Welcome to our glossary of real estate terms. This is intended to be used as a quick reference to help you understand the process of buying and selling property in Texas and the paperwork that must be completed along the way. You may click on any letter to skip to that section or scroll down the page to find the term you are looking for. If you do not understand a term or do not find what you are looking for, please email me at info@rrea.com. These terms have been compiled from various sources from the internet.Ai?? I also have a Glossary of Construction Terms on the right side of this page that you can click on and it will take you to all of my alphabetized construction terms which were compiled by the Champions School of Real Estate.Ai?? Those will be very helpful if you are purchasing new construction or having a new home built.

Other useful definitions:

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401(k)/403(b) – An employer-sponsored investment plan that allows individuals to set aside tax-deferred income for retirementAi??or emergency purposes.Ai?? 401(k) plans are provided by employers that are private corporations.Ai?? 403(b) plans are provided by employers that are not-for-profit organizations.

401(k)/403(b) Loan – Some administrators of 401(k)/403 (b) plans allow for loans against the monies accumulated in these plans – monies must be repaid to avoid serious penalty charges.

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Absorption Rate – The ratio of the number of properties in an area that have been sold against the number available and it is used to show the volatility of the market.

Abstraction Method– A method of estimating the value of property that uses similar properties available in the same market to extract the value of a parcel of land.

Acceleration Clause– A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. This is usually when the borrower defaults on the loan.

Acceptance – A buyer’s or seller’s agreement to enter into a contract and be bound by the terms of the offer.

Accessory Builder– A building separate from the main structure on a property. This is often used for a specific purpose, such as a workshop, storage shed or garage.

Accretion– The natural growth of a piece of land resulting from forces of nature.

Acre– 43,560 square feet – a measurement of area.

Actual Age– The amount of time that has passed since a building or structure was built.

Ad Valor em Tax– Taxes assessed based on the value of the land and its improvements.

Addendum- A supplement to any document that contains additional information pertinent to the subject. Appraisers use addendum to further explain items for which there was inadequate space on the appraisal form.Ai?? Realtors use addendum for various reasons, one being to re-negotiate the contract after inspections are done on a property and the contract is already at the title company.

Additional Principal Payment – A payment made by a borrower of more than the scheduled principal amount due, in order to reduce the outstanding balance on the loan, to save on interest over the life of the loan and/or pay off the loan early.

Adjustable Period– The length of time between interest rate changes on the Adjustable Rate Mortgage (ARM.) For example, a loan with an adjustable period of one year is called a one year ARM, which means that the interest rate can change once a year.

Adjustable Rate Mortgage (ARM) – Also known as a Variable Rate Mortgage. An ARM is a mortgage with an interest rate that adjusts periodically to reflect changes in market conditions. The mortgage payments are adjusted up or down (usually on an annual basis) as the interest rate changes. To protect you in a rising interest market, rate increases are limited (usually two percentage points annually; six percentage points over the life of the loan.) ARMs are also referred to as AMLs (Adjustable Mortgage Loans) or VRMs (Variable Rate Mortgages).

Adjusted Basis– The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

Adjusted Sales Price– An opinion of a property’s sales price, after adjustments have been made to account for differences between it and another comparable property.

Adjustment Date– The date the interest rate changes on an adjustable rate mortgage.

Aesthetic Value– The additional value of a property enjoyed based on subjective criteria such as look or appeal.

Affirmation– A declaration that a certain set of facts are truthful.

Affordable Analysis– A calculation used to determine an individual’s likelihood of being able to meet an obligation of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

Agent– A person who has been appointed to act on behalf of another for a particular transaction.Ai?? You need Shannon Register as your real estate agent!Ai?? Sometimes new home builders will tell you they will reduce the amount of the house by 6% if you do not use an agent.Ai?? The sales person says that so he or she can get both sides of the commission.Ai?? Marketing fees pay a realtor, it’s not added to your new home price.Ai?? Your realtor will negotiate a good house price for you and keep you from having to pay increased fees down the road at closing.Ai?? Without a realtor, you have no representation and the builder will most likely add fees to your closing cost and your loan if you use their financing and their title company (they require you use their title company.)Ai?? You have no representation if you do not use a Realtor.Ai?? I have a New Home Sales Certification so I can help my clients buy new homes without being taken to the cleaners!

Amenity – A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction, although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views, etc. Man-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.

American Society of Appraisers– An organization of appraisal professionals and others interested in the appraisal profession.

Amortization – The gradual repayment of a home loan by periodic installments. Repayment of a loan in installments of principal and interest, rather than interest-only payments.

Amortization Schedule – A timetable for payment of a home loan. An amortization schedule shows the amount of each payment applied to interest and principal and the remaining balance after each payment is made.

Amortization Term (Period) – The amount of time it takes to pay off the loan. The amortization term is expressed as a number of months. For example, for a 30 year fixed rate loan, the amortization term is 360 months.

Amortize – To repay a loan with regular payments that cover both principal and interest.

Amperage– A measure of electric current describing the magnitude.

Annual Percentage Rate (APR) – This refers to the interest rate that reflects the actual cost of a mortgage as a yearly rate. Because APR includes points and other costs associated with the mortgage, it’s usually higher than the advertised simple interest rate. The APR more accurately reflefts what you’ll be paying and allows you to compare different mortgages based on actual costs. The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.

Annuity– A sum of money paid at regular intervals, often annually.

Application (or 1003) – A form to be completed by a home loan applicant with the lender’s assistance to provide pertinent information about a prospective borrower’s employment, income, assets, debts, and other financial information, about the purpose of the home loan, and about the property securing the home loan. Lenders also sometimes call it a 1003 – the form number of Fannie Mae’s standard application form.

Application Fee – A fee usually paid at the time an application is given to a lender for helping to complete and review an application. Some lenders collect fees for a property appraisal and a credit report, instead of an application fee, at the time of application.

Appraisal – An estimate of the value of a home, made by a professional appraiser. The maximum amount of the mortgage is usually based on the appraisal. An estimate of the property’s value. A “defensible” and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraisal.

