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Glossary of Real Estate Terms

 

    ·     ABSTRACT OF TITLE: The summarized history of the legal title to property showing changes of title, records of liens and encumbrances.
·       AGENCY: A legal description in which an owner-principal engages a broker-agent in the sale of property or a buyer-principal engages a broker-agent in the purchase of property.
·       APPRAISAL: An estimate of value. The process through which property value is established.
·       APR: Annual Percentage Rate. The TOTAL finance charge (including interest, loan fees, points, etc.) expressed as a percentage of the loan amount.
·       ARM: Adjustable Rate Mortgage. A loan that allows the interest rate to be changed periodically.
·       ASSESSED VALUE: The valuation placed on property by a public tax assessor as the basis of property value.
·       ASSUMABLE MORTGAGE: A loan in which the remaining payments on an existing mortgage can be transferred to a new buyer.
·       CLOSING: The final step in transferring ownership of property from seller to buyer.
·       CLOSING COSTS: Charges paid at closing to obtain a mortgage loan and transfer real estate title, usually in addition to the purchase price of the home.
·       CONTINGENCY: A condition that must be satisfied before a contract is binding.
·       CONVENTIOAL LOAN: A fixed rate, fixed term loan that is made without government participation in the form of insuring (FHA) or guaranteeing (VA) the loan.
·       DEED: A legal document conveying title to a property.
·       EARNEST MONEY DEPOSIT: The payment given to the seller by a potential buyer indicating the buyer’s intent to complete the purchase of the property.
·       EASEMENTS: Rights of way granted to persons or companies authorizing access to or over the owner’s land. For example, utility companies may have easement rights to install pipes or wires on or over your land.
·       EQUITY: The difference between market value and the amount of the owner’s indebtedness on a property.
·       ESCROW: The placement of money and/or documents with a third party for safekeeping pending the fulfillment or performance of a specific act or condition. This definition of escrow varies in different parts of the country.
·       FHA MORTGAGE: A mortgage loan insured by the Federal Housing Administration that permits lenders to normally offer better terms for a buyer.
·       FIXED RATE MORTGAGE: A loan that has only one stated interest rate.
·       FORECLOSURE: A legal process instituted by a lender to have the proceeds from the sale of a property applied to the payment of a defaulted debt.
·       HUD: Housing and Urban Development. A United States government agency established to implement certain federal housing and community development programs.
·       INTEREST: The cost paid by a borrower for the use of money borrowed.
·       LIEN: A legal claim against a property such as security for debt, a judgment, or mortgage or taxes due.
·       LOAN ORIGINATION FEE: The charge paid to a lender by a borrower for processing a mortgage.
·       MARKET VALUE: The highest price a ready, willing and able buyer will pay and the lowest price a seller will accept.
·       MORTGAGE: A lien on real estate given by a buyer as security for money borrowed from a lender.
·       MORTGAGE COMMITMENT: A formal written communication by a lender, agreeing to make a mortgage on specific property, specifying the loan’s amount, length of time and conditions.
·       MORTGAGEE: The lender who has agreed to lend money to the mortgagor.
·       MORTGAGOR: The borrower who has agreed to repay a mortgage loan to the mortgagee.
·       MULTIPLE LISTING SERVICE: An index of all available properties in a given area; listing information includes asking price, type of property, taxes, etc…
·       P&I: Principle and Interest Payment. A periodic payment that includes the interest charges for the period plus an amount applied to amortization of the principal balance.
·       POINTS: A dollar amount, expressed as a percentage of the mortgage amount, which is paid to a lender as a consideration for making a loan. A point is 1% of the amount of the mortgage loan, also called discount points.
·       PREPAYMENT: Payment of a mortgage before the due date.
·       PRINCIPAL: The amount of money borrowed (excluding taxes, insurance, etc…).
·       REAL PROPERTY/REAL ESTATE: Land; anything affixed to land which can be regarded as a permanent part of the land, and that which is immovable by law.
·       REALTOR/REALTOR ASSOCIATE: Registered collective membership that identifies real estate professionals who are members of the National Association of REALTORS® and subscribe to its strict Code of Ethics.
·       SALES CONTRACT: The contract between the buyer and the seller. The contract should explain, in detail, exactly what your purchase includes, who is responsible for providing it, what guarantees there are, when you can move in, what the closing costs are, and what “outs” parties have in case the contract is not fulfilled or if you cannot get a mortgage commitment at the agreed-upon terms.
·       SURVEY: On-site measurement of lot lines, dimensions and position of house on lot, including determination of possible encroachment or existing easements. A survey is often required by the lender to assure him that a house is actually on the land according to its legal description.
·       TITLE: A document showing evidence of ownership.
·       TITLE INSURANCE: Protection for lenders and homeowners against financial loss resulting from legal defects in the title.
·       TITLE SEARCH: A review of title records to identify liens, encumbrances and ownership rights to the property.
·       VA MORTGAGE: Veterans Administration. A mortgage loan guaranteed by the Veterans Administration, an agency of the federal government that provides services for eligible veterans.
·       ZONING: Classification of real property for varying uses. A municipality has a right to determine and regulate the use of property.