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A
A-frame design:
An interior style that features a steeply peaked roofline and a ceiling
that is open to the top rafters.
Abstract of judgment,law: The summary of a court judgment that creates a lien against a property
when filed with the county recorder.
Accelerated cost recovery system:
A tax calculation that provides greater depreciation in the early years
of ownership of real estate or personal property.
Accelerated depreciation:
A bookkeeping method that depreciates property faster in the early years
of ownership.
Accelerated depreciation:
A bookkeeping method that depreciates property faster in the early years
of ownership.
Acceptance:
The seller's written approval of a buyer's offer.
Access:
Any means by which a person can enter property.
Accessibility:
The degree to which a building or site allows access to people with disabilities.
Accretion:
The gradual addition to the shore or bank of a waterway by deposits of
sand or silt.
Acknowledgment:
A written declaration affirming that a person acted voluntarily.
Acre:
A measurement of land equal to 43,560 square feet.
Acre foot:
The volume of material needed to cover an acre of land one foot deep.
Active solar system:
A system that utilizes electric pumps or fans to transfer solar energy
for storage or direct use.
Actual age:
The number of years a structure has been standing.
Add-on interest:
The interest a borrower pays on the principal for the duration of the
loan.
Addendum:
An addition or change to a contract.
Additional principal payment:
Extra money included in the monthly payment to help reduce the principal
and shorten the term of the loan.
Adjustable-rate mortgage (ARM):
A loan with an interest rate that is periodically adjusted to reflect
changes in a specified financial index.
Adjusted cost basis:
The cost of any improvements the seller makes to the property. Deducting
the cost from the original sales price provides the profit or loss of
a home when it is sold.
Adjustment period:
The amount of time between interest rate adjustments in an adjustable-rate
mortgage.
Administrator:
A person given authority to manage and distribute the estate of someone
who died without leaving a will.
Administrator's deed:
A legal document that an administrator of an estate uses to transfer
property.
ADR:
Average daily room rate, usually calculated on a yearly basis
Adverse possession:
The acquisition of title to property through possession without the owner's
consent for a certain period of time.
Adverse use:
The access and use of property without the owner's consent.
Aeolian soil:
Soil that is composed of materials deposited by the wind.
Affiant:
A person who makes a sworn statement.
Affirmation:
A substitution for an oath granted to people based on religious reasons.
Agency:
The relationship of trust that exists between sellers and buyers and
their agents. The agency is formed through a written contract.
Agency closing:
The process by which a lender uses a title company or other firm as an
agent to complete a loan.
Agent:
A person licensed by the state to conduct real estate transactions.
Agreed boundary:
A compromise boundary to which property owners agree in order to resolve
a dispute.
Agreement of sale:
A document the buyer initiates and the seller approves that details the
price and terms of the transaction.
Alcove:
A recessed section of a room, such as a breakfast nook.
Alienation clause:
A provision that requires the borrower to pay the balance of the loan
in a lump sum after the property is sold or transferred.
Alkali:
Mineral salt found in soil.
Alkaline soil:
Soil that contains a higher concentration of mineral salt than natural
acid.
Alley:
A lane behind a row of buildings or between two rows of buildings.
Allowances:
Budgets offered by builders of new homes for the purchase of carpeting
and fixtures.
Alternative mortgage:
Any home loan that does not conform to a standard fixed-rate mortgage.
Aluminum siding:
A metal covering that provides an alternative to paint for owners of
wood homes.
Aluminum-clad windows:
Wooden windows with aluminum covering the exterior.
Amenities:
Parks, swimming pools, health-club facilities, party rooms, bike paths,
community centers and other enticements offered by builders of planned
developments.
American Society of Home Inspectors:
The American Society of Home Inspectors is a professional association
of independent home inspectors. Phone: (800) 743-2744.
Americans with Disabilities Act:
A law passed in 1990 that outlaws discrimination against a person with
a disability in housing, public accommodations, employment, government
services, transportation and telecommunications.
Amortization:
The process of paying the principal and interest on a loan through regularly
scheduled installments.
Amortization tables:
Mathematical tables that lenders use to calculate a borrower's monthly
payment.
Amperage:
The strength of an electrical current.
Anchor bolt:
A large steel bolt anchored in concrete and attached to a building to
prevent the structure from moving.
Annual:
Any kind of plant that must be planted every year.
Annual mortgagor statement:
A yearly statement to borrowers that details the remaining principal
and amounts paid for taxes and interest.
Annual Percentage Rate (APR):
The cost of the loan expressed as a yearly rate on the balance of the
loan.
Annuity:
The payment of a fixed sum to an investor at regular intervals.
Anticipatory breach:
A communication that informs a party that the obligations of the original
contract will not be fulfilled.
Application:
A document that details a potential borrower's income, debt and other
obligations to determine credit worthiness.
Application fee:
The fee that a lender charges to process a loan application.
Appraisal:
An opinion of the value of a property at a given point in time.
Appraisal fee:
The fee that an appraiser charges to estimate the market value of the
property.
Appraisal report:
A detailed written report on the value of a property based on recent
sales of comparable sites in the area.
Appraised value:
An opinion of the current market value of a property.
Appreciation:
An increase in the value of a home or other property..
Arbitration:
A method of resolving a dispute in which a third party renders a decision.
Arbor:
An area shaded by trees, shrubs or vines on a latticework structure.
Arch:
A curved structure that supports weight over an area, such as a doorway.
Architect:
A licensed professional who designs homes, buildings and other structures.
Architectural fees:
The fee an architect charges for services. In general, architects charge
for their services by the hour, by the square foot, or by a percentage
of the project budget.
Arpent:
A French measurement of land equal to .84625 acres.
As-is condition:
The purchase or sale of a property in its existing condition.
Asbestos:
A fire-resistant mineral used for insulation and home products that has
been found to pose a health hazard.
Asking price:
A seller's initial price for a property.
Assessed value:
A tax assessor's determination of the value of a home in order to calculate
a tax base.
Assessment:
The estimated value of a piece of real estate or a levy placed on property
in addition to taxes.
Assessment rolls:
A list of taxable property compiled by the assessor.
Assets:
Items of value which include cash, real estate, securities and investments.
Assignor:
A person who transfers rights and interests of a property.
Assumable mortgage:
A mortgage that can be transferred to another borrower.
Assumption clause:
A provision that allows a buyer to take responsibility for the mortgage
from a seller.
Assumption fee:
A fee the lender charges to process new records for a buyer who assumes
an existing loan.
Average price:
The price of a home determined by totaling the sales prices of all houses
sold in an area and dividing that number by the number of homes.
Avigation easement:
An easement over private property near an airport that limits the height
of structures and trees.
Awning windows:
Single-sash windows that tilt outward and up. |
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B
Back title letter:
A letter that a title insurance company gives to an attorney
who then examines the title for insurance purposes.
Back-to-back escrow:
Arrangements that an owner makes to oversee the sale of one property
and the purchase of another at the same time.
Backup offer:
A secondary bid for a property that the seller will accept if the first
offer fails.
Balance sheet:
A statement that shows the assets, liabilities and net worth
of an individual.
Balloon loan:
A mortgage in which monthly installments are not large enough to repay
the loan by the end of the term. As a result, the final payment due
is the lump sum of the remaining principal.
Balloon payment:
The final lump sum payment due at the end of a balloon mortgage.
Bankruptcy:
A proceeding in which an insolvent debtor can obtain relief
from payment of certain obligations. Bankruptcies remain on a credit
record for seven years and can severely limit a person's ability to
borrow.
Bargain sale:
The sale of a piece of property for less than market value.
Basis Point:
A basis point is one one-hundredth of one percentage point. For example,
the difference between a loan at 8.25 percent and a mortgage at 8.37
percent is 12 basis points.
Bed Tax:
A fee collected by the city, also called transit tax. Exceptions to the
payment of this tax are persons who stay at the motel for more than
30 days, state employees and some city and county employees. This is
paid quarterly and is a good check on the reported gross income. Keep
in mind the exceptions. The bed tax totals will not always match the
reported gross income, however, should be close. The owners must approve
your looking at the bed tax roll before the clerk will show them to
you
Before-tax income:
Total income before taxes are deducted.
Beneficiary:
The lender who makes a loan, also called a mortgagee. The person borrowing
money is the mortgagor.
Bequest:
Personal property given to a person through a will.
Betterment:
An improvement that increases a property's value as opposed to repairs
that maintain the value.
Bidding war:
Offers from multiple buyers for a piece of property. Agents
also sometimes compete to list a house for sale.
Bilateral contract:
A contract in which the parties involved give mutual promises. Also called
"reciprocal" contracts.
