of Real Estate Terms
Mortgage (ARM): A loan characterized by a fluctuating interest rate,
usually one tied to a bank or savings and loan association cost-of-funds
brokers, real estate agents (REALTORS®, sales associates,
licensees, etc.) are trained and licensed to conduct real estate transactions.
Agents, however, must operate under the supervision of a broker, and their
training is not as extensive.
A loan in which the principal as well as the interest is payable in monthly
or other periodic installments over the term of the loan.
An estimate of the quantity, quality or value of something. The process
through which conclusions of property value are obtained; also refers
to the report that sets forth the process of estimation and conclusion
An increase in the worth of value of a property due to economic or related
causes, which may prove to be either temporary or permanent; opposite
The valuation placed upon property by a public tax assessor for the purposes
estate broker is a person licensed to carry out real estate transactions
and receive a fee for these activities.
The bringing together of parties interested in making a real estate transaction.
Chain of title:
The succession of conveyances, from some accepted starting point, whereby
the present holder of real property derives title.
occasion when a sale is finalized; the buyer signs the mortgage and closing
costs are paid.
Presides over the closing; works on the buyer’s behalf to transfer title
and ownership from the seller to the buyer.
Expenses (over and above the price of the property) incurred by buyers
and sellers in transferring ownership of a property.
A detailed cash accounting of a real estate transaction showing all cash
received, all charges and credits made and all cash paid out in the transaction.
Cloud on title:
Any document, claim, unreleased lien or encumbrance that may impair the
title to real property or make the title doubtful; usually revealed by
a title search and removed by either a quitclaim deed or suit to quiet
Property pledged as security for a debt, such as the real estate pledged
as security for a mortgage.
Payment to a broker for services rendered, such as in the sale or purchase
of real property; usually a percentage of the selling price of the property.
Analysis (CMA: A comparison of the prices of recently sold homes that
are similar to a seller’s home in terms of location, style and amenities.
A condition that must be met before a contract is legally binding.
A loan that requires no insurance or guarantee.
A new offer made in response to an offer received. It has the effect of
rejecting the original offer which cannot be accepted thereafter unless
revived by the offeror.
ratio: The ratio used to qualify potential borrowers for a loan. Compares
total monthly housing expense and other debt with total monthly income.
Deed: A written
instrument that, when executed and delivered, conveys title to or an interest
in real estate.
to make mortgage payments on a timely basis or to comply with other conditions
of the mortgage.
A unit of measurement used for various loan charges; one point equals
one percent of the amount of the loan.
Down payment investment:
Part of the purchase price which the buyer pays in cash and does not finance
with a mortgage.
Money deposited by a buyer under the terms of a contract, to be forfeited
if the buyer defaults but applied to the purchase price if the sale is
right to use the land of another for a specific purpose, such as for a
right-of-way or utilities.
interest or value that an owner has in property over and above any indebtedness.
The trust account established by a broker under the provisions of the
license law for the purpose of holding funds on behalf of the broker’s
principal or some other person until the consummation or termination of
Evidence of title:
Proof of ownership of property; commonly a certificate of title, an abstract
of title with lawyer’s opinion or title insurance.
Administration (FHA) Loan: A loan insured by the Federal Housing Administration
and made by an approved lender in accordance with the FHA’s regulations.
A legal procedure whereby property used as security for a debt is sold
to satisfy the debt in the event of default in payment of the mortgage
not or default of other terms in the mortgage document. The foreclosure
procedure brings the rights of all parties to a conclusion and passes
the title in the mortgaged property to either the holder of the mortgage
or a third party who may purchase the realty at the foreclosure sale.
policy: A standardized package insurance policy that covers a residential
real estate owner against financial loss from fire, theft, public liability
and other common risks.
ratio: The relationship between the monthly payments made for housing
costs and monthly income.
HUD 1 Statement:
An itemized statement of all charges that will be collected at closing,
whether they are required by the lender or a third party.
use of borrowed money to finance an investment.
Lien: The right
given by law to certain creditors to have their debts paid out of the
property of a defaulting debtor, usually by means of a court sale.
Representing both parties to a transaction. This is illegal unless both
parties agree to it.
fee: A fee charged to the borrower by the lender for making a mortgage
loan. The fee is usually computed as a percentage of the loan amount.
The relationship between the amount of the mortgage loan and the value
of the real estate being pledged as collateral.
conditional transfer or pledge of real estate as security for the payment
of a debt. Also, the document creating a mortgage lien.
A lien or charge on the property of a borrower that secures the underlying
service (MLS): A marketing organization composed of member brokers
who agree to share their listing agreements with one another in the hope
of procuring ready, willing and able buyers for their properties more
quickly than they could on their own.
Payment terms under which the borrower’s monthly payments do not cover
the interest due; as a result, the loan balance increases.
The limit on the amount the monthly payment can be increased on an adjustable-rate
mortgage when the interest rate is adjusted.
On a closing statement, items that have been paid in advance by the seller,
such as insurance premiums and some real estate taxes, for which he or
she must be reimbursed by the buyer.
A charge imposed on a borrower who pays off the loan principal early.
This penalty compensates the lender for interest and other charges that
would otherwise be lost.
The original amount (as in a loan) of the total due and payable at a certain
Insurance (PMI): Insurance provided by private carrier that protects
a lender against a loss in the event of a foreclosure or deficiency.
Expenses, either prepaid or paid in arrears, that are divided or distributed
between buyer and seller at closing.
Rate cap: The
limit on the amount the interest rate can be increased at each adjustment
period in an adjustable-rate loan. The cap may also set the maximum interest
rate that can be charge during the life of the loan.
Land; a portion of the earth’s surface extending downward to the center
of the earth and upward indefinitely into space, including all things
permanently attached to it, whether naturally or artificially.
of the National Association of Real Estate Brokers use the term Realtist.
of the National Association of REALTORS® use the term REALTOR®.
process by which boundaries are measured and land areas are determined;
the on-site measurement of lot lines, dimensions and position of a house
on a lot, including the determination of any existing encroachments or
easements. Surveys prepared from public records are called location
surveys. Surveys prepared on-site by a professional surveyor are called stake surveys.
The right to or ownership of land. (2) The evidence of ownership of land.
A policy insuring the owner or borrower against loss by reason of defects
in the title to a parcel of real estate, other than encumbrances, defects
and matters specifically excluded by the policy.
(VA) loan: A mortgage loan on approved property made to a qualified
veteran by an authorized lender and guaranteed by the Department of Veterans
Affairs in order to limit the lender’s possible loss.
division of a city or county by legislative regulations into areas (zones),
specifying the uses allowable for the property in those areas.
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