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Glossary
Glossary of Real Estate Terms |
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| Amortization. | The gradual repayment of a mortgage loan by installments. |
| Appraisal. | An estimate of value based upon an analysis of information. |
| APR. | The Annual Percentage Rate is the borrower's actual cost of a loan. It includes the interest rate and other loan origination charges, and is expressed as a yearly rate and calculated over the life of the loan. |
| Assessed Value. | Value placed on a property as the basis for taxation. |
| Assessor. | A public official who establishes the value of a property for taxation purposes. |
| Assumable Mortgage. | A mortgage that can be taken over ("assumed") by the buyer when a home is sold. |
| Balloon Payment. | The final lump sum payment that is made at the maturity date of a balloon mortgage. |
| Bearing Wall. | A wall supporting a vertical load in addition to its own weight. |
| Broker. | One who acts as an agent for others in Real Estate transactions for a fee. |
| Building Code. | Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards. |
| Capital Gain. | Income from the sale of an asset. |
| CC&Rs. | Covenants, conditions and restrictions |
| Closing Statement. | An accounting of funds made to the buyer and seller separately at the completion of a Real Estate transaction. |
| Commission. | An agents compensation for performing the duties of his agency. |
| Comparable Sales. | Sales which have similar characteristics to the subject property, used for analysis by the appraiser. |
| Conforming Loan. | A loan that meets all eligibility requirements of federal agencies other than FHA and VA, and is under $300,700. If the loan amount is over $300,700, it would be considered a non-conforming or "jumbo" loan. |
| Contigency. | A condition that must be met before a contract is legally binding. |
| Credit Report. | A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. |
| CRV. | Certificate of reasonable value - The federal Veterans Administration appraisal of property value. |
| Deed. | A written instrument which conveys title. |
| Discount Points. | Discount points are often used to describe a type of fee that lenders charge. Discount points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. |
| Earnest Money. | Down payment made by a purchaser of Real Estate as evidence of good faith. |
| Easement. | A right, privelage or interest which one party has in the land of another such as a right of way. |
| Encroachment. | Construction of any improvements on the property of another. |
| Equity. | The difference between the current market value of a property and the total amount still owed against that property. |
| Escrow. | The deposit of instruments, funds and instructions with a neutral party who will carry out the provisions of a contract or agreement. |
| Exclusive Right to Sell. | A type of written listing agreement between agent and owner giving agent the right to collect a commission if the property is sold by anyone during the term of the agreement. |
| FHA. | Federal Housing Administration - a government agency that insures mortgage loans |
| FHA Loan. | With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower. |
| Foreclosure. | A legal procedure in which a mortgaged property is sold to pay the outstanding debt in case of default. |
| Hazard Insurance. | Insurance coverage that provides compensation to the insured in case of property loss or damage. |
| Homestead. | A home upon which the owner has recorded a Declaration of Homestead, this protects the home against judgements up to an amount specified in the statutes. |
| HUD | U.S. Department of Housing and Urban Development. The Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by l enders and sets minimum standards for such homes. |
| HUD-1 Statement. | The HUD-1 Settlement Statement itemizes the amounts to be paid by the buyer and the seller at closing. |
| Impounds. | A trust account set up by lenders to accumulate funds to pay taxes and insurance. They are usually collected along with the mortgage payment. |
| Income to Debt Ratio. | A qualifying ratio used in underwriting a residential mortgage loan, which computes the percentage of monthly income, required to meet the monthly housing expense. |
| Interest Rate. | The percentage of a sum of money which is charged for its use. |
| Joint Tenancy. | Joint ownership by two or more people with the right of survivorship. All tenants have equal rights and own an equal interest. |
| Lease. | A contract between property owner and tenant specifying the conditions under which the tenant may occupy and use the property. |
| LIBOR. | The London Interbank Offer Rate. An interest rate charged among banks in London for short term loans denominated in a specific currency. A common index for debt securities. |
| Lien. | A legal claim against a property that must be paid off when the property is sold. |
| Liquidated Damages. | An agreed upon amount of damages to apply if a certain event occurs. |
| Listing. | An employment contract between property owner and agent authorizing the agent to perform services for the owner in order to secure a buyer for that property. |
| Market Value. | The price at which a willing buyer would buy and a willing seller would sell when neither are subject to undue pressure. |
| MLS. | The Multiple Listing Service where members post their clients properties for sale so that other members have the opportunity to find buyers. |
| Mortgage. | A legal instrument wherein property is used to secure the payment of a debt. |
| Notary Public. | An officer who is authorized to take the acknowledgement of persons executing documents, to sign the certificate and affix his seal. |
| Option. | A right given (in exchange for a fee) to purchase or lease a property according to specified terms and conditions. |
| Origination Fee. | The fee lenders charge to borrowers to prepare documents, process and close the loan. Usually stated as a percentage of the loan. |
| PITI. | Acronym for items included in a monthly mortgage payment: principal, interest, taxes and insurance. |
| PMI. | Private Mortgage Insurance is provided to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value ratio in excess of 80%. |
| Prepayment Penalty. | A fee that may be charged to a borrower who pays off a loan before it is due. |
| Proration of Taxes. | To divide the taxes in proportion to the time in use. |
| Rate Lock. | A commitment issued by a lender to a borrower guaranteeing specified interest rate for a specified period of time. |
| REALTOR. | A member of the National Association of Realtors. realtors subscribe to a higher code of ethics. |
| Secondary Financing. | An additional loan secured by a second mortgage or trust deed on real property, could apply to any loan other than the first one. |
| Septic Tank. | An underground tank in which sewage from the house is reduced to liquid by bacterial action and then drained away. |
| Special Assessment. | A charge by a public authority against Real Estate to pay the cost of public works such as street lighting and improvements. |
| Subdivision. | A housing development that is created by dividing a tract of land into individual lots for sale or lease. |
| Tenancy in Common. | Ownership by two or more people who hold undivided interests (not necessarily equal). There is no right of survivorship. |
| Termites. | Wood eating insects. |
| Title. | An instrument which provides evidence of ownership |
| Title Insurance. | Insurance written by a title company to protect property owner against loss in the event that title is found to be flawed. |
| Transfer Fee. | Fees charged by a municipality to defray the cost of recording a transfer of ownership. |
| Trust Deed. | A legal document wherin a buyer pledges real property as a guarantee for the repayment of a loan. |
| Underwriter. | One who analyzes a potential borrowers ability to repay a loan. |
| Zoning. | An act by a city or county which specifies the type of use to which a property may be put. |
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Jim Forsyth CRS e-PRO
DRE License: 01386947 College Realty Inc. GMAC Real Estate, 14767 Bear Valley Rd. Hesperia, CA, 92345 Cell: (760) 617-3390 Fax: (760) 281-1701 |
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