Bill of sale:
A document that transfers ownership of personal property.
Binder:
A report issued by a title insurance company that details the condition
of a home's title. and provides guidelines for a title insurance policy.
Biweekly mortgage:
A mortgage that requires payments every two weeks and helps repay the
loan over a shorter term.
Blanket insurance policy:
A policy that covers more than one person or piece of property.
Blanket mortgage:
A mortgage that covers more than one property owned by the same borrower.
Blue sky laws:
Regulations on the sale of securities to prevent consumers from investing
in fraudulent or high-risk companies without being informed of the risks.
Blueprint:
A print of an architectural plan or technical drawing
Board of Equalization: A state board charged with ensuring
that local property taxes are assessed in a uniform manner.
Bona fide: A legal term that refers to actions or persons
that are honest and in good faith.
Bond: An agreement that insures one party against loss
by acts or defaults of another party.
Book value: The value of a property as a capital asset
based on its cost plus any additions, minus depreciation.
Boundary: The dividing line between two adjacent properties.
Breach of contract: The failure to perform provisions
of a contractwithout a legal excuse.
Breach of covenant: The failure to obey a legal agreement.
Breach of warranty: A seller's inability to pass clear
title to a buyer.
Break-even point: The point in which the owner's rental
income matches expenses and debt.
Bridge loan:
A short-term loan for borrowers who need more time to find permanent
financing.
Broker:
A person licensed by the state to deal in real estate.
Brokerage:
The act of bringing together two or more parties in exchange
for a fee or commission.
Builder upgrades:
Extra house features or better finishing materials that a builder
offers.
Building and loan association:
An organization that raises money to helps its members purchase real
estate or construct a building.
Building code:
A comprehensive set of laws that controls the construction or remodeling
of a home or other structure.
Building inspector:
A city or county employee who enforces the building code and ensures
that work is correctly performed.
Building permit:
A permit issued by a local government agency that allows the construction
of home or renovation of a house.
Building restrictions:
Regulations that limit the manner in which property can be used.
Built-ins:
Appliances or other items that are framed into a home or permanently
attached.
Bundle of rights:
The various interests or rights an owner has in a property.
Buy-down mortgage:
A home loan in which the lender receives a premium as an inducement to
reduce the interest rate during the early years of the mortgage.
Buyer broker:
A real estate broker who exclusively represents the buyer's interests
in a transaction and whose commission is paid by the buyer rather than
the seller.
Buyer's market:
A slow real estate market in which buyers have the advantage.
Buyer's remorse:
An emotion felt by first-time homebuyers after signing a sales contract
or closing the purchase of a house.
Bylaws:
The rules and regulations that a homeowners association or corporation
adopts to govern activities. |
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C
Call option: A clause in a loan agreement that allows a lender
to ask for the balance at any time.
Can lights: Cylindrical chambers with bulbs recessed
into the ceiling.
Cancellation clause: A clause that details the conditions
under which each party may terminate the agreement.
Cantilever: A projecting structure supported on one
end, such as a balcony.
Cap: A limit on the amount the interest rate or monthly
payment can increase in an adjustable-rate mortgage.
Cap rate: The percentage rate of return estimated from
the net income of a piece of property.
Cape Cod style: A wood-frame or shingled house with
a steep roof and several windows projecting from the second floor.
Capital: Money used to create income, such as funds
invested in rental property.
Capital expenditure:
The cost of making improvements on a property.
Capital gains:
Profits an investor makes from the sale of real estate or investments.
Capital gains tax:
A tax placed on the profits from the sale of real estate or investments.
Capital improvement:
Any improvement that extends the life or increases the value of a piece
of property.
Capitalization:
A mathematical formula that investors use to compute the value of a property
based on net income.
Caravan:
A group of real estate agents who tour a house that has been recently
listed for sale.
Carport:
A roof that covers a driveway or other parking area.
Casement window:
A window hinged on its sides to allow it to swing open vertically.
Cash flow:
The amount of cash a rental property investor receives after deducting
operating expenses and loan payments from gross income.
Cash-out refinance:
The refinancing of a mortgage in which the money received from the new
loan is greater than the amount due on the old loan. The borrower can
use the extra funds in any manner.
Cashier's check:
A check the bank draws on itself rather than on a depositor's account.
Cathedral ceiling:
A high open ceiling formed by finishing exposed roof rafters.
Caulk:
An acrylic or silicon sealant used to fill cracks, crevices and holes
in a home.
Caveat:
A formal notice, that asks a court to suspend action until the party
which filed the challenge can be heard.
Caveat emptor:
A legal principle derived from Latin than means "let the buyer beware."
Cavedium:
A courtyard or atrium.
Ceiling height:
The standard height of a ceiling is eight feet.
Central air conditioning:
A device that generates cold air through an outside unit that is connected
to ductwork inside the house.
Central business district:
The area of a city where most large businesses are located.
Certificate of Deposit (CD):
A document which shows that the bearer has a specified amount of money
on deposit with a bank, stock-brokerage firm or other financial institution.
Certificate of deposit index:
An index based on the interest rates on six-month CDs. It used to determine
the interest rate for some adjustable-rate mortgages.
Certificate of eligibility:
A document issued by the Veterans Administration that verifies the eligibility
of a veteran for a loan program.
Certificate of occupancy:
A document which states that a home or other building has met all building
codes and is suitable for habitation.
Certificate of sale:
A document issued at a judicial sale, which entitles the buyer to receive
a deed after court confirmation of the purchase of the property.
Certificate of title:
A written opinion on the status of a piece of property based on an examination
of the public record.
Chain of title:
The official record that details the ownership history of a piece of
property.
Chair railing:
Decorative trim installed on a wall about 32 inches above the floor,
which protects against scuffs from furniture.
Change frequency:
The adjustment schedule on an adjustable-rate mortgage.
Change order:
A modification of the construction contract to authorize a change in
the work, an adjustment in the amount of the contract or a change in
the contract time. The owner, architect and contractor must sign the
change.
Chattel:
Personal property such as furniture, clothing or a car.
Chattel mortgage:
A lien on personal property used as collateral for a loan.
Chimney back:
The back wall or lining of a fireplace or furnace chimney.
Chimney flue:
The passage inside a chimney that channels smoke and heat to the outside.
Chimney pot:
A short pipe at the top of a chimney that increases ventilation to the
fireplace and reduces smoke.
Cinder block:
A block made of ash and cement that is used in construction.
Cinder fill:
Cinders used below a basement or around a foundation to promote drainage.
Circuit breaker:
An electric fuse that activates or deactivates a circuit.
Cistern:
A tank used to store rainwater.
Classified property tax:
A tax that varies in rate depending on the use of the property.
Clear title:
A property that does not have liens, defects or other legal encumbrances.
Closing:
The final procedure in which documents are signed and recorded, and the
property is transferred.
Closing costs:
Expenses incidental to the sale of real estate, including loan, title
and appraisal fees.
Closing statement:
A document which details the final financial settlement between a buyer
and seller and the costs paid by each party.
Cloud on title:
An invalid encumbrance on real property.
Cluster development:
A method of squeezing more homes into less space.
Co-housing:
Individual housing units that are clustered around a common building
where residents share cooking and other activities.
Co-insurance:
Coverage that involves the use of two or more insurers..
Co-maker:
A person who signs a promissory note with the borrower and assumes responsibility
for the loan.
Co-signer:
A second party who signs a promissory note and takes responsibility for
the debt.
Codicil:
A change to a will that adds or subtracts provisions or clarifies portions
of the document.
Coign:
The cornerstone of a building that differs in shape or color from the
rest of the wall.
Collar beam:
The structural element that connects roof rafters.
Collateral security:
Additional security that a borrower supplies to obtain a loan.
Collection:
The series of steps a lender takes to bring a delinquent mortgage up
to date.
Collusion:
The action of two or more people to break the law.
Colonia:
Unincorporated communities along the U.S.-Mexico border.
Column:
A slender upright structure that consists of a base, a round or square
shaft and a capital.
Column footing:
The support base for a load-bearing column. The footing is usually made
of reinforced concrete.
Combination door:
An outer door with interchangeable screen and glass panels.
Combination window:
A window with interchangeable screen and glass panels.
Commercial bank:
A financial institution that provides a broad range of services, from
checking and savings accounts to business loans and credit cards.
Commercial property:
An area that is zoned for businesses.
Commingling:
The mixing of money held in trust with other funds.
Commission:
The negotiable percentage of the sales price of a home that is paid to
the agents of the buyer and seller.
Commitment:
A promise by a lender to make a loan with specific terms for a specified
period.
Commitment fee:
The fee a lender charges for promising to make a loan.
