Term
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Definition
| To choose not to exercise or sell an option before it expires. To voluntarily relinquish rights of property ownership. |
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Term
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Definition
| A historical summary of all recorded transactions that affect the title of the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title. |
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Term
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Definition
| A provision in a loan agreement that allows the lender to demand full and immediate (usually within 30 days) repayment of the entire loan balance if the contract is breached or conditions for repayment occur (aka Due on Sale Clause) |
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Term
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Definition
| A clause added to the end of the contract, which supersedes, augments, or supplements what is written in the original contract |
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Term
| Adjustable Rate Mortgage (ARM) |
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Definition
| AKA a variable rate mortgage. A mortgage with an interest rate that may change, usually in response to changes in the Treasury bill rate or the prime rate. |
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Term
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Definition
| Generally, someone who acts on behalf of another for a fee. In real estate, the tern refers to a person with a real estate license who works under the authority of a real estate broker. |
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Term
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Definition
| A written signed agreement between the seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreemnet. This agreement may also be known as a contract for purchase, purchase agreement, offer and acceptance, earnest money contract or sales agreement. |
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Term
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Definition
| A gradual paying off of a debt by regular periodic installments which pay principal and interest over a specified period of time. |
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Term
| Annual Percentage Rate (APR) |
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Definition
| The effective rate of interest for a loan per year. This rate is typically higher that the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. Caution: the APR is sometimes computed differently by different lenders and can be misleading. |
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Term
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Definition
| An opinion or estimate of the value of a property at a given date, usually based upon recent sales patterns for similar properties (residential properties) or on income production (commercial properties). |
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Term
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Definition
| Increase in value of property over time. |
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Term
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Definition
| Typically, a transaction between two related or affiliated parties that is conducted as if they were unrelated, so that there is no question of a conflict of interest. |
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Term
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Definition
| The amount of debt that is overdue or unpaid. |
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Term
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Definition
| A local (city or county) tax levied against a property for a specific purpose such as street lights. |
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Term
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Definition
| Anything of value that can be converted into cash or used to pay a debt. |
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Term
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Definition
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Term
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Definition
| Individual to whom a title, claim, property, interest, or right has been transferred. |
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Term
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Definition
| The one who transfers a title, claim, property, interest, or right to another person. |
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Term
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Definition
| A sales contract with an assignment clause allows the buyer to transfer the interest in the property (e.g. the right to buy it at the given rates and terms) to another party. |
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Term
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Definition
| A mortgage loan that allows a new home buyer to take over the obligation of making loan payments, typically with no change in the terms of the loan. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments. |
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Term
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Definition
| The process of taking over the obligation to make loan payments on an assumable mortgage. |
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Term
| Balloon (payment) Mortgage |
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Definition
| Usually a short-term fixed-rate loan which involves small payments (such as if it were amortized for a traditional 30-year period) for a certain period of time, followed by one large payment for the remaining amount of the principal at a time specified in the contract. Example: A baloon mortgage for $25K has interest only payments for 5 years at 12% ($250 per month), with the full principal of $25K due and payable after 5 years. |
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Term
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Definition
| The legal process of declaring one's financial inability to pay one's debts when due. The debtor surrenders his assets to the bankruptcy court in order to help satisfy existing debts. |
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Term
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Definition
| The person who receives or is eligible to receive the benefits resulting from certain acts. |
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Term
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Definition
| An offer of a specific amount of money in exchange for products and services, as in an auction. |
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Term
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Definition
| A mortgage which requires 1/2 the normal monthly payment every two weeks. Over the course of the year, 26 half-payments are made which is equivalent to 13 full mortgage payments. As a result of this extra payment, the loan amortizes much faster than a loan with normal monthly payments. |
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Term
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Definition
| A mortgage covering more than one piece of property. Example: A developer subdivides a tract of land into lots and obtains a blanket mortgage on the whole tract. |
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Term
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Definition
| The value of an asset as shown in the financial records of an individual or corporation. Book Value may differ substantially from Market Price. |
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Term
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Definition
| One who applies for a loan secured by real estate and is responsible for repaying the loan (mortgage) |
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Term
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Definition
| An individual or firm that acts as an intermediary between buyer and seller, usually charging a commission. |
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Term
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Definition
| An agreement specifying conditions under which a seller agrees to repurchase a propety from whom they sold it to, usually for a stated price and within a stated time limit. |
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Term
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Definition
| Obtaining a lower interest rate (buying down the rate) by paying additional points (fees) to the lender. The lower rate may apply for the full duration of the loan or for just the first few years. A buy down may be used to qualify a borrower who would otherwise not qualify. This is because a buy down results in lower payments that are easier to qualify for. |