Appraisal Foundation– A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

Appraisal Institute– A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

Appraisal Principles– The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

http://pole-handicap-autonomie.com/?p=28534 Appraisal Report– The end result of the appraisal process, usually consists of one major, standardized form such as the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

Appraisal Standards Board (ASB)– An independent board of the Appraisal Foundation, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation’s Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

Appraised Value – The dollar figure for a property estimated fair market value, based on an appraiser’s knowledge, experience, analysis of the property and comparable properties near by. The opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

Appraiser – A person qualified by education, training, and experience to estimate the value of real property.

Appreciation where can i purchase minocycline – An increase in the value of a property due to changes in market conditions or other causes. Inflation, increased demand, home improvement, and sweat equity are all causes of appreciation. The opposite of depreciation.

Assessed Value – The value used to determine property taxes, based on a public tax assessor’s opinion. Contrast with appraised value.

Arms Length Transaction– Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

Assessed Value– The value of a property according to jurisdictional tax assessment.

Assessment – The amount of tax due to local government. May also refer to the amount due to local government or to common owners of a property (e.g., a homeowner’s association) for a special payment to cover expenses for improvements or maintenance, such as new sewers or roads.

Assessment Ratio– The comparative relationship of a property’s assessed value to it’s market value.

Assessment Rolls – A public record of the assessed value of property in the taxing jurisdiction.

Assessor – A public official who establishes the value of a property for taxation purposes.

Asset – Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

Assignment– Transfer of ownership of a mortgage- usually when the loan is sold to another company.

Assumable Loan – A home loan that allows a new purchaser of the home to take over (“assume”) the land obligations of the seller when a home is sold.

Assumable Mortgage– A mortgage that can be taken over by the buyer when a home is sold.

Assumption– When a buyer takes over, or assumes the seller’s mortgage.

Assumption Clause – A provision in an assumable loan that allows a buyer to assume responsibility for the home loan from the seller. The loan does not need to be paid in full by the original borrower (seller) upon sale or transfer of the property.

Assumption Fee – The fee paid to a lender (usually by the buyer) for the lender’s agreement to start collecting payment from the buyer instead of the original borrower (seller).

Assumption of Mortgage– A buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyers in order to release the original borrower (usually the seller) from liability.

Attached Housing– Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

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Balance Sheet – A financial statement that shows an individual’s assets, liabilities, and net worth as of a specific date.

Balloon Loan – A loan that has level monthly payments that will amortize it over a stated term (e.g., 30 years) but that requires a lump sum payment of the entire principal balance at the end of a shorter term (e.g., 10 years).

Balloon Mortgage– A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.

Balloon Payment – The final lump sum payment that is made at the end of the shorter term for a balloon loan and pays the loan in full. A lump sum principal payment due at the end of some mortgage or other long-term loans.

Bankrupt – A person, firm, or corporation that is financially unable to pay debts when due. The debtor seeks relief through a court proceeding to work out a payment schedule or erase debts. In some cases, the debtor must surrender control of all assets to a court-appointed trustee.

Bankruptcy – A proceeding in a federal court in which a debtor who is financially unable to pay debts when due seeks relief to work out a payment schedule or erase debts.

Bill of Sale – A written document that transfers title to personal property from seller to buyer.

Binder– Sometimes known as an offer to purchase or an earnest money receipt. A binder is the acknowledgment of a deposit along with a brief written agreement to enter into a contract for the sale of real estate.

Biweekly Mortgage– A mortgage where you make “half payments” every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.

Biweekly Payment Loan – A loan that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30 year fixed rate loan, and they are usually drafted from the borrower’s bank account. The result for the borrower is faster amortization leading to substantial interest savings from faster principal reduction.

Blighted Area– Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

Bona Fide– Any genuine offer, made without intent to defraud or deceive.

Bond – An interest-bearing certificate of debt with a maturity date. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

Breach – A violation of terms of any legal obligation.

Break Even Point – Point at which total income equals total expenses.

Bridge Financing– An interim loan made to facilitate the purchase of a new home before the buyer’s current residence sells and its equity is available to fund the new purchase.

Bridge Loan – A type of mortgage financing between the termination of one loan and the start of another loan. For example, a mortgage secured by the borrower’s present home (which is usually up for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as a “swing loan.”

Broker – A person who is normally licensed by the state and who, for a commission or a fee, assists in negotiating a real estate transaction or negotiating the terms of a home loan. See mortgage broker.

BTU– British Thermal Unit. A unit measurement used to describe heating or cooling capacity.

Budget – A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.

Buffer Zone– A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

Building Code – Local regulations that specify minimum structural requirements for design of, construction of, and materials used in a home or office building. Building codes are based on safety and health standards.

Building Line or Setback– The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.

Built- ins– Specific items of personal property which are installed in a real-estate improvements such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

Bungalow– A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.

Buy Down – A temporary buy down gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan. Permanent– prepaid interest that brings the note rate on the loan down to a lower, permanent rate. Temperary – helps the buyer to more readily qualify and to increase payments as income grows.

Buy Down Account – An account in which funds are held so that they can be applied as part of the monthly loan payment as each payment comes due during the period that an interest rate buy down plan is in effect. For example, if a seller agrees to help reduce a buyer’s monthly payment during the first year of a loan, the seller may put money in a buy down account which is then paid to the lender each month to reduce the buyer’s monthly payment. This is more commonly done through a buy down paid directly to the lender at closing.

BX Cable- Electrical cable shrouded in a galvanized steel outer cover.

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Call Option – A provision or clause in a mortgage loan which allows the lender the right to accelerate the debt, and require for full payment of the loan immediately, at the end of a specified period or for specified reason. So the mortgage company can “call” the loan and demand payment of the outstanding balance at a specified time.

Cap – A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or loan payments may increase or decrease within a certain time period or the life of the mortgage. In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap. The limit on how much an interest rate or monthly payment can change, either at each adjustable or over the life of the mortgage.

Cape Cod Colonial – A single-story house style made popular in New England. Often characterized by a steep roof with gables.

Capital – 1. Money used to create an income, either as an investment in a business or an income property. 2. The money or property comprising the wealth owned or used by a person or business enterprise. 3. The accumulated wealth of a person or business. 4. The net worth of a business represented by the amount by which its assets exceed liabilities. Accumulated goods and money which is most often used to generate additional income.