Common area:
An area inside a housing development that is owned by all residents.
Common law:
A body of laws based on custom, usage and rulings by courts in various
jurisdictions.
Common-area assessments:
Fees paid by the owners of a condominium project or planned-unit development
to maintain, repair, improve or operate common areas.
Common-interest development:
A project composed of individually owned units that share usage and financial
responsibility for common areas.
Community property:
Property accumulated through the joint efforts of husband and wife. It
is a classification of property peculiar to certain states.
Community Reinvestment Act:
A federal law that encourages financial institutions to loan money in
the neighborhoods where minority depositors live.
Commute:
The distance and time it takes a person to reach the workplace.
Comparables:
Properties used as comparisons to determine the value of a certain property.
Comparative market analysis:
An estimate of the value of a property based on an analysis of sales
of properties with similar characteristics.
Competent:
A term for a buyer who is legally fit to enter into a sales contract.
Compound interest:
The interest paid on the principal balance in a mortgage and on the accrued
and unpaid interest of the loan.
Concrete tilt-up:
The process of pouring concrete into forms on the ground, allowing the
forms to harden and then raising the material to a vertical position
to form walls.
Condemnation:
The process the government uses to take private property for public use
without the consent of the owner.
Conditional commitment:
A promise by a lender to make a loan if the borrower meets certain conditions.
Condominium:
Individual units in a building or development in which owners hold title
to the interior space while common areas such as parking lots, community
rooms and recreational areas are owned by all the residents.
Condominium conversion:
The change in title from a single owner of an entire project or building
to multiple owners of individual units.
Conduit:
A metal pipe that houses electrical wiring.
Consent judgment:
A binding written agreement between two parties to have a judgment entered
and recorded.
Conservator:
A court-appointed guardian.
Consideration:
Anything that is legal, has value and induces a person to enter into
a contract.
Construction budget:
The funding that an owner arranges for the construction of a project.
Construction documents:
Drawings and specifications from an architect that provide detailed requirements
for the construction of a project.
Construction loan:
Short-term loans a lender makes for the construction of homes and buildings.
The lender disburses the funds in stages.
Construction to permanent loan:
The conversion of a construction loan to a longer-term traditional mortgage
after construction has been completed.
Consumer Credit Counseling Service (CCCS): A
nationwide, nonprofit organization that helps consumers get out of debt
and improve their credit profile. National headquarters: 8701 Georgia
Avenue., Suite 507, Silver Springs, MD 20910. Phone: (800) 388-2227.
Contemporary style:
A design that features streamlined shapes, large unadorned windows and
industrial materials.
Contiguous lots:
Pieces of property that are adjoined.
Contingency:
A condition specified in a purchase contract, such as a satisfactory
home inspection.
Contingency listing:
A property listing with a special condition attached.
Contingent fee:
A fee that must be paid if a certain event occurs.
Contract: An agreement between
two or more parties that creates or modifies an existing relationship.
Contract for deed:
A contract in which the seller agrees to defer all or part of the purchase
price for a specified period of time.
Contract to purchase:
A contract the buyer initiates which details the purchase price and conditions
of the transaction and is accepted by the seller. Also known as an agreement
of sale.
Contractor:
The individual who contracts for the construction of a home or project.
Contractual lien:
A voluntary obligation such as a mortgage or trust deed.
Controlled growth:
Any restrictions imposed on the amount or type of new development in
an area.
Conventional loan:
A long-term loan a lender makes for the purchase of a home.
Convertible adjustable-rate mortgage:
A mortgage which starts as an adjustable-rate loan, but allows the borrower
to convert the loan to a fixed-rate mortgage during a specified period
of time.
Conveyance:
The transfer of title of property.
Conveyance tax:
A tax imposed on the transfer of real property.
Cooperating broker:
A real estate broker who finds a buyer for a property that another broker
has listed.
Cooperative corporation:
A business trust that holds the title to a cooperative residential building
and grants occupancy rights to shareholders in the corporation.
Cooperative mortgages:
Any loans related to a cooperative residential project.
Cooperative project:
A project in which a corporation holds title and sells shares representing
individual units to buyers who then receive a proprietary lease as their
title.
Corner bead:
A reinforcement placed in the corner where two walls intersect.
Corner influence:
The effect on the value of a property because it is situated on a corner
or near a corner.
Cornice:
A horizontal molding that projects from the top of a structure or wall.
Corporate relocation:
An arrangement by which employers pay to transfer and move employees.
Corrective work:
Necessary or desired repairs to remedy problems uncovered by a home or
specialized inspection.
Cost-plus contract:
A construction contract that determines the builder's profit based on
a percentage of the cost of labor and materials.
Cottage:
A small, one-story house.
Counteroffer:
A response to an offer.
Covenant:
A legal assurance or promise in a deed or other document, or implied
by the law.
Covenants, conditions and restrictions (CC&Rs):
Rules and regulations for a development, such as acceptable landscaping
or improvements that can be made to individual units.
Craftsman style:
An architectural style that evolved as part of the Arts and Craft movement
near the turn of the century.
Crawl space:
The space between the ground and the first floor of a home, usually no
higher than four feet.
Creative financing:
Innovative home-financing arrangements that help sell a property.
Credit:
The money a lender extends to a buyer for a commitment to repay the loan
within a certain time frame.
Credit Card Discounts:
Visa, Mastercard, etc., have a fee they charge for handling and billing.
This fee can run from 1 to 3%. This is a direct expense to the operation
of the motel. Most agents forget this item and leave it off the P &
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Damper:
A movable plate in a fireplace that allows smoke and fumes to
travel up the chimney's flue.
Days on the market:
The period of time a property is listed for sale until it is sold
or taken off the market
Deadbolt lock:
Locks that require a key to open from the outside and a turn button
from the inside.
Debt:
Any amount one person owes to another.
Deck:
A roofless, floored area that adjoins a house.
Deed:
The legal document that transfers ownership of a piece of property.
Deed of trust:
A document that gives a lender the right to foreclose on a piece of property
if the borrower defaults on the loan.
Deep-seal floor drain:
A drain used to dispose of water from the basement floor to a sewer line.
Default:
The failure to fulfill a duty or promise or discharge an obligation, such
as making monthly mortgage payments.
Deferred maintenance:
Any repair or maintenance of a piece of property that has been postponed,
resulting in a decline in property value.
Delinquent mortgage:
A mortgage that involves a borrower who is behind on payments. If the borrower
cannot bring the payments up to date within a specified number of days,
the lender may begin foreclosure proceedings.
Density test:
An analysis of soil to determine if the surface can support the foundation
of a house.
Dentils:
Small rectangular blocks that project from a building, usually under cornices
or along rooflines.
Deposit:
Money given by the buyer with an offer to purchase property. Also called
earnest money.
Depreciation:
The decline in value of a piece of property.
Design/build:
A project in which the owner contracts directly with an individual or company
to perform design and construction.
Designer:
Unlike architects, designers are limited to drawing blueprints.
Digital images:
Images that are incorporated into house listings to give potential buyers
a view of the property.
Dimension plans:
Plans which show the layout of a house but are less detailed than full
blueprints.
Disability insurance:
An insurance policy which covers an individual's ability to produce income.
Disclosure:
A statement to a potential buyer listing information relevant to a piece
of property, such as the presence of radon or lead paint.
Discount points:
Fees that a borrower pays at the time the lender makes the loan. A point
equals 1 percent of the total loan amount.
Distressed property:
Property that is in poor physical or financial condition.
Document needs list:
A list of documents a lender requires when a potential submits a loan application..
The required documents range from paycheck stubs to credit card statements.
Domed ceiling:
A hemispherical ceiling that projects upward without support.
Domicile:
A person's primary or permanent home.
Dormer:
A window set upright in a sloping roof.
Double-hung window:
A window that consists of two sashes that slide up and down.
Dovetail
joints:
Joints that lock two pieces of wood together with meshed teeth.
Down
payment:
The amount of money a buyer agrees to give the seller when a sales agreement
is signed. Complete financing is later secured with a lender.
Down
spouts:
A vertical gutter that empties water from the roof to the ground.
Drainage:
A system of gutters and drainpipes that carry water away from the foundation
of a house.
Draw:
A payment made to subcontractors or suppliers from a construction loan.
Dropped ceiling:
A flat ceiling built lower than the original ceiling.
Dry rot:
A fungal decay that causes wood to become brittle and crumble.
Drywall:
A construction material composed of gypsum or plaster wrapped in paper
and produced in large sheets that can be nailed to wall studs.
Dual
agency:
A relationship in which a real estate agent or broker represents both parties
in a transaction.
