survivorship In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.
sale-leaseback A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
second mortgage A mortgage that has a lien position subordinate to the first mortgage.
secondary market The buying and selling of existing mortgages, usually as part of a "pool" of mortgages.
secured loan A loan that is backed by collateral.
security The property that will be pledged as collateral for a loan.
seller carry-back An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.
servicer An organization that collects principal and interest payments from borrowers and manages borrowers' escrow accounts. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.
servicing The collection of mortgage payments from borrowers and related responsibilities of a loan servicer.
settlement statement See HUD1 Settlement Statement
subdivision A housing development that is created by dividing a tract of land into individual lots for sale or lease.
subordinate financing Any mortgage or other lien that has a priority that is lower than that of the first mortgage.
survey A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
sweat equity Contribution to the construction or rehabilitation of a property in the form of labor or services rather than cash.
tenancy in common As opposed to joint tenancy, when there are two or more individuals on title to a piece of property, this type of ownership does not pass ownership to the others in the event of death.
third-party origination A process 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 legal document evidencing a person's right to or ownership of a property.
title company A company that specializes in examining and insuring titles to real estate.
title insurance Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
title search A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
transfer of ownership Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchas
transfer tax State or local tax payable when title passes from one owner to another.
Treasury index An index that is used to determine interest rate changes for certain adjustablerate mortgage (ARM) plans. It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's dail
Truth-in-Lending A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.
two-step mortgage An adjustable-rate mortgage (ARM) 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.
two- to four-family property A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.
trustee A fiduciary who holds or controls property for the benefit of another.
VA mortgage A mortgage that is guaranteed by the Department of Veterans Affairs (VA).
vested Having the right to use a portion of a fund such as an individual retirement fund. For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund. However, taxes may be due on any funds t
Veterans Administration (VA An agency of the federal government that guarantees residential mortgages made to eligible veterans of the military services. The guarantee protects the lender against loss and thus encourages lenders to make mortgages to veterans.