Capital Expenditure – The cost of an improvement made to extend the useful life of a property or to add to its value, such as adding a room. The cost of repairing a property is not a capital expenditure. Capital expenditures are appreciated over their useful life; repairs are subtracted from income for the current year. An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

Capital Improvement – Any structure or component erected as a permanent improvement to real property that adds to its value and useful life. See Capital Expenditure.

Cash Available for Closing – Borrower funds available to cover down payment and closing costs.

Cash Flow Basis – This calculation shows when your monthly payment savings exceed your estimated closing costs and discount points. It does not consider the tax impact or differences in principal balance reduction between your current loan and the refinance suggestions. You can use the Amortization Schedule Calculator to compare principal reduction.

Cash Out Refinance – A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity. Refinancing a mortgage at a higher amount than the current balace in order to transform a potion of the equity into cash.

Cash Reserves – The amount of the buyer’s liquid cash remaining after making the down payment and paying all closing costs.

Caveat Emptor- Literally translated: “Let the buyer beware.” A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CC&Rs – Covenants, conditions and restrictions. A document that controls the use, requirements and restrictions of a property.

Ceiling – The maximum interest rate that can accrue on a variable rate loan or adjustable rate mortgage (ARM). See lifetime rate cap.

Certificate of Commitment – The lender’s approval of a VA loan, which is usually good for up to six months.

Certificate of Deposit- A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

Certificate of Deposit Index- An index based on the interest rate of six month CD’s . Used to set interest rates on some Adjustable Rate Mortgages.

Certificate of Eligibility – A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) loan.

Certificate of Occupancy- Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

Certificate of Reasonable Value (CRV) – A document issued by the Department of Veteran’s Affairs (VA) that establishes the maximum value and loan amount for a VA loan, based on an approved appraisal. A document that establishes the maximum value and loan amount for a VA guaranteed mortgage. Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

Certificate of Title – A statement provided by an abstract company, title company, or attorney stating who holds title to real estate based on the public record. A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

Certified General Appraiser- Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

Certified Residential Appraiser- A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

Chain of Title – The history of all of the documents affecting title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Chattel – Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of a property.

Circuit Breakers– Electrical devices which automatically open electrical circuits if they are overloaded.

Clear Title – A title that is marketable and is free of liens or disputed legal questions as to ownership of the property. Ownership of property that is not encumbered by any counter-claim or lien.

Closing – The conclusion or consummation of a transaction. In real estate, closing includes the delivery of a deed, the signing of notes and security instruments, and the disbursement of funds necessary to the sale or loan transaction. Also referred to as settlement.

Closing Cost Item – A fee or amount that a home buyer must pay at closing for a particular service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney’s fees. Many closing cost items are included as numbered items on the HUD-1 settlement statement.

Closing Costs – Various expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include items such as broker’s commissions, discount points, origination fees, attorney’s fees, taxes, title insurance premiums, escrow agent fees, and charges for obtaining appraisals, inspections and surveys. Closing costs will vary according to the area of the country. Lenders or real estate professionals often provide estimates of closing costs to prospective home buyers even before the HUD-1 settlement statement is delivered.

Closing Statement – An accounting of funds given to both buyer and seller before real estate is sold. See HUD – 1 settlement statement. The financial disclosure statement that accounts for all of the funds received and expected at the closing, including deposits for taxes, hazard insurance, and mortgage insurance.

Cloud on Title – An outstanding claim or lien, revealed by a title search, that adversely affects the owner’s title to real estate. Usually, clouds on title cannot be removed except by a quit claim deed, release, or court action.

Co-Borrower– A second person sharing obligation on the loan and title on the property.

Coinsurance – A sharing of insurance risk between the insuree and the insured.Ai?? Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.

Coinsurance Clause – A provision in hazard insurance policies stating the minimum amount of coverage that must be maintained – as a percentage of the total value of the property – in order for the insured to collect the full amount of a loss.

Collateral– An asset which is placed at risk to secure the repayment of a loan.

Collection– The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that my be used in foreclosure.

Co-Maker– A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

Combined Loan To Value (CLTV) – The ratio of the total amount borrowed on all mortgages against a property compared to the appraised value of the property.Ai?? For example, if you have an $80,000 1st mortgage and a $10,000 2nd mortgage on a home with an appraised value of $100,000, theCLTV is 90% ($80,000+$10,000=$90,000/$100,000=90%).

Commission – The fee chargedAi??by a broker or agent for negotiating a real estate or loan transaction.Ai?? A comission is generally a percentage of the price of the property or loan (such as 3%, 5%, or 6%).Ai?? Usually Sellers pay all of the commission for a real estate agent, so if you are buying a property you are not paying the commission even though you have representation.

Commitment Letter – A formal notification from a lender stating that the borrower’s loan has been conditionally approved and specifying the terms under which lender agrees make the loan.Ai?? Also known as a “loan commitment.”

Commitment Period– The period during which a loan approval is valid.

Common Area Assessments – Payments required of individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowner’s association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.

Common Areas – Those portions of a building, land and amenities owned (or managed) by a planned unit development (PUD) or condominium project’s homeowner’s association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance.Ai?? Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Common Law– As opposed to the statue of law. Laws that have been established by custom, usage and courts over many years.Ai?? Some couples are considered common law married, even though they have never actually been married.

Community Property– In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

Comparables (Comps) – An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property who’s value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

Compound Interest – Interest Paid on the principal balance and on the accrued and unpaid interest.

Concessions– Additional value granted by a buyer or seller to entice another party to complete a deal.

Condemnation – (1) Declaration that a building is unfit for use or is dangerous and must be destroyed; (2) taking of private property for a public use (such as a park, street or school) through an exercise of the right of eminent domain.

Condensation– The transition of water vapor to liquid. Typically forms in areas of high humidity.

Condominium– A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surface (walls, floors, and ceilings) serves as boundaries. A real estate project in which each unit owner has title to a unit in a multi-unit building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

Condominium Conversion– Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

Condominium Hotel (condotel) – A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.

