GLOSSARYOFREAL ESTATE TERMS
Abstract of Title: A summary of all conveyances, such as deeds or wills and legal proceedings, giving the names of the parties, the description of the land and agreements, arranged to show the continuity of ownership.
Abutment: Touching or joining.
Access: The right to enter or leave a track of land from a public way.
Adjustment Rate Mortgage: A loan that allows the lender to adjust the borrower’s interest rate and payments at prescribed times and sometimes with prescribed limits.
Agent: A person acting on behalf of another, called the principal.
Agreement of Sale: Known by various names, such as "contract of purchase", "purchase agreement". A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.
Amortization: The act of process of extinguishing debt with equal payments at regular intervals over a specified period of time.
Amortized Loan: A loan which is paid off in equal installments during its term.
Appraisal: An estimate of real estate value, usually issued to the standards of FHA, VA, FNMA. Recent comparable sales in the neighborhood are the most important factors in determining value.
Appreciation: An increase in the value of real estate, due to economic or related causes, which may be either temporary or permanent.
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" transfer’s real property.
Closing: Point of real estate transaction when the seller transfers title to the buyer in exchange for the purchase price.
Closing Costs: Expenses incurred in the closing of real estate or mortgage transactions. Purchasers’ expenses normally include: cost of title examination, premiums for title policies, survey, attorney’s fees, lender’s service fees and recording charges.
Commission: Payment of money or other valuable consideration to a real estate broker for service performed.
Condominium: A form of property ownership providing for individual ownership of an apartment or other space, and undivided interest in land and common areas of the structure.
Conventional Mortgage: A mortgage securing a loan made by investors without government underwriting (e.g. not FHA-insured or VA-guaranteed).
Convey: To deed or transfer a title of property from one person to another.
Counteroffer: A new offer made as the result of another offer, which cancels the original offer.
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 estate 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).
Discount Points: Additional charges made by the lender at the time a loan is made. These additional interest charges are paid at the time a loan is closed to increase the rate of return to the lender so as to approximate the market level. One point=one percent.
Earnest Money Deposit: Down payment of part of the purchase price to bind a contract for property.
Easement: The right to use or enjoy certain privileges that appertain to the land of another by reason of an agreement of record with the owner of adjacent property (example: right of way).
Equity: The difference between the market value of property and the homeowner’s indebtedness.
Escrow: A deed or other instrument placed in the hands of a disinterested party for delivery upon performance of certain conditions or the happening of certain contingencies.
Escrow Payment: That portion of the monthly payment held in trust by the lender to pay taxes, hazard insurance, mortgage insurance and other items as they become due.
Fannie Mae: Nickname for Federal National Mortgage Association (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.
Fee Appraisal: The process through which estimates of property value are obtained for a fee; the estimate of property taxes.
FHA Loan: A loan, which has been insured by the federal government, guaranteeing its payment in case of default by the borrower.
Fixed Rate Mortgage: A loan that fixes the interest rate at a prescribed rate for the duration of the loan.
Fixture: What was formally personal property which is now permanently attached to real property and goes with the property when it is sold.
FMHA Loan: Similar to a FHA loan, usually used for residential properties in rural areas.
Freddie Mac: Nickname for the Federal Home Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages.
Joint Tenancy: A tenancy shared equally by two or more parties with the right of survivorship.
Lien: A charge against property by which the property is made security for the payment of a debt.
Listing Contract: Between a home owner (as principal) and licensed real estate broker (as agent) by whom the broker is employed to sell the real estate within a given time for which service the owner agrees to pay a commission. Also, "listing agreement".
Loan to Value Ratio: The ratio of the mortgage loan principle (amount borrowed) to the property’s appraised value (selling price). On a $100,000 home, with a mortgage loan principle of $80,000, the loan ratio is 80%.
Market Value: The highest price which a buyer, ready, willing and able but not compelled to buy would pay. Basis for "listing price" or "asking price".
Marketable Title: Clear title with no undisclosed encumbrances, has no serious defects and will not expose the buyer to litigation.
Mortgage: A lien or claim against real property given by the buyer to the lender as security for money borrowed.
Mortgage note: A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of indebtedness, and states the manner in which it shall be paid. Also, "deed of trust note".
Multiple Listing Service: A marketing tool used by members of the service to expose properties to a wider market base.
Origination Fee: A fee or charge for work involved in the evaluation, preparation, and submission of a proposed mortgage loan.
Personal Property: Any property which is not real, e.g. money, cars, etc.
PITI: Principle, interest, taxes and insurance. Most residential mortgage payments include the above and are therefore referred to as PITI.
Point: One percent of loan amount.
Prepayment Penalty: A fee paid to the mortgagee for paying the mortgage before it becomes due.
Private Mortgage Insurance (PMI): Insurance written by a private company protecting the mortgage lender against loss occasioned by mortgage default.
Promissory Note: One lender agrees to make a loan; the borrower signs a note promising to repay the loan under designated terms
Prorate: To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, a prorate of real estate taxes, fire insurance or condominium fee.
Purchase Agreement: An agreement between a buyer and a seller for the purchase of real estate.
Realty: Real estate, land and whatever naturally or artificially is a part of it.
Special Assessment: A charge laid against real estate by public authority to defray the cost of making public improvements from which the real estate benefits.
Straight Loan: A loan with periodic payments of interest only; the principle sum due in one lump sum upon maturity.
Subdivision: Area of land that has been divided into smaller plats, suitable for building.
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 tenancy shared by two or more equal parties, without right of survivorship, interests need not be equal.
Term of Mortgage: The time period in which a mortgage must be paid.
Title: Often used interchangeably with the word ownership. It indicates the accumulation of all rights in property; the owners and other.
Title Insurance: An insurance policy, which protects the insured (purchaser or lender) against loss, arising from 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.
Trust Account: Bank account set up by broker to deposit funds entrusted to him by his principals.
VA Loan: A loan, guaranteed by the Veterans Administrations, insuring payment in case of default by the borrower. Available to qualified veterans.
Warranty Deed: Conveyance of title that contains certain assurances and guarantees by the grantor that the deed conveys a good and unencumbered title.
Zoning: Government regulation of land use; of such matters as height, bulk and use of buildings or use of land intended to accomplish desirable ends.