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Term
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Definition
| An agent hired by a buyer to locate a property for purchase. The broker represents the buyer and negotiates with the seller's broker for the best possible deal for the buyer. |
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Term
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Definition
| Market conditions that favor buyers i.e. there are more sellers than buyers in the market. As a result, buyers have ample choice of properties and may negotiate lower prices. Buyers markets may be caused by an economic slump or overbuilding |
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Term
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Definition
| Money used to generate income or pay for operating expenses. |
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Term
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Definition
| Profit earned from the sale of real estate or the amount by which an asset's selling price exceeds its initial purchase price. |
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Term
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Definition
| The rate used to determine the present value of property with future earnings. |
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Term
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Definition
| Consumer safeguards, which limit the amount, the interest rate on an ARM and may change per year and/or over the life of the loan. |
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Term
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Definition
| Consumer safeguards, which limit the amount of monthly payments on an ARM and may change. |
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Term
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Definition
| The amount of cash derived over a certain period of time from an income-producing property. Cash receipts minus cash payments over a given period of time. The cash flow should be large enough to pay the expenses of an income-producing property (mortgage payment, maintenance, utilities, etc.) |
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Term
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Definition
| A legal term meaning "let the buyer beware". The buyer must examine the property and buy at his/her own risk. Example: A property may be offered in an "as is" condition with no expressed or implied guarantee of quality and condition. |
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Term
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Definition
| Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan. |
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Term
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Definition
| An opinion rendered by an attorney as to the status of title to a property, according to the public records. This certificate does not hold the same level of protection as title insurance. |
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Term
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Definition
| Chronological order of conveyance of a parcel of land from the original owner to the present owner. An abstractor can research title to the property going back to the date that the property was granted to the United States. |
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Term
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Definition
| Personal, tangible, moveable property. The same as personal property. Not real estate. |
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Term
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Definition
| A marketable title, free of liens and legal questions as to the ownership of the property. Most lenders require a clear title prior to closing. |
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Term
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Definition
| 1. The act of transferring ownership of a property from seller to buyer in accordance with a sales contract. 2. The time when a closing takes place. 3. The process of signing the documents to transfer property. |
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Term
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Definition
| Expenses incurred by the buyer and seller in a real estate or mortgage transaction over and above the price of the property. There are two types of costs: recurring and non-recurring. Non-recurring costs are one-time transactional costs, which include: discount and origination points, lender fees (underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc.), title insurance fees, escrow, attorney, or closing agent fees, recording fees, inspection and appraisal fees, and real estate brokerage commissions. Recurring fees are costs associated with owning the property and they recur month after month. these costs may include hazard insurance, interest, property taxes, mortgage insurance (PMI), and assocation fees. A pro-rated amount of these fees may have to be paid at closing, including pre-paid interest (interest charges from the date of closing to the end of the month), property taxes if due, hazard insurance, fire insurance or homeowner's insurance (has to be paid for one year). Mortgage insurance (PMI) - may be required if the loan amount is more than 80% of the value of the property. In the past, a whole year of PMI had to be paid up front; however in recent years many PMI companies only require 1-2 months up front. Mortgage insurance premiums are normally paid every month with the loan payment. |
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Term
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Definition
| The settlement statement (usually called a HUD-1) that discloses all the financial details of the transaction between the buyer and seller, including all costs. |
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Term
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Definition
| An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title. Compare to clear title. |
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Term
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Definition
| Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default. |
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Term
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Definition
| The fee charged by a broker or agent when selling real estate. |
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Term
| Comparative Market Analysis (CMA) |
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Definition
| A comparison of sales prices of similar properties in a given area for the purpose of determining the FMV of a property. AKA "Comps". |
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Term
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Definition
| A written document provided by a lender agreeing to make a loan provided certain conditions are met by the borrower prior to closing. |
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Term
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Definition
| Anything of value given to induce another to enter into a contract. An earnest money deposit on a sales contract is consideration. |
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Term
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Definition
| A short term loan to pay for the construction of buildings or homes. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed, a "take-out" or permanent loan is used to pay off the construction loan. |
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Term
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Definition
| An agreement used in straight option transactions that stipulates the investor who manages the transaction receives a specified portion of the proceeds upon sale of the property. Specific verbiage and terms in such an agreement may vary from state to state so an attorney should review this before use. |
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Term
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Definition
| Conditions, which must be satisfied before the buyer , can close the purchase of the property. Contingencies are generally outlined in the purchase contract between the buyer and the seller. Example: The buyer has 14 days to remove the property contingency under the sales contract. In this case the buyer has 14 days to inspect the property and request the seller to perform repairs. If the buyer is not satisfied with the condition of the property or if the buyer and the seller cannot agree on repairs, the buyer may back out of the contract with no penalty. After 14 days the buyer no longer has the right to back out, without penalty, as a result of a problem with the condition of the property. |