Conforming Loan – A home loan with a maximum loan amount of $417,000.00Ai??that is eligible for purchase by FNMA and FHLMC.

Construction Loan – A short-term, interim loan for financing the cost of home construction. The lender makes payments to the builder at periodic intervals as the work progresses. A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage once the property is completed.

Consumer Reporting Agency (or Bureau) – An organization that prepares reports that lenders use to determine a potential borrower’s credit history. The agency obtains data for these reports from a credit repository as well as from creditors such as mortgage lenders, credit card companies, department stores, etc.

Contiguous– Connected to or touching along an unbroken boundary.

Contingency– A condition that must be satisfied before a contract is legally binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing. Home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Contract – An oral or written agreement to do or not do something. All real estate contracts in Texas must be in writing. A legal binding agreement, oral or written, between two parties.

Conventional Loan – A home loan that is not insured or guaranteed by the federal government. Contrast with government loan. Can be for conforming or non-conforming amounts.

Conventional Mortgage– A traditional, real estate financing mechanism that is not backed by any government or other agency.

Conversion Clause– A provision in some ARMs that enables home buyers to change an ARM to a fixed rate loan, usually after the first adjustment period. The new fixed rate is generally setAi??to the prevailing interest rate for fixed rate mortgages. This conversion feature may cost extra.

Convertibility Clause – A provision in some adjustable rate mortgages (ARMs) that allow the borrower to change the ARM to a fixed rate loan at specified times during the life of the loan.

Convertible ARM – An adjustable rate mortgage (ARM) that can be converted to a fixed rate loan under specified conditions.

Cooperative (Co-op) – A form of multiple ownership in which a cooperation or business trust entity holds a title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements. Residents own shares in the cooperative corporation that owned the property, giving each resident the right to occupy a specific apartment or unit.

Corporate Relocation – Arrangements under which an employer moves an employee to another area as part of the employer’s normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity. A situation where a person’s employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee’s primary residence.

Co-Signer – A person who signs a promissory note along with the borrower. A co-maker’s signature helps to assure that the loan will be repaid. The borrower and the co-maker are jointly responsible for the repayment of the loan.

Cost of Funds Index (COFI) http://mttaborsoap.com/?p=12687 – An index that is used to determine interest rate changes for certain adjustable-rate mortgage(ARM) plans. It represents the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco. See adjustable-rate mortgage (ARM).

Covenant – A promise in a mortgage or deed that requires or prevents certain uses of the property that, if violated, may result in loss or foreclosure of the property. A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

Credit – An agreement in which a borrower receives money or something of value in exchange for a promise to repay the lender on specified terms at a later time. A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

Credit History – An evolution of an individual’s capacity and history of debt repayment. A credit history helps a lender to determine whether a potential borrower is likely to repay a loan in a timely manner.

Credit Life Insurance – A type of insurance that pays off a loan if one of the borrowers dies while the policy is in force.

Credit Limit – The maximum amount that can be borrowed under the home equity line of credit.

Creditor – A person to whom money is owed.

Credit Rating – An expression of creditworthiness based upon present financial condition and past credit history.

Credit Report – A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies, or similar matters of public record entered against the individual.

Credit Repository (Credit Bureau) – An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Large companies that gather and store financial and credit information about individuals who apply for credit.

Credit Scoring – Credit scores are numerical values that rank individuals according to their credit history at a given point in time. Your score is based on your past payment history, the amount of credit you have outstanding, the amount of credit you have available, and other factors. According to Fannie Mae – one of the major investors in home loans, credit scores have proven to be very good predictors of whether a borrower will repay his or her loan.

Cul-de-sac– A dead-end street. One with only one entrance/exit.

Cumulative Interest – Total interest accrued.

Current PITI – There is an abbreviation for monthly payment that includes principal, interest, taxes and insurance. In mortgage lending it is common for the monthly mortgage payment to include not only the principal and interest payment on the loan, but an escrow amount for real estate taxes and hazard insurance as well.

Curtailment – A payment that reduces the principal balance of a loan.

CRB– Certified Residential Broker

CRS– Certified Residential Specialist

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Date of Appraisal– The specific point in time at which an appraiser designates the value of a home. Often stipulated as the date of inspection.

Debt – An amount owed to another. See installment loan and revolving liability. An obligation to repay some amount owed. This may or may not be monetary.

Debt Equity Ratio– The ratio of the amount of a mortgage still owed on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.

Debt Ratio– The comparison of a buyer’s housing costs to his or her gross or net effective income, and the comparison of a buyer’s total long-term debt to his or her gross or net effective income. The first ratio is housing ratio; the second ratio is total debt ratio.

Deed – The legal document conveying title to a property.

Deed-In-Lieu – A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure. Also called a “voluntary conveyance.”

Deed of Reconveyance-A document which transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.

Deed of Release– A document which dismisses a lien or other claim on a property.

Deed of Surrender– A document used to surrender any claim a person has to a property.

Deed of Trust – The document used in some states instead of a mortgage; title is vested in a trustee to secure repayment of the loan. This is used in Texas.

Default – Failure to make loan payments on a timely basis or to comply with other requirements of a mortgage.

Delinquency – Failure to make mortgage payments due.

Deposit – A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.

Depreciation – A natural decline in the value of property because of physical or economic changes such as wear and tear; the opposite of appreciation.

Detached Single-Family Home-A single building improvement intended to serve as a home for a single family.

Discount Points – Amounts paid to the lender at origination to lower the rate on the face of the note. See point. Points paid in addition to the loan origination fee to get a lower interest rate. One point is equivalent to one percent of the loan amount.

Distressed Property– A mortgaged property which has been foreclosed on.

Document Preparation – This fee covers the expenses associated with the process of preparing some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement.

Down Payment – The part of the purchase price of a property that the buyer pays in cash and does not finance with a home loan. An amount paid in cash for a property, with the intent to mortgage the remaining amount due.

Draw Period – The time period which the borrower may access and use a line of credit.

Due-On-Sale Clause or Due-On-Sale Provision – A clause or provision in a mortgage home loan that requires a full payment of a mortgage or deed of trust when the secured property changes ownership. This allows the lender to demand repayment in full if the borrower sells the property that serves as security for the loan.