Duct:
Any kind of pipe or channel that carries water, wiring or conditioned air
through a house.
Due-on-sale clause:
Standard language in a mortgage which states that the loan must be paid
when a house is sold.
Duplex:
A structure that consists of two separate family units.
Dutch
colonial style:
A design that features barn-like gambrel roof, a ground-level front porch,
and dormers. |
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E
Early occupancy
The condition in which buyers can occupy the property before the sale is
completed.
Earnest money
Money a buyer gives with an offer to purchase a property. Also called a
deposit.
Earthquake insurance
A policy that provides coverage against damage to a home from an earthquake.
Easement
A right given to a third party to use a portion of the property for certain
purposes, such as power lines or water mains.
Eaves
The projecting overhang at the lower edge of a roof.
Effective age
The age of a structure estimated by its condition rather than its actual
age.
Effective gross income
Additional income that a lender considers when assessing the loan application
of a potential borrower.
Electric service panel
A panel that transfers power from the utility line into a house to be distributed
through fuses or circuit breakers.
Elevations
The exterior view of a home design that shows the position of the house
relative to the grade of the land.
Ell
An extension or wing of a house that is at right angles to the main structure.
Eminent domain
The government's right to condemn private land for public use, such as the
routing of a public highway.
Employer-assisted housing
Programs which help employees purchase homes through special plans developed
with lenders.
Empty nesters
Potential buyers who have raised their families and want to move into a
smaller home.
Encroachment
Fences or other structures that extend into the property of another owner.
Encumbrance
A claim or lien on a property which complicates the title process.
End loan
The conversion from a construction loan to permanent financing a condominium
buyer secures after all units in a project have been completed.
Endorser
A person who signs over ownership of property to another party.
English Tudor style
An architectural design that features stone or brick exterior walls and
exposed beams.
Environmental impact statement
A government-mandated evaluation of all aspects and effects a development
will have on the environment of a proposed site.
Environmentally friendly home construction
A method of construction that utilizes recycled materials.
Equal Credit Opportunity Act
A federal law that prohibits a lender or other creditor from refusing to
grant credit based on the applicant's sex, marital status, race, religion,
national origin or age. The law also prohibits a creditor from refusing
to grant credit because the applicant receives public assistance.
Equifax
Equifax Credit Information Services, Inc., is one of the "Big Three"
credit-reporting bureaus that operate nationwide. Address: P.O. Box 740249,
Atlanta, GA 30374.
Equity
A determination of the value of a property after existing liens are deducted.
Errors and omissions insurance
A policy that pays for any mistakes a builder or architect makes in a project.
Escrow
A neutral third party holds the documents and money involved in a real estate
transaction and ensures that all conditions of a sale are met.. Escrow also
refers to a special account that a lender establishes to hold monthly installments
from the borrower to cover property taxes and insurance.
Escrow account
An account that a lender or mortgage servicer establishes to hold funds
for the payment of expenses such as homeowners insurance and property taxes.
Also known as an impound account.
Escrow agent
A neutral third party who ensures that all conditions of a real estate transaction
are met.
Escrow analysis
A lender's periodic examination of an escrow account to determine if the
lender is withholding enough funds from a borrower's monthly mortgage payment
to pay for expenses such as property taxes and insurance.
Escrow closing
Escrow closes when all conditions of a real estate transaction are met and
the title of the property is transferred to the buyer.
Escrow company
Firms that act as neutral third parties to ensure that all conditions that
the buyer, seller and lender establish in a real estate transaction are
met.
Escrow payment
Funds that a mortgage servicer withdraws from a borrower's escrow account
to pay property taxes and insurance.
Estate
The total assets of a person, including real property, at the time of death.
Estimated Gross Costs of Buying
Total principal and interest payments over the number of years that you
plan to own your home.
Estimated Increase in Equity
A specified property value increased by a selected rate of appreciation
for a specific number of years.
Estimated Net costs of Buying
The estimated gross costs of buying minus estimated tax savings and the
estimated increase in equity.
Estimated Tax Savings
The amount of tax a renter would save instead of owning a home based on
property taxes and interest paid.
Estimated Total Costs of Renting
The total current rental payments for the same number of years you would
plan to own a home increased by a yearly rental increase adjustment.
Estimated Total Savings
The estimated net costs of renting minus the lower net cost of buying.
Eviction
A legal procedure to remove a tenant for reasons including failure to pay
rent.
Examination of title
An inspection by a title company of public records and other documents to
determine the chain of ownership of a property.
Excavation
The process of clearing trees, removing topsoil and grading land before
the foundation is laid.
Exclusive listing
A contract that gives an agent the exclusive right to market a property
for a specific period of time.
Executor
A person appointed to carry out the instructions in a will. If there is
no will, a probate court will appoint an executor.
Exhaust fan
Ventilating devices that remove water vapor, undesired smells or smoke.
Experian
Experian, formerly known as TRW Information Systems & Services, is one
of the "Big Three" credit-reporting bureaus.. Address: 505 City
Parkway West, Orange, CA 92868. |
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F
Façade
The part of a building facing the street or a courtyard.
Fair Credit Billing Act
A federal law that governs credit and charge card billing errors. If a
credit or charge card company violates any provision, consumers can sue
to recover damages.
Fair Credit Reporting Act
A federal law passed in 1971 that regulates the activity of credit bureaus.
It is designed to prevent inaccurate or obsolete information from staying
in a consumer's credit file and requires credit bureaus to have reasonable
procedures for gathering, maintaining and disseminating credit information.
The act also requires credit bureaus to show a consumer their credit file
if the consumer presents proper identification, although the bureau reserves
the right to charge a fee for doing so.
Fair Debt Collection Practices Act
A federal law passed in 1977 which outlaws debtor harassment and other
types of collection practices. The act regulates collection agencies,
original creditors who set up a separate office to collect debts, and
lawyers hired by the creditor to help collect overdue bills. An original
creditor--the company or individual that originally granted the credit--is
not covered by the act, but may be covered by similar measures approved
by state governments.
Fair Housing Act
Landmark federal law passed in 1965 and amended in 1988 that makes it
illegal to deny rent or refuse to sell to anyone based on race, color,
religion, sex or national origin. The 1988 amendment expanded the protections
to include family status and disability.
Fannie Mae
The official name of the Federal National Mortgage Association, it is
a congressionally chartered, shareholder-owned company that buys mortgages
from lenders and resells them as securities on the secondary mortgage
market.
Farmer's Home Administration
A U.S. Department of Agriculture agency that provides credit to farmers
and rural residents.
Fascia
A board that connects the ends of the roof rafters and provides a surface
to support gutters.
Federal Home Loan Mortgage Corporation
The Federal Home Loan Mortgage Corporation, commonly known as Freddie
Mac. The company buys mortgages from lending institutions, pools them
with other loans and then sells shares to investors.
Federal Housing Administration (FHA)
This government agency operates a variety of home-loan programs. Its most
popular is the Sec. 203(b), program, which provides low-rate mortgages
to buyers who make a down payment as small as 3 percent.
Federal National Mortgage Association
Now officially dubbed Fannie Mae, this federally chartered agency buys
mortgages from lending institutions, pools them with other loans and sells
shares to investors.
Federal Reserve Board
A group of economists and other experts who set the nation's monetary
policy. Its chief tool to control inflation is the power to control interest
rates.
Federal style
The all-American home architecture style that evolved after the Revolutionary
War. Details include bigger windows and a front doorway surrounded by
glass and topped with an arched window.
Federal Trade Commission
The government agency responsible for regulating a variety of companies
and industries, from credit bureaus and collection agencies to timeshare
operators and certain types of creditors. National headquarters: Sixth
and Pennsylvania Avenue NW, Washington, D.C. 20580. Phone: (202) 326-2222.
Fee simple
This type of ownership is the maximum interest a person can have in a
piece of real estate. It entitles the owner to use the property in any
manner they see fit, in accordance with state and local laws.
Fee simple defeasible
The owner of the property holds a fee simple title contingent upon certain
conditions.
Feng shui
An ancient Chinese belief that the physical characteristics of a house
and the positioning of the home will affect the fortunes of the owner.
FF&E
Furniture, fixtures and equipment. Used as a dollar figure in the bulk
sale escrow. Will have a serious tax consequence for both buyer and seller.
FHA loans
Mortgages that are insured by the Federal Housing Administration. The
FHA's 203(b) loan program provides low-rate mortgages to buyers who make
a down payment as small as 3 percent. The agency also operates loan plans
for investors and purchasers of rural property.
Fiduciary duty
The relationship of trust that buyers and sellers expect from a real estate
agent. The term also applies to legal and business relationships.