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Term
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Definition
| A binding agreement between competent parties to do or not to do certain things for consideration. |
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Term
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Definition
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Term
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Definition
| A real estate installment selling arrangement where the buyer may occupy the property but the seller retains the title until the agreed upon sales price has been paid. AKA an installment land contract. |
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Term
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Definition
| An agreement of sale detailing the transaction and submitted by the buyer to the seller. |
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Term
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Definition
| Any mortgage loan other than a VA or FHA loan. A conventional loan may be conforming or non-conforming. |
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Term
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Definition
| Some variable rate loans come with options to convert then to a fixed rate loan based on a pre-determined formula, during a given time period. |
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Term
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Definition
| The transfer of real property from one party to another. |
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Term
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Definition
| A multi-unit housing complex where the residents own stock in the building instead of individual units. |
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Term
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Definition
| An association of one or more shareholders having its own legal entity separate from the individual shareholders. |
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Term
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Definition
| A written agreement or restriction on the use of land or promising certain acts. |
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Term
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Definition
| A report detailing a borrower's credit history including payment history on revolving accounts (e.g. credit cards), installment accounts (e.g. car loan), bankruptcies and late payments, and recent inquiries. It can be obtained by prospective lenders with the borrower's permission, to determine his or her creditworthiness. A credit report also includes information found from public records including tax liens and judgments. |
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Term
| Debt-to-Income Ratio (DTI) |
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Definition
| The ratio, expressed as a %, which results when a borrower's monthly payment obligation on LT debts is divided by his or her net effective income (FHA or VA loans) or gross monthly income (conventional loans). |
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Term
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Definition
| A written document by which title to a real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the buyer at closing. |
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Term
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Definition
| Used in many states instead of a mortgage to secure the payment of a note. In a deed of trust there are three parties - the borrower, the trustee, and the lender, (or the beneficiary). The deed to a property is held by a trustee instead of the borrower. |
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Term
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Definition
| A clause in a deed that limits the use of the land. |
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Term
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Definition
| Failure to meet legal obligations in a contract - such as the failure to make the monthly mortgage payment. |
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Term
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Definition
| Any recorded instrument that would prevent a grantor/seller from giving a clear title. |
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Term
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Definition
| Failure to make payments on time. This can lead to foreclosure. |
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Term
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Definition
| Decline in the value of a house due to wear and ear, obsolescence, adverse changes in the neighborhood, or any other reason. |
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Term
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Definition
| Statement of fact(s) concerning the condition of the property for sale and the surrounding area. in most states, the buyer is protected by disclosure laws requiring sellers to divulge certain information about the property. |
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Term
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Definition
| Fees paid to a lender to reduce the interest rate. |
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Term
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Definition
| Stamps affixed to a deed showing the amount of transfer tax paid. |
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Term
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Definition
| The part of the purchase price paid in cash up front, reducing the amount of the loan or mortgage. |
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Term
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Definition
| A clause i the deed of trust or mortgage that states that the entire loan is due upon the sale or transfer of the property. |
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Term
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Definition
| A deposit made by a buyer of real estate towards the down payment to evidence good faith. This money is typically held by the real estate broker or the escrow company. |
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Term
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Definition
| The right to use the land of another for a specific purpose. Easements may be temporary or permanent. |
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Term
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Definition
| The right of the government or a public utility to acquire private property for public use by condemnation, with proper compensation to the owner. |
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Term
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Definition
| A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. |
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Term
| Equal Credit Opportunity Act (ECOA) |
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Definition
| 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 or income from public assistance programs. |
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Term
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Definition
| (Equity=Property Value - Loans/Liens Against the property) - The property value minus what you still owe (the mortgage balance). |
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Term
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Definition
| The reversion of property to the state in the event that the owner dies without leaving a will and has no legal heirs. |
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Term
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Definition
| An account held by the lender into which a homeowner pays money for taxes and insurance. |
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Term
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Definition
| The lawful removal of an occupant and her/his belongings from a property. |
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Term
| Fannie Mae/Federal National Mortgage Association (FNMA) |
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Definition
| A federal organization that purchases loans from lenders and then sells then as FNMA mortgage backed securities. |
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Term
| Farmer's Home Administration (FmHA) |
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Definition
| An agency, within the U.S. Department of Agriculture, that makes and insures loans for rural housing farms. |
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Term
| Federal Deposit Insurance (FDIC) |
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Definition
| A government agency that supervises and insures accounts held by lending institutions. |