Due-On-Transfer Provision – This terminology is usually used for second mortgages. See due-on-sale provision.

Duplex– A single-building improvement which is divided and provides two units which serve as homes to two families.

Dwelling– A house or other building which serves as a home.

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Earnest Money Deposit (Earnest Money) – The portion of the down payment (deposit) delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith. A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.

Easement – A right of way given to persons other than the owner to accessAi??or go over a property. The right of a non-owner of property to exert control over a portion or all of the property. For example, power companies often own an easement over residential properties for access to their power lines.

Economic Depreciation– The decline in property value caused by external forces, such as neighborhood blight or adverse development.

Economic Life– The amount of time which any income-producing property is able to provide benefits to it’s owner.

Effective Age – An appraiser’s estimate of the physical condition of a building. The actual age of a building may be shorter or longer than its effective age. The subjective, estimated age of a property based on its condition, rather than the actual time it was built. Excessive wear and tear can cause a property’s effective age to be greater than its actual age.

Eminent Domain – The right of a government to take private property for public use upon payment of fair compensation to the owner. Eminent domain is the basis for condemnation proceedings. The legal process whereby a governament can take ownership of a piece of property in order to convert it to public use. Often, the property owner is paid fair-market value for the property.

Employer-Assisted Housing – A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.

Encroachment – An improvement that physically intrudes or trespasses on another’s property. A building or other improvements on one property which invades another property or restricts its usage.

Encumbrance – Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, deeds, or restrictions. A claim against a property. Examples are mortgages, liens, and easements.

Endorser – A person who signs a check or promissory note over to another party. Contrast with co-signer.

Energy Efficiency Ratio– An efficiency rating system for all air conditioning units that corresponds to the number of BTU’s output per watt of electricity used.

Equal Credit Opportunity Act (ECOA) – A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equity– The difference between what is owed and what the property could be sold for. The value of your home after the outstanding balance of any loans are subtracted. If you make a 5% down payment, you have 5% of the price of your home in equity. As you make payments toward principal over time, the equity in your home grows.

Equity Buildup– The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

Errors and Omissions Insurance– An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.Ai?? Realtors also useAi??E & O Insurance.

Escrow– A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties’ instructions and assuming responsibility for handling all the paperwork and distribution funds. An amount retained by a third party in a trust to meet a future obligation. Often used in the payment of annual taxes or insurance for real estate.

Escrow (or Impound) Account– An account setup by a mortgage servicing company to hold funds with which to pay expenses such as homeowners insurance and property taxes. An extra amount is paid with regular principal and interest payments that goes into the escrow account each month.

Escrow Analysis– An analysis performed by the lender usually once each year to see that the amount of money going into the escrow account each month is correct for the forcasted expenses.

Escrow Collections – Funds collected by the loan servicer and set aside in an escrow account to pay borrower expenses such as property taxes, mortgage insurance, and hazard homeowners insurance.

Escrow Disbursements– The payout of funds from an escrow account to pay property expenses such as taxes and insurance.Ai?? The use of escrow funds to pay real estate taxes, homeowners insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment – The portion of a borrower’s monthly payment that is held by the loan servicer to pay for taxes, hazard homeowners insurance, mortgage insurance, lease payments, and other items as they become due. Known as “impound” or “reserves” in some states.

Estate – The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Eviction – A legal proceeding by a landlord to recover possession of real property from the tenant.

Examination of Title – The report on the title of a property from the public records or an abstract of the title.

Exclusive Listing – A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.

Executor– The person named in a will to administer the estate.

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Facade– The front exposure of any building. Often used to describe an artificial or false front which is not consistent with the construction of the rest of the building.

Fair Credit Reporting Act– A federal law regulating the way credit agencies disclose consumer credit reports and the remedies available to consumers for disputing and correcting mistakes on their credit history.

Fair Market Value– The price at which two unrelated parties, under no duress, are willing to transact business.Ai?? The price that a buyer, willing but not compelled to buy, and a seller, willing but not compelled to sell, would agree on.

Fannie Mae (Federal National Mortgage Association FNMA) – A New York Stock Exchange company and the largest non-bank financial services company in the world.Ai?? It operates pursuant to a federal charter and is the nation’s largest source of financing for home mortgages.Ai?? It adds liquidity to the mortgage market by investing in home loans through the country.

Federal Deposit Insurance Corporation (FDIC)- The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nation’s financial system by insuring deposits and promoting safe and sound banking practices.

Federal Home Loan Mortgage Corporation (FHLMC)- Called “Freddie Mac”; a part of the secondary market, particularly used to purchase loans from savings and loan lenders within the Federal Home Loan Bank board.

Federal-Housing Administration (FHA) – An agency of the U.S. Department of Housing and Urban Development (HUD).Ai?? Its main activity is the insuring of residential mortgage loans made by private lenders.Ai?? The FHA sets standards for construction and loan underwriting but does not lend money or plan or construct housing.

Federal Housing Administration (FHA)- A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930’s to facilitate the purchase of homes by low-income, first-time buyers. It currently provides federally-subsidized mortgage insurance for private lenders.

Federal National Mortgage Association (FNMA)– Popularly known as “Fannie May”; a privately owned cooperation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home loans.

Fee Appraiser- A certified, professional appraiser who forms an opinion of the fair market value of property and receives a set fee exchange.

Fee Simple– An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate. A complete, unencumbered ownership right in a piece of property.

Fee Simple Estate- A form of ownership, or holding title to real estate. It is the most complete form of title, having an unconditional and unlimited interest of perpetual duration.

FHA Coinsured Home Loan– A loan for which the Federal Housing Administration and the originating lender share the risk of loss in the event of the borrower’s default.

FHA home loan– A mortgage home loan that is insured by the Federal Housing Administration.Ai?? Also known as a government loan.

FHA Loan– A loan insured by the Federal Housing Administration.

FHA Mortgage– The primary mortgage that is insured by the Federal Housing Administration.

Filing Status-Ai??That isAi??whether you file your income taxes as married, single, seperated or head-ofAi?? household.