Field changes
Modifications made on the construction site that do not match blueprints.
Fill dirt
Soil brought in to solidify a finished foundation.
Filled land
An area where the ground has been raised by adding dirt, gravel or other
fill material.
Finder's fee
A fee in any amount that is paid to someone.
Finish grade
A finish that prepares a lot for landscaping.
Fire wall
A buffer composed of fire-resistant material.
Firm commitment
A promise made by a lender when it agrees to loan money for the purchase
of property.
First mortgage
The primary mortgage on a property that has priority over all other voluntary
liens.
Fixed installment
The monthly payment on a home loan.
Fixed time
The specific weeks in a year an owner of a timeshare arrangement has access
to accommodations.
Fixed-rate mortgage
A home loan with an interest rate that will remain at a specific rate
for the term of the loan. About 75 percent of all home mortgages have
fixed rates.
Fixer-upper
A house that needs refurbishment or remodeling It usually sells at a below-market
price.
Fixture
Personal property permanently attached to a house, such as drapery rods,
toilets, built-in bookcases or a furnace.
Flashing
Metal strips placed around chimneys, skylights, vents, windows, doors,
beneath shingles and along seams in the roof to prevent water seepage.
Flat fee
A set fee charged by a broker instead of a commission.
Flat roof
A roof with a level surface.
Flats
Sheets used in the room. Smaller motels will usually send their sheets
out to a commercial laundry. They will do the wash cloths, towels and
pillow cases in their own laundry.
Float floor drain
A drain that diverts water from the basement to a collection area. Water
is then removed with a sump pump.
Floating wall
Walls built to withstand movement in the basement floor.
Flood insurance
Hazard coverage that is required in designated flood areas.
Flood plain
Flat, flood-prone areas located along waterways.
Floor area ratio
The calculation of the floor area of all homes or buildings in a project.
It is used in the planning and development of a site.
Florida rooms
Enclosed porches built on the side or back of a home.
Footings
Concrete foundations that support a structure.
For Sale By Owner (FSBO)
The owner acts as the agent to avoid paying a sales commission.
Forbearance
A course of action a lender may pursue to delay foreclosure or legal action
against a delinquent borrower.
Foreclosure
The legal process reserved by a lender to terminate the borrower's interest
in a property after a loan has been defaulted. When the process is completed,
the lender may sell the property and keep the proceeds to satisfy its
mortgage and any legal costs. Any excess proceeds may be used to satisfy
other liens or be returned to the borrower.
Forfeiture
The relinquishing of property rights by a delinquent borrower.
Foundation
The support structure of a house.
Foyer
The entrance hall to a home or building.
Framing
The construction of the skeletal framework of a house.
Freddie Mac
The common name for the Federal Home Loan Mortgage Corporation, a congressionally
chartered institution that buys mortgages from lenders and resells them
as securities on the secondary mortgage market.
Free-market lots
Owners of these types of lots may hire any builder to construct their
home.
French doors
Two adjoining doors inlaid with glass that open from the middle.
Front Desk
Office of the motel, may be in the lobby. This is where clients check
in.
Frontage
The portion of property that borders a roadway or body of water.
Fully amortized adjustable-rate mortgage
A mortgage that amortizes, or pays down, the balance of a loan.
Furnace
An enclosed heating device powered by coal, oil, propane or natural gas.
Fuse
A device that allows power to be channeled into a home. |
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H
No Terms |
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I
Impact fees
Fees collected from developers of new homes to pay for schools, parks and
other facilities.
Implied warranty of habitability
Court cases which determined that all new homes are assumed to be fit for
human habitation and meet all building codes.
Impounds
A portion of the monthly mortgage payment that is placed in an account and
used to pay for hazard insurance, property taxes and private mortgage insurance.
In Room Handouts
For some franchise motels, the in room handouts can be significant. The
franchise inspector will count the number of handouts to be sure they are
there. All will usually have the franchise logo on them.
In-file credit report
Computer-generated reports drawn from credit repositories that are generally
regarded as objective histories.
Income property
Property that is not occupied by the owner but is used to generate income.
Incurable defect
A defect in a property that cannot be fixed, such as an adjacent hazardous
waste site, or that would cost too much to repair relative to the value
of the property.
Index
Financial tables used by lenders to calculate interest rates on adjustable
mortgages and on Treasury bills.
Individual Retirement Account
Tax-deferred savings accounts that allow people to accrue retirement funds.
Infill development
Any significant new construction in an established area.
Infill housing
Home construction in established areas.
Inflation
This event occurs when there is more money available than there are goods
and services to be purchased. Mortgage rates, which are determined by the
marketplace and the actions of the Federal Reserve Board and Wall Street,
are sensitive to inflation fears.
Infrastructure
The roads, schools, parks, utilities, bridges and communications systems
in a community.
Initial interest rate
The original interest rate on an adjustable mortgage.
Inspection report
An examination of a home's exterior, foundation, framing, plumbing, electrical
system, heating, air conditioning, fireplace, kitchen, bathroom, roofing
and interior.
Installment contract
A purchase agreement in which the buyer does not receive title to the property
until all installments are paid.
Insulation
Materials including cellulose, glass fiber, rock wool, polystyrene, urethane
foam and vermiculite that slow heat loss.
Insurable title
Title to property that a company agrees to insure against defects and disputes.
Insurance
Owners and buyers can purchase various types of insurance: hazard, private
mortgage and earthquake. The policies guarantee compensation for specific
losses.
Insurance binder
A temporary insurance arrangement usually put in force until a permanent
policy can be obtained.
Interest
The fee borrowers pay to obtain a loan. It is calculated based on a percentage
of the total loan.
Interest accrual rate
The rate at which interest accrues on a mortgage.
Interest rate
The sum, expressed as a percentage, charged for a loan. Interest payments
on most home loans are tax- deductible.
Interest rate buy-down plans
For cash-short buyers, some sellers are willing to advance funds from the
sale of the home to buy down the interest rate and reduce the buyer's monthly
obligation.
Interest rate caps
A limit on the amount that can be charged to the monthly payment of an adjustable-rate
mortgage during an adjustment period.
Interest rate ceiling
The highest interest a lender can charge for an adjustable-rate mortgage.
Interest-only loan
The pays only the interest that accrues on the loan balance each month.
Because each payment goes toward interest, the outstanding balance of the
loan does not decline with each payment.
Investment property
Real estate that generates income, such as an apartment building or a rental
house.
Investment Related Savings
The estimated total savings of buying invested at a rate of 8% for the number
of years that a borrower would plan to own a home. |
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J
Jalousie window
A window that consists of vertical rows of horizontal glass slats that
operate together by a crank mechanism that connects all the slats.
Joint liability
The responsibility of two or more people to fulfill the terms of a home
loan or debt.
Joint tenancy
Ownership by two or more people that gives equal shares of a piece of
property. Rights pass to the surviving owner or owners.
Joist
A floor or ceiling support member supported by foundation walls, piers
or beams. Subflooring is connected to floor joists.
Judgment
The decision of a court or law. If a court decides that a person must
repay a debt, a lien may be placed against that person's property.
Judicial foreclosure
A procedure to handle foreclosure proceedings as civil matters.
Jumbo mortgage
Loans that exceed limits set by Fannie Mae and Freddie Mac. The current
limit is $300,700.
Junior mortgage
A loan that subordinate to the primary loan. |
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K
Kick Plate
Metal plate that covers the bottom portion of the room door. Protects against
water and kick damage.
Kit home
A structure that contains prefabricated components and is put together by
a contractor.
Knee wall
A wall-like structure that supports roof rafters.
Knob-and-tube wiring
An old-fashioned wiring system that has been replaced by fuses and circuit
breakers.
Kick Plate
Metal plate that covers the bottom portion of the room door. Protects against
water and kick damage.
Kit home
A structure that contains prefabricated components and is put together by
a contractor.
Knee wall
A wall-like structure that supports roof rafters.
Knob-and-tube wiring
An old-fashioned wiring system that has been replaced by fuses and circuit
breakers. |
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L
Landscape
A home's surroundings can range from a shrub-studded emerald lawn to a native-plant
xeriscape. It is a major component of curb appeal.
Landscape architect
A professional who holds a degree in landscape architecture, which involves
training in horticulture, landscape design and planning.
Landscape contractor
A professional who carries out the plans of a landscape architect or a landscape
designer.
Landscape designer
A landscape designer has training in horticulture and landscape planning,
but does not necessarily hold a degree.
Late charge
A fee a lender imposes on a borrower when the borrower does not make a payment
on time.
Late payment
A payment a lender receives after the due date has passed.
Latent defect
An invisible problem in a piece of property such as bad wiring, termite
damage or lead paint.