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Term
| Fee Simple (Fee Absolute or Fee Simple Absolute) |
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Definition
| Absolute ownership of real property; owner is entitled to the entire property with unrestricted power of disposition during the owner's life and upon his death the property descends to the owner's designated heirs. |
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Term
| Federal Housing Administration (FHA) |
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Definition
| A government agency within HUD that administers and insures mortgage loans for private lending agencies. |
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Term
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Definition
| This program provides mortgage insurance to protect lenders against the risk of default on loans to qualified buyers. A loan insured by the Federal Housing Administration is open to all qualified home purchasers |
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Term
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Definition
| FICO stands for Fair Isaac & Company. Credit scores are reported by three major credit bureaus, Equifax, Experian and Trans-Union. Scores are not necessarily the same on each bureau's report because each bureau may place a slightly different value on different items. |
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Term
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Definition
| A person in a position of trust or responsibility with the legal authority and duty to make decisions regarding financial matters on behalf of the other party. |
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Term
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Definition
| Interest charged by a lender. |
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Term
| Fixed Rate Mortgage (FRM) |
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Definition
| The mortgage interest rate will remain the same throughout the term of the mortgage for the original borrower. |
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Term
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Definition
| A lenders postponement of foreclosure in order to give the borrower time and an opportunity to make up for overdue payments. Also, an agreement for a buyer to temporarily make higher payments in order to satisfy overdue payments. |
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Term
| Foreclosure (Repossession) |
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Definition
| A legal sale of property forced by the lender when the borrower defaults on the mortgage loan. |
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Term
| Freddie Mac/Federal Home Loan Mortgage Corporation (FHLMC) |
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Definition
| Purchases loans from the Federal Reserve and the Federal Home Loan Bank Systems then sells them as FHLMC mortgage backed securities. |
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Term
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Definition
| A property that has no liens. |
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Term
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Definition
| A property for sale that is not listed with a real estate broker and therefore will not be listed on the Multiple Listing Service (MLS). |
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Term
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Definition
| The time period between the due date of a mortgage payment and the due date when late charges are assessed. For example, payments due on the first of the month may have a 14 day grace period, meaning that fees will be charged if payment is not received by the 15th. |
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Term
| Graduated Payment Mortgage (GPM) |
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Definition
| A mortgage that has lower payments initially (with potential negative amortization), which payments then increase each year until the loan is fully amotized. This program is intended for people with low current income but greater anticipated future income. |
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Term
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Definition
| The party in the deed who is the buyer or recipient. |
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Term
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Definition
| The party in the deed who is the seller or giver. |
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Term
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Definition
| Lenders who use private money to make loans with Borrowers who have trouble getting loans via conventional methods. There is usually a very high interest rate associated with hard money lenders. |
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Term
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Definition
| A loan used to finance home improvements. It may or may not require a mortgage or collateral. |
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Term
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Definition
| An association of homeowners that oversees the common areas of the development and its rules and regulations. |
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Term
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Definition
| Private insurance insuring a buyer against defects (usually in plumbing, electrical, appliances and heating an cooling system). Typically purchased at the time of closing, a warranty can cover both new and used homes. |
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Term
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Definition
| Status provided to a homeowner's principal residence in some states that protects the home against certain judgments up to specified amounts. |
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Term
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Definition
| Available in some states - this causes the assessed value of a principal residence to be reduced by the amount of the exemption for the purposes of calculating property tax. |
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Term
| Housing and Urban Development (HUD) |
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Definition
| A U.S. government agency established to implement certain federal housing and community development programs. |
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Term
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Definition
| Additions to raw land such as buildings, streets, etc. that add value to the land |
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Term
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Definition
| A method used by an appraiser to estimate the value of rental property based on the income it generates over the life of the structure, discounted to determine its present value. |
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Term
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Definition
| Real Estate that generates rental income. |
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Term
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Definition
| The right to go in and out over a piece of property but not the right to park on it. See also Easements. |
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Term
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Definition
| An examination of a property or building to determine condition or quality for a particular purpose such as an assessment of structural or termite damage. An inspection may also be used to confirm that the property meets the standards of the contract. |
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Term
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Definition
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Term
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Definition
| A limit on the amount that the interest rate for an adjustable rate mortgage can change, regardless of how much the index changes. Most ARMs have a cap on both the amount they can increase and decrease at any periodic adjustment interval, and a life-long cap that limits the amount the interest rate can vary over the life of the loan. The two interest caps are sometimes called a "periodic cap" and a "life cap". |
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Term
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Definition
| The percentage rate on a principle amount charged by a lender for the use of a sum of money. |
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Term
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Definition
| A money source for a lender. Also, one who makes investments. |
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