Finance Charge– The total cost a borrower must pay, directly or indirectly, to obtain credit according to Regulation Z.

Firm Commitment– A lender’s agreement to make a loan to a specific borrower on a specific property.

First Mortgage – A home loan that is the primary lien against a property.

Fixed Installment– The monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest.

Fixed Period ARM– Provides a fixed rate for 3,5,7, or 10 years then adjusts annually based on a financial index for the remaining loan term.

Fixed Rate Mortgage– A conventional loan with a single interest rate for the life of the loan.Ai?? A mortgage with an interest rate that stays the same over the life of the mortgage.Ai?? Monthly payments for a fixed rate mortgage are very stable and will not change.

Fixture– Any piece of personal property which becomes permanently affixed to a piece of property.

Flood Check– A survey conducted to determine whether a property is in a flood zone.

Flood Insurance-Supplemental insurance which covers a home owner for any loss due to water damage from a flood. Often required by lenders located in FEMA-designated flood zones.

Floor Plan– The representation of a building which shows the basic outline of the structure, as well as detailed information about the positioning of rooms, hallways, doors, stairs, and other fixtures. Often includes detailed information about other fixtures and amenities.

Flush Valve– The valve between the toilet bowl and the tank.

Foreclosure- The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.

Forfeiture– The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

Foundation – The solid structural element upon which a structure is built.

Freddie Mac (Federal Home Loan Mortgage Corporation) – A federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans.

Frontage – The segment of a property that runs along a point of access, such as a street or water front.

Fully Indexed Rate– The maximum interest rate on an ARM that can be reached at the first adjustment.

Functional Obsolescence – A decrease in the value of property due to a feature or lack thereof which renders the property undesirable. Functional obsolescence can also occur when the surrounding area changes, rendering the property unsuitable for its originally intended purpose.

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Gable Roof – A steeply angled, triangular roof.

Galvanized Pipe – Iron Pipe with a galvanized (zinc) coating.

Gambrel Roof – A “barn-like” roof, where the upper portion of the roof is less-steeply angled than the lower part.

General Lien – A broad-based claim against several properties owned by a defaulting party.

Georgian – A classic, English style house characterized by simple rectangular shape and multiple stories.

GFI – Ground Fault Interrupter – A type of circuit breaker required in areas where water is present.

Gift Letter– A letter from a relative stating that an amount will be gifted to the buyer, and that said amount is to not be repaid.

GINNIE MAE – A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to-moderate-income home buyers.

Girder – A main supporting beam.

Good Faith Estimate– A document provided when you apply for a loan.Ai?? It provides estimates of all costs associated with obtaining and closing a mortgage loan.

Government Loan– A loan that is insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs or the Rural Housing Service.Ai?? Contrast with conventional loan.

Government Mortgage – Any mortgage insured by a government agency, such as FHA or VA.

Government National Mortgage Association (GNMA)– Called “Ginnie Mae”; a government part of the secondary market that deals primarily in recycling VA and FHA mortgages, particularily those that are highly leveraged.

Grade – The slope of land around a building.Ai?? Also ground level.

Graduated Payment Mortgage– A residential mortgage with monthly payments that can start at a low level and increase at a predetermined rate.

Grantee – Any person who is given ownership of a piece of property.Ai?? The person to whom an interest in real property is conveyed.

Grantor – Any person who gives away ownership of a piece of property.Ai?? The person who conveys an interest in real property.

GRI– Graduate Realtors Institute: A professional designation granted to a member of the National Association of Realtors who has successfully completed courses covering Law, Finance, and Principals of Real Estate.

Gross Area – The sum total of all floor space, including areas such as stairways and closet space. Often measured based on external wall lengths.

Gross Monthly Income – Normal annual income including overtime that is regular or guaranteed. The before taxes income may be from more than one source. Salary is generally the principal source, but other income may qualify if it is significant and stable.

Ground Rent – The amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate.

Group Home – A single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature.

Grouting – Material used around ceramic tile.

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Half-Section – 320 acres.

Hazard Insurance – Insurance covering damage to a property caused by hazards such as fire, wind, and accident.

Hearth – The floor of a fireplace or the area immediately in front of it.

Height Zoning – A municipal restriction on the maximum height of any building or other structure.

Hidden Amenities – Assets of a property which contribute to its value, but are not readily apparent. Examples might include upgraded or premium building materials.

Highest and Best Use – The most profitable and likely use of a property. Selected from reasonably probable and legal alternative uses, which are found to be physically possible, appropriately supported and financially feasible to result in the highest possible land value.

Home Equity Conversion Mortgage (HECM) – Also known as a reverse annuity mortgage. It allows home owners (usually older) to convert equity in the home into cash. Normally paid by the lender in monthly payments. HECM’s typically don’t have to be repaid until the borrower is no longer occupying the home.

Home Inspection – A thorough inspection that evaluates the structural and mechanical condition of a property.Ai?? A satisfactory home inspection is often included as a contingency by the purchaser.Ai?? Contrast with appraisal.

Home Inspection Report– A qualified inspector’s report on a property’s overall condition. The report usually includes an evaluation of both the structure and mechanical systems.

Home Inspector – A person who performs professional home inspections. Usually, with an extensive knowledge of house construction methods, common house problems, how to identify those problems and how to correct them.

Homeowner’s Association – A nonprofit organization that manages the common areas of a planned unit development (PUD) or condominium project.Ai?? In a condominium project, it has no ownership interest in the common elements.Ai?? InAi??a PUD project, it holds title to the common elements.Ai?? See also master association.

Homeowner’s Insurance (Hazard Insurance) – Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards. The policy typically combines personal liability insurance and property hazard insurance coverage for a dwelling and its contents. See also home owner’s insurance.Ai?? Also known as Home Owner’s Insurance.

Homeowner’s Warranty (HOW) – A type of insurance that coversAi?? repairs to specified parts of a house for a specific period of time.Ai?? It may be provided by the builder or property seller as a condition of the sale but homeowners can also purchases it.

Home Equity Line of Credit (HELOC) – A type of mortgage loan, which is usually in a subordinate position, that allows the borrower to draw cash advances at his or her own discretion, up to an amount that represents a specified percentage of the borrower’s equity in a property.

Home owner’s Association – A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. It facilitates the maintenance of common areas and enforces any building restrictions or covenants. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

Home Warranty Plan or Home owner’s Warranty (HOW) – An insurance policy that gives protection against failure of mechanical systems and appliances within the property for a coverage period. Usually includes plumbing, electrical, heating systems and installed appliances. A type of insurance that covers repairs to specified parts of a house for a specific period of time. It may be provided by the builder or property seller as a condition of the sale but homeowners can also purchase it.

Housing Expense Ratio – The percentage of gross monthly income that goes toward paying housing expenses.

HUD Median Income – Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).

HUD-1 Settlement Statement – A standard document that provides an itemized listing of the funds that are payable at closing (closing costs). Items that appear on the statement include real estate commissions, loan fees, points, and initial escrow amounts. Each item on the statement is represented by a separate number within a standardized numbering system. The totals at the bottom of the HUD-1 statement define the seller’s net proceeds and the buyer’s net payment at closing. The blank form for the statement is published by the Department of Houston and Urban Development (HUD). THe HUD-1 statement is also known as the “closing statement” or “settlement sheet.”

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Improved Land – Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

Improvement Ratio – The comparative value of an improved piece of land to its natural, unaltered state.

Improvements – Any item added to vacant land with the intent of increasing its value or usability.

Income Approach – The process of estimating the value of property by considering the present value of a stream of income generated by the property.

Income Property – Real estate developed or improved to produce income. The highest and best use for the property is to generate income through rent or other sources.

Independent Appraisal – An estimate of value created by a professional, certified appraiser with no vested interest in the value of the property.

Index– A measure of interest rate changes used to determine changes in an ARMs (Adjustable Rate Mortgage) interest rate over the term of the loan. The index is usually a published number or percentage, such as the average interest rate or yield on Treasury Bills. A margin is added to the index to determine the interest rate that will be charged on the ARM. Some lenders provide caps that limit how much the interest rate or loan payments may increase or decrease.

In-File Credit Report – An objective account, normally computer-generated, of credit and other financial information obtained from a credit reporting agency.

Inflation – An increase in the amount of money or credit available in relation to the amount of goods or services available, which causes an increase in the general price level of goods and services.

Initial Draw Amount – The amount of the home equity line of credit that the borrower is requesting at closing (up to, but never exceeding, the credit line amount).

Initial Interest Rate or Introductory Rate – The introductory or starting interest rate on an Adjustable Rate Mortgage (ARM) Loan or Variable-Rate Home Equity Line of Credit; signals that there may be rate adjustments later in the loan. At the end of the effective period for the initial rate, the interest rate adjusts periodically during the life of the loan based on changes in a specified financial index. Sometimes known as “start rate” “intro rate,” or “teaser rate.”

Inspection – The examination of a piece of property, its buildings or other amenities.

Installment Loan – Borrowed money that is repaid in equal payments, known as installments.Ai?? A furniture loan is often paid for as an installment loan.

Insurable Title – The title to property which has been sufficiently reviewed by a title insurance company, such that they are willing to insure it as free and clear.

Insurance – A contract that provides compensation for specific losses in exchange for a periodic payment.Ai?? An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

Insurance Binder – A document that states that insurance is temporarily in effect.Ai?? Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Insured Mortgage – A mortgage that is protected by the Federal Housing Administration (FHA) or by Private Mortgage Insurance (PMI).Ai?? If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.

Interest – The amount the lender charges to lend you money.

Interest Accrual Rate – The percentage rate at which interest acrues on the mortgage.Ai?? In most cases, it is also the rate used to calculate the monthly payments.

Interest Payment – The portion of a monthly payment that goes to interest based on the amortization schedule.

Interest Rate – A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

Interest Rate Buydown Plan – A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower.Ai?? A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan.

Investment Property – Any piece of property that is expected to generate a financial return. This may come as the result of periodic rents or through appreciation of the property value over time.

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Joint Tenancy– An equal undivided ownership of property by two or more persons. That means two or more parties own a piece of property together and each of the owners has an equal share and cannot dispose of or alter that share without the consent of the other owners. Upon the death of any owner, the survivors take the decedent’s interest in the property.

Judgment – A decree by a court of law that one person, a debtor, is indebted to another, a creditor, in a specified amount. The court may place a lien against the debtor’s real property as collateral for payment of the judgment to the creditor. An official court decision. If the judgment requires payment from one party to another, the court may put a lien against the payees property as collateral.

Judgment Lien – A lien on the property of a debtor resulting from a judgment.

Judical Foreclosure- A type of foreclosure conducted as a civil suit in a court of law.

Jumbo Loans– Mortgage loans that exceed the loan amounts acceptable for sale in the secondary market; these jumbos must be packaged and sold differently to investors and, therefore, have separate underwriting guidelines. Also called nonconforming loans and in excess of $417,000.00. A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans. A minimumAi??jumbo loan would beAi??$417,001.00.

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Lally Column- A concrete filled steel pipe used to support beams.

Late Charge- An extra charge, or penalty added to a regular mortgage payment when the payment is made late by an amount of time specified in the original loan document.

Latent Defects- Any defect in a piece of property which is not readily apparent, but which has an impact on the value. Structural damage or termite infestation would be examples of latent defects.

Lease- A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.

Lease Option– A lease agreement that gives the tenant an option to buy the property. Usually, a portion of the regualr monthly rent payment will be applied towards the down payment.

Leasehold Estates– A type of property “ownership” where the buyer actually has a long-term lease on the property.

Legal Description– The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

Lender– The person or entitiy who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.

Lender’s Fees – Fees paid to the lender to cover costs assiciated with processing.

Lending Guidelines – Every loan program has different guidelines.Ai?? Guidelines are used to meet Federal, State and Local laws and enforce minimum requirements by the lender.Ai?? Guidelines ensure that prospective borrowers won’t purchase a home that they won’t be able to afford.

Liabilities– A person’s outstanding debt obligations.

Liability Insurance– Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.

Lien – A legal hold or claim on a property as security for a debt or charge. Any claim against a piece of property resulting from a debt or other obligation.

Life Cap– A limit on how far the interest rate can move for an Adjustable Rate Mortgage.Ai?? Also known as the Lifetime Rate Cap which limits the amount that the interest rate can increase or decrease over the life of the loan.Ai?? See also cap.

Like-kind Property– Any property which is substantially similar to another property.

Line/Loan Amount – The entire HELOC or Fixed Rate Second mortgage loan amount.

Line of Credit– An extension of credit for a certain amount of money for a specific amount of time. To be used by the borrower at his discretion.

Liquid Asset– Any asset which can be quickly converted into cash at little or no cost, or cash itself.

Loan– Money borrowed, to be repaid with interest, according to the specific term and conditions of the loan.

Loan Amount – The amount of money you want to borrow to purchaswe or refinance a home.Ai?? Also called the principal and is generally repaid over time with interest.

Loan Commitment – A written promise to make a loan for a specified amount on specified terms.

Loan Officer– A person that “sells” loans, representing the lender to the borrower, and the borrower to the lender.

Loan Origination – The process by which a mortgage lender makes a home loan and records a mortgage against the borrower’s real property as security for repayment of the loan.

Loan Originator– How a lender refers to the process of writing new loans.

Loan Program – Typically a lender will have several types of loan programs available.Ai?? They are described in accordance with the major features of the loan program.Ai?? For example, a loan described as a “Fixed 30 year” would mean that the interest rate and payment remain fixed over the thirty year life of the loan.Ai??Ai?? A program described as “Fixed/ARM 5/1” means that the interest rate and payment remain fixed for the first five years, and then it is subject to adjustments every year thereafter.

Loan Servicing– The processing of payments, mailing of monthly statements, management and disbursement of escrow funds, etc. Typically carried out by the company you make payments to.

Loan-To-Value-Ratio – The ratio of the total amount borrowed on a morgage against a property compared to the appraised value of the property.Ai?? For example, if you have an $80,000 1st mortgage on a home with an appraised value of $100,000, the LTV is 80% ($80,000/$100,000 = 80%).Ai?? The comparison of the amount owed on a mortgaged property to its fair market value.

Lock-in – The fixing of an interest rate or points at a certain level, usually during the loan application process. It is usually done for a certain period of time, such as 60 days, and may require a fee or premium in the form of a higher interest rate. An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.

Lock-in Period– The amount of time the lender has guaranteed an interest rate to a borrower.

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Major Deficiency– A deficiency that strongly impacts the usability and habitability of a house. Or a deficiency that may be very expensive to repair.

Manufactured Home– Once known as “mobile homes”, manufactured housing is any building which has been constructed off site, then moved onto a piece of real property.

over the counter version of antivert Margin – The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. The difference between the interest rate and the index on an adjustable rate mortgage.

Marginal Land– Land whose value has been diminished due to some internal defect or external condition. In most cases, the cost to correct the flaw or condition is as much or more than the expected return from the property.

Master Association– An umbrella organization that is made up of multiple, smaller home owner’s associations. Often found in very large developments or condominium projects.

Maturity– The date on which the principal balance of a financial instrument becomes due and payable.

Maximum Financing – The maximum interest rate that can accrue on a variable rate loan.

Maximum Rate – The maximum interest rate that can accrue on a variable rate loan.

Merged Credit Report– A credit report derived from the data obtained from multiple credit agencies.

Metes and Bounds– A traditional way of describing property. Generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its origin.

Metropolitan Area– The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.

Mineral Rights– The legal right to exploit and enjoy the benefits of any minerals located below the surface of a parcel of land.

Minimum Payment – The minimum amount that must be paid monthly on an account.Ai?? On the HELOC product, the minimum payment is interest only during the draw period.Ai?? On the Fixed Rate Second products, the minimum payment is principal and interest.

Misrepresentation– A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, are rendered through simple mistakes, oversights or negligence.

Modification – The act of changing any of the terms of the mortgage.

Money Market Account – A savings account that provides bank depositors with many of the advantages of a money market fund.Ai?? Certain regulatory restrictions apply to the withdrawal of funds from a money market account.

Money Market Fund – A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury Bills.

Monthly Debt – A borrower’s monthly expenses including credit cards, installment loans, student loan payments, alimony and child support and housing payment expenses.

Monthly Mortgage Insurance (MI) Payment – Portion of monthly payment that covers the cost of Private Mortgage Insurance.

Monthly Payment (P&I) – This is the monthly mortgage payment on a home loan, this includes principal and interest, but excludes any amounts that are applied to taxes and insurance.

Monthly Principal & Interest (P&I) Payment – Portion of montly payment that funds the escrow or impound account for taxes and insurance.

Mortgage– A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.

Mortgage Banker– A financial institution that provides primary and secondary mortgages to home buyers.

Mortgage Broker– A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

Mortgage Insurance– A policy that fulfills that obligation of a mortgage when the policy holder defaults or is no longer able to make payments.

Mortgage Insurance Premium (MIP) – The mortgage insurance required on FHA loans for the life of said loans; MIP can either be paid in cash at closing or refinanced in its entirety in the loan. The premium varies depending on the method of payment.

Mortgage Life Insurance – A type of term life insurance often bought by home buyers. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the mortgage debt is automatically covered by insurance proceeds.

Mortgagee– The entity that lends money in a real estate transaction.

Mortgagor – The borrower in a mortgage agreement. The entity that borrows the money in a real estate transaction.

Multi-Dwelling Units – Properties that provide separate housing units for more than one family, although they secure only a single mortgage. Typically a 2-4 unit property.

Multi-Family Properties– Any collection of buildings that are designed and built to support the habitation of more than four families.

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National Association of Master Appraisers– A non-profit professional association organized in 1982, dedicated to the advancement of professionalism in real estate appraisal.

National Society of Real Estate Appraisers– An organization founded in 1956 which promotes standards of professionalism in its members.

Natural Vacancy Rate– The percentage of vacant properties in a given area that is a result of natural turnover and market forces.

Negative Amortization – Occurs when monthly payments fail to cover the interest cost. The interest that isn’t covered is added to the unpaid principal balance, which means that even after