Laundry
If the motel has 40 units or more, the laundry will usually have two 50
lb. Commercial washers with automatic soap injection and one or two large
dryers.
Lead
A metallic chemical element present in older dwellings, primarily in the
form of lead-based paint and lead plumbing. Exposure to lead has been found
to be a health risk.
Lease
A binding agreement that contains the terms and conditions of a renter's
occupancy.
Lease option
A lease that contains the right to purchase the property for a specific
price within a certain time frame.
Leasehold estate
An arrangement in which the borrower does not own a specific piece of property
but possesses a long-term lease.
Legal blemish: Blemishes on a piece of property, such as a zoning violation
or fraudulent title claim.
Legal description: A specific way of identifying and locating a piece of
real estate that is acceptable to a court.
Lender: A bank, savings institution or mortgage company that offers home
loans.
Letter of intent: A formal statement that the buyer intends to purchase
the property for a certain price on a certain date.
Leverage: The use of a small amount of cash--a 5 percent or 10 percent down
payment--to buy a piece of property
Liabilities: A borrower's debts and financial obligations.
Liability insurance: A policy that protects owners against any claims of
negligence, personal injury or property damage.
Lien: A claim laid by one person or company on the property of another as
security for money owed.
Life cap: A limit on the amount that a loan rate can move during the term
of the mortgage. For example, the rate on an adjustable-rate mortgage that
begins at 5 percent and has a lifetime cap of 6 percentage points cannot
rise above 11 percent, even if rates on fixed-rate mortgages soar to 20
percent.
Life-cycle cost analysis: An analysis of a building project's expected operating,
maintenance and replacement costs, calculated by an architect.
Limited partnership: Real estate syndicates and other investment groups
use this type of ownership.. A general partner makes the group's investment
decisions, oversees the investment and is principally liable for any losses.
Liquid assets: Cash and all other assets that can be converted to cash relatively
quickly. Liquid assets can include money in savings and checking accounts,
money-market accounts, and most certificates of deposit.
Listing: A piece of property placed on the market by a listing agent.
Listing inventories: The known number of houses for sale within a given
market.
Loan -to-value ratio: A technical measure used by lenders to assess the
relationship of the loan amount to the value of the property
Loan application: The first step toward submitting a home loan requires
the borrower to itemize basic financial information.
Loan application fee: A fee charged by lenders to for making a loan application.
Loan commitment: A promise by a lender or other financial institution to
make or insure a loan for a specified amount and on specific terms.
Loan officer: An official representative of a lending institution who is
empowered to act on behalf of the lender within certain limits.
Loan origination fee: Most lenders charge borrowers an origination fee--or
points--for processing a loan. A point is 1 percent of the total loan amount.
Loan processing fee: A fee charged by some lenders for gathering information
to enable the lender to process the loan.
Loan term: The amount of a time set by the lender for a buyer to pay a mortgage.
Most conventional loans have 30-year or 15-year terms.
Lock-in: When interest rates are volatile, many borrowers want to "lock
in" an interest rate and many lenders will oblige, setting a limit
on the amount of time the lock-in is in effect.
Low density: A low concentration of housing units in a specific area.
Low-ball offer: An offer made to a seller that is substantially below market
value. The longer a property stays on the market, the more likely there
are to be such offers.
Low-documentation loan: A mortgage that requires only minimal verification
of income and assets.
Low-down-payment loan: A home loan that requires the borrower to make only
a small down payment before obtaining the financing needed to purchase a
house. |
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M
Maintenance fee: The monthly assessment members of a homeowners'
association pay for the repair and maintenance of common areas.
Managed-competition lots: Lots in which buyers choose between one of several
builders.
Manager's Quarters: Where the owner or manager lives. Has access to the
front desk. Usually the personal items in this unit belong to the manager
and do not go with the sale of the motel.
Manufactured housing: Prefabricated homes that can range from simple trailers
to larger dwellings.
Margin: The lender's "retail markup" on the mortgage. For example,
if the index rate for an adjustable-rate mortgage is 5 percent but the lender
has a 2.5 percentage-point margin, the rate the borrower will pay is 7.5
percent.
Market conditions: Factors affecting the sale and purchase of homes at a
particular point in time.
Market value: The price that a piece of property sells for at a particular
point in time.
Master-planned community: A suburban plan that includes homes and commercial,
work, educational and community facilities.
Maximum financing: A loan amount within 5 percent of the highest loan-to-value
ratio allowed for a property.
Median price: The price of the house that falls in the middle of the total
number of homes for sale in that area.
Mediation: A dispute-resolution process in which a neutral party works to
resolve contract differences.
Merged credit report: A report that draws information from the Big Three
credit-reporting companies: Equifax, Experian and TransUnion Corp.
Metes and bounds: A time-honored land surveying method of describing land
in terms of shape and boundary dimensions.
Mint condition: Mint condition, or blue-ribbon condition, refers to a house
that looks as close to new as possible.
Mixed-income housing: A neighborhood that contains houses of widely varying
prices.
Mixed-use development: A project that combines several different functions,
such as residential space above a commercial establishment or an entire
development combining commercial, residential and public accommodations.
Modification: A change in any of the terms of the loan agreement.
Money market account: Accounts that work like money market funds and allow
individual investors to participate in certain managed investments and withdraw
funds under most conditions.
Money market funds: A mutual fund that pools the resources of individuals
to invest in certain managed investments.
Mortgage: A legal document specifying a certain amount of money to purchase
a home at a certain interest rate, and using the property as collateral.
Mortgage acceleration clause: A clause which allows a lender to demand that
the entire balance of the loan be repaid in a lump sum under certain circumstances.
The acceleration clause is usually triggered if the home is sold, title
to the property is changed, the loan is refinanced or the borrower defaults
on a scheduled payment.
Mortgage banker: A company that provides home loans using its own money.
The loans are usually sold to investors such as insurance companies and
Fannie Mae.
Mortgage broker: A company that matches lenders with prospective borrowers
who meet the lender's criteria. The mortgage broker does not make the loan,
but receives payment from the lender for services.
Mortgage insurance: Required by lenders in some loans to protect them from
a possible default . All conventional loans with less than a 20 percent
down payments require private mortgage insurance, or PMI.
Mortgage life insurance: A special type of insurance that will pay off a
mortgage if the borrower dies before the debt is retired.
Mortgage-interest deduction: The tax write-off that the Internal Revenue
Service allows most owners to claim for the annual interest payments they
make on their real estate loans.
Mortgagee: A bank or other financial institution that lends money to the
borrower. The borrower is considered the mortgagor.
Mortgagor: The person who borrows money to purchase a house. The lender
is called the mortgagee.
Motivated buyer: Any buyer with a strong incentive to make a purchase.
Motivated seller: Any seller with a strong incentive to make a deal.
Move-in condition: A house that is ready for a new occupant.
Move-up buyer: A buyer who has purchased a home before and is looking for
a bigger or more expensive home.
Multidwelling property: A property that contains individual units for several
households but carries only one mortgage.
Multifamily mortgage: A mortgage on a multifamily dwelling with more than
four families, typically an apartment building.
Multiple listing service (MLS): The service combines the listings for all
available homes in an area, except For-Sale-By-Owner (FSBO) properties,
in one directory or database.
Multiple offers: Multiple purchase offers occur in hot markets or hot neighborhoods.
Municipal housing inspector: Inspectors employed by cities or counties to
check all construction sites and verify that contractors are meeting building
codes. |
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Needs-based pricing: A seller's asking price that is based on factors
such as the required funds to pay off the mortgage, the cost of remodeling
or the purchase of another house.
Negative amortization: The situation occurs when a borrower's monthly payment
is not large enough to cover both the principal and interest of a loan.
As a result, the outstanding balance of the loan actually grows larger with
each payment rather than smaller. Most fixed-rate loans are not subject
to negative amortization, but many adjustable-rate mortgages are susceptible.
Net cash flow: Investment property that generates income after expenses
such as principal, interest, taxes and insurance are subtracted.
Net worth: The worth of a person or company based on the difference between
total assets and liabilities.
New Urbanism: A community design philosophy that favors the return of new-home
development with such traditional features as prominent front porches, backyard
garages, multi-use buildings and housing clustered near commercial service
areas.
No cash-out refinance: The amount of the new mortgage covers the remaining
balance of the first loan, closing costs, any liens and cash no more than
1 percent of the principal on the new loan.
No-competition lots: A lot in which the buyer's home will be constructed
by a particular builder.
No-documentation loan: A loan application that does not require verification
of income but typically is granted in cases of large down payments.
Non-assumption clause: A loan provision that prohibits the transfer of a
mortgage to another borrower without lender approval.
Non-liquid asset: An asset such as a house that is not easily turned into
cash.
Non-recurring closing costs: Costs that are one-time only fees for such
items as an appraisal, loan points, credit report, title insurance and a
home inspection.
Note: The legal document that requires a borrower to repay a mortgage at
a certain interest rate over a specified period of time.
Note rate: The interest rate specified in a mortgage note.
Notice of default: A lender's initial action when a mortgage payment is
late and attempts to reconcile the issue out of court have failed. |
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O
Online real estate listings: Properties listed for sale on the
Internet.
Open house: A marketing tool in which a listing agent opens a house for
view.
Open listing: A property given to a number of brokers to market at the same
time.
Option: A situation in which a buyer puts down money for the right to purchase
a piece of real estate within a set time period but does not have an obligation
to buy.
Oral agreement: Contractual arrangements that are not in writing and are
usually not legally binding.
Original principal balance: The amount of principal owed on a loan before
a borrower makes any payments.
Origination fee: A fee charged by most lenders--also called points--for
processing a loan. A point is 1 percent of the total loan amount.
Owner financing: A transaction in which the seller of a property agrees
to finance all or part of the purchase. |
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P
Partnership: There are several partnership options for unmarried
individuals to buy a piece of property, such as live-in partnerships (in
which both buyers share the residence) or a shared-equity partnership (in
which one buyer lives in the home and the other is an investor in the property).
Payment cap: A legal limit on the amount a monthly payment can increase
on an adjustable-rate mortgage.
Per-diem interest: Interest charged or accrued daily.
Personal property: Any moveable property in a house such as furniture or
appliances.
PITI (Principal, Interest, Taxes, Insurance): When a buyer applies for a
loan, the lender will calculate the principal, interest, taxes and insurance.
The figure is designed to represent the borrower's actual monthly mortgage-related
expenses.
Planned communities: The concept began in the 19th century and describes
any town or neighborhood built with certain guidelines and goals.
Planned-unit development: Residents own the home and the land, and share
the use and financial responsibility for common areas.
Point: Fees charged by lenders at the time a loan is originated. A point
is equal to 1 percent of the total loan amount.
Portfolio lender: A lender who makes loans with its own funds and keeps
the loans on the company's books--in other words, inside the institution's
"portfolio"--rather than selling the loan on the secondary market.
Possession: When a buyer signs the papers and receives the keys to the house,
the buyer officially takes possession.
Power of attorney: A document that authorizes an individual to act on behalf
of someone else.
Pre-approval letter: A letter from a lender that informs a seller about
the amount of money that a potential buyer can obtain.
Pre-sold home: Homes that are sold before they are built.
Prepaid expenses: The costs for taxes, insurance and assessments paid before
the due date.
Prepaid interest: Interest paid before it is due. For example, at the close
of a real estate transaction borrowers usually pay for the interest on their
loan that falls between the closing period and the first monthly payment.
Prepayment penalty: Lenders can impose a penalty on a borrower who pays
a loan off before its expected end date.
Prequalification: Many lenders will prequalify a borrower who is shopping
for a loan by completing a preliminary assessment of the buyer's ability
to pay for a home.
Price range: The range of how much a buyer is willing to pay for a home.
Principal: The amount of money that the borrower owes on a mortgage.
Principle of conformity: The idea that a house will more likely appreciate
in value if its size, age, condition and style are similar to, or conform
to, other houses in the neighborhood.
Principle of progression: An appraisal term which states that real estate
of lower value is enhanced by the proximity of higher-end properties.
Principle of regression: An appraisal term which states that the value of
higher-end real estate can be brought down by the proximity of too many
lower-end properties.
Private mortgage insurance (PMI): A special type of loan insurance that
many lenders require borrowers to purchase if the borrower's down payment
is less than 20 percent of the home's purchase price.
Probate sale: A real estate sale triggered by the death of the owner, with
proceeds to be divided among heirs or creditors.
Production home: Homes that are mass-produced by one builder in a project.
Property line: The official dividing line between properties.
Property report: A disclosure issued by the state when a time-share project
is located or sold.
Property tax: Property taxes are calculated at about 1.5 percent of the
current market value.
Property tax deduction: The U.S. tax code allows homeowners to deduct the
amount they have paid in property taxes.
Property value: The value of a piece of property is based on the price a
buyer will pay at a certain time.
Proration: Agreed-upon percentages of certain expenses associated with a
piece of property that must be paid by the buyer or the seller at the time
of closing.
Punch list: Buyers compile a punch list during the final walk-through detailing
items to be fixed before closing.
Purchase agreement: A document which details the purchase price and conditions
of the transaction.
Purchase-money mortgage: A mortgage that a borrower obtains to acquire a
property. |
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Q
Qualifying ratios: Lenders compute qualifying ratios to determine
how much a potential buyer can borrow.
Quit-claim deed: A document that releases a party from any interest in a
piece of real estate. |
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R
Rate lock: When interest rates are volatile, many borrowers want
to "lock in" an interest rate and many lenders will oblige, setting
a limit on the amount of time the guaranteed interest rate is in effect.
Rate Sheet: Printed card that gives the price charged for each room, crib,
extra person and pets.
Rate-improvement mortgage: A loan with a clause that entitles a borrower
to a one-time cut in the interest rate without going through refinancing.
Real estate: Land and anything permanently affixed to it, including buildings,
fences and other items attached to the structure.
Real estate agent: A real estate agent has a state license to represent
a buyer or a seller in a real estate transaction in exchange for a commission.
Most agents work for real estate brokers.
Real estate attorney: A lawyers who specializes in real estate transactions.
Real estate broker: A real estate agent who is licensed by the state to
represent a buyer or seller in a real estate transaction in exchange for
a commission. Most brokers also have agents working for them, and are entitled
to a portion of their commissions.
Real estate investment trusts (REITs): The trusts are publicly traded companies
that own, develop and operate commercial properties.
Real Estate Settlement Procedures Act (RESPA): A federal law designed to
make sellers and buyers aware of settlement fees and other transaction-related
costs. RESPA also outlaws kickbacks in the real estate business.
Real property: Land and any permanent fixtures on it, including buildings,
trees and minerals.
Realtor: A designation for an agent or broker who is a member of the National
Association of Realtors.
Recission: The cancellation of a contract by law or consent by the parties
involved.
Reconveyance: When a borrower completely pays off the mortgage, the property
is reconveyed to them from the lender.
Recorder: A public official responsible for keeping the records of all real
estate transactions.
Recording: The filing of a specific document to the appropriate government
entity.
Recording fee: A fee charged by real estate agents for conveying the sale
of a piece of property into the public record.
Redlining: The practice by a bank or insurance company to deny credit or
insurance to people based on ethnic background or neighborhood.
Refinancing: The process of replacing an older loan with a new mortgage
that has better terms.
Regulation Z: The federal code issued under the Truth-in-Lending Act which
requires that a borrower be advised in writing of all costs associated with
the credit portion of a financial transaction.
Rehabilitation mortgage: A mortgage that provides for the costs of repairing
and improving a resale home or building.
Relocation benefits: Benefits provided by employers for new workers and
can include moving costs, reimbursement for temporary housing and transportation,
real estate agent assistance and discounted loans.
Relocation company: A firm that administers all aspects of moving in new
employees to the community.
Remaining balance: The amount of unpaid principal on a home loan.
Remaining term: The original loan term minus the number of payments made.
Rent loss insurance: A policy that covers any loss of rent or rental value
in the event of fire or other damage that renders the property uninhabitable.
Renter's insurance: A policy that covers the replacement value of possessions.
Repayment plan: When a borrower falls behind in mortgage payments, many
lenders will negotiate a repayment plan rather than go to court.
Replacement reserve fund: Money that is set aside from homeowners' assessments
to replace common property, such as furniture in a planned development's
community room.
Repossession: When a house is repossessed, it is taken back by the lender
holding the mortgage.
Resale value: The future value of a piece of property that can be affected
by many factors, including the surrounding neighborhood, school scores,
and economic and housing market conditions.
Reserve fund: All homeowners associations set aside a certain amount of
money for major repairs or improvements.
Restructured loan: A mortgage in which new terms are negotiated.
Return on investment: The amount of profit a property generates.
Reverse mortgage: A special type of loan available to equity-rich, older
owners. Repayment is not necessary until the borrower sells the property
or moves into a retirement community.
Right of first refusal: An agreement by a property owner to give another
person the right to buy or rent the property before it goes on the open
market.
Right to recission: A provision in the federal Truth-in-Lending Act that
allows borrowers to cancel certain kinds of loans within three days of signing.
Rural Housing Service: A U.S. Department of Agriculture program that provides
financing to farmers and certain borrowers to purchase rural property when
other funds are not available. |
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S
Sale-leaseback: A transaction in which the buyer leases back the
property to the seller for a specified period of time.
Sales contract: A contract signed by the buyer and sellerthat details the
terms of a home purchase.
Second mortgage: Another loan placed upon a piece of property.
Secondary mortgage market: A market of packaged home loans that are resold
as securities to investors. Major players are Fannie Mae and Freddie Mac.
Secured loan: Any loan backed by collateral.
Security: A piece of property designated as collateral.
Seller broker: A seller broker represents the interest of the seller.
Seller carry-back: An agreement in which the seller provides financing for
a home purchase.
Seller take-back: An agreement in which the seller provides financing for
a home purchase.
Seller's market: A hot real estate market in which sellers have the advantage
and multiple offers are common.
Semi-custom home: The buyer of a semi-custom home is free to make some design
changes but not to the home's structural plan.
Servicer: A firm that collects mortgage payments and manages borrowers'
escrow accounts.
Setback: The minimum distance a house or buildings must be from the lot
line.
Settlement statement: A document that details who has paid what to whom.
Shared-appreciation mortgage: A loan that allows a lender
to share in the borrower's profits when the home is sold.
Shared-equity transaction: A transaction in which two buyers purchase a
property, one as a resident co-owner and the other as an investor co-owner.
Special assessment: When a homeowners' association needs or wants extra
funds, it levies a special assessment upon the owners.
Special deposit account: Rehabilitation mortgages require a special deposit
account from which restoration and remodeling funds included in the loan
are disbursed to the appropriate contractors as work is completed.
Specifications: The written requirements for materials, equipment, construction
systems and standards.
Speculation home: A home that has been built without a buyer.
Square footage:
The number of square feet of livable space in a home or building.
Standard Metropolitan Statistical Area: Areas designated by the U.S. Office
of Management and Budget that contain a city of 50,000 or more.
Standard payment calculation: A calculation that is used to determine the
monthly payment necessary to repay the balance of a home loan in equal installments.
Starter home: Homes that fall within the lower price range of a typical
first-time buyer.
Step-rate mortgage: A loan that allows a gradual increase in the interest
rate during the first few years of the loan.
Straight purchase: A transaction in which the buyer gives a new-home builder
a deposit to begin building and the balance when the sale of the house closes.
Subagent: When an agent brings a buyer to a property, they in effect act
as a subagent to the listing agent.
Subcontractor: Specialty construction companies hired by the general contractor
to perform certain tasks.
Subdivision: The process in which the owner of a large piece of property
divides it into smaller parcels.
Subordinate loan: A second or third mortgage.
Survey: A precise measurement of a piece of property
by a licensed surveyor.
Sweat equity: The non-cash value put into a piece of property by the owner,
such as do-it-yourself home improvements. |
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T
Tax deduction: A tax break given by the government. Mortgage interest,
loan points and property taxes can be deducted.
Tax lien: An impediment placed against a property, such as back taxes.
Tax sale: The public sale of a property by the government for nonpayment
of taxes.
Tax shelter: A term often applied to real estate investment and refers to
various tax advantages.
Tear-down condition: A house that requires the entire interior to be rebuilt.
Teaser rate: An low, short-term rate offered on a mortgage to entice the
borrower.
Tenancy by the entirety: When a married couple owns a home, it is usually
considered tenancy by the entirety If the property must be sold to pay the
debts of one spouse, both must agree.
Tenants in common: Two or more owners who share interest in a specific property.
The 72-hour clause: When a buyer has a house to sell before they can purchase
another home, most sellers insist on a 72-hour clause. In the event of a
better offer coming in before the contingency is settled, this clause entitles
the seller to give the buyer 72 hours to remove the contingency or lose
the house.
Title: The actual legal document conferring ownership of a piece of real
estate.
Title company: Firms that ensure that the title to a piece of property is
clear and provide title insurance.
Title insurance: A policy issued to lenders and buyers to protect any losses
because of a dispute over the ownership of a piece of property.
Title risk: Possible impediments to the transfer of a title from one owner
to another.
Title search: A check of public title records to ascertain that the seller
is the legal owner and that there are no claims or liens against the property.
Total expense ratio: The percentage of monthly debt obligations relative
to gross monthly income.
Townhouse: An attached home that is not a condominium.
Tract home: Another term for a production home, a mass-produced house constructed
by one builder in a project.
Trade equity: Other real estate or assets a buyer gives to a seller as part
of the down payment.
Trading down: A reference to buyers who purchase a home that is less expensive
than their current house.
Trading up: A reference to buyers who purchase a home that is more expensive
home than their current house.
Trans-Union: Trans-Union Corp. is one of the "Big Three" credit-reporting
bureaus that operate nationwide. Address: 760 Sproul Road, P.O. Box 390,
Springfield, PA 19064-0390. Phone: (312) 408-1400.
Transfer of ownership: Any legal means by which a piece of real estate changes
hands.
Transfer tax: An assessment by state or local authorities at the time a
piece of property changes hands.
Treasury bills: Securities issued by the Treasury Department that have the
full backing of the U.S. government.
Treasury index: An index used to determine interest rate changes for adjustable
rate mortgages.
Trust account: Special accounts used by brokers and escrow agents to safeguard
funds for a buyer or seller.
Trustee: A legally empowered person who holds or controls a piece of property
for another person.
Truth-in-Lending Act: A federal law that protects consumers in a variety
of ways. One of its key provisions allows a consumer to cancel a home-improvement
loan, second mortgage or other loan if the home was pledged as security
(except for a first mortgage or first trust deed) until midnight of the
third business day after the contract was signed.
Two- to four-family property: A piece of property that is owned by one person
but provides housing for up to four households.
Two-step mortgage: An adjustable mortgage with two interest rates, one for
the first five or seven years of the loan, and the other for the remainder
of the loan term. |
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U
U.S. Department. of Housing and Urban Development
(HUD): A federal
agency that oversees the Federal Housing Administration and a variety of
housing and community development programs.
Underwriting: The process that lenders go through to evaluate the risks
posed by a particular borrower and to set appropriate conditions for the
loan.
Undisclosed heir: A person who claims the right to a piece of property after
the death of an owner without a will.
Undisclosed spouse: An unidentified marital partner who can claim the right
to a piece of property.
Unrecorded deed: An unrecorded deed transfers ownership from one party to
another without being officially recorded.
Unsecured loan: Any loan that is not backed by collateral.
Upgrades: Options than the standard carpeting, lighting, finish carpentry
and other amenities offered to all buyers in a new-home project.
Upzoning: The process in which a property is zoned from a lower to a higher
use.
Urban sprawl: The unplanned expansion of development over a large area.
Usury: A reference to illegally excessive interest charged on any loan. |
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V
VA loans: A program that allows most veterans to purchase a house without a down
payment.
Variable interest rate: A loan rate that moves up and down based on factors
including changes in the rate paid on bank certificates of deposit or Treasury
bills.
Variable rate: An interest rate that changes with fluctuations in such indexes
as the U.S. Treasury bill index.
Variable rate mortgage: Interest rates that hinges on
factors such as the rate paid on bank certificates and Treasury bills.
Verification of deposit: Part of the loan process, in which a lender will
ask a borrower's bank to sign a statement verifying the borrower's account
balances and history.
Verification of employment: Part of the loan process, in which a lender
asks the borrower's employer for confirmation of the borrower's position
and salary.
Veterans Administration (VA): The U.S. Department of Veterans Affairs operates
a variety of programs to help veterans. One of the key plans it oversees
is the VA loan program, which allows most veterans to purchase a house without
a down payment.
Voluntary lien: A lien that a homeowner willingly gives to a lender. |
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W
Waiver: A voluntary relinquishing of certain rights or claims.
Walk-through: A buyer's final inspection of the home to determine if conditions
in the purchase agreement have been satisfied.
Warranty: A legally binding promise to do something in the future.
Wetlands: Watery areas such as swamps, marshes and floodplains.
Wild Deed: An improperly recorded deed.
Will: The most basic legal document outlining the disposition of a person's
estate in the event of death.
Wraparound Mortgage: A loan to a buyer for the remaining balance on a seller's
first mortgage and an additional amount requested by the seller. Payments
on both loans are made to the lender who holds the wraparound loan. |
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X
No
Terms |
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Y
No Terms |
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Z
Zero-lot lines: Houses built without space between them and with
little or no yard.
Zoning: Regulations that control the use of land within a jurisdiction..
Zoning variance: A one-time modification of existing zoning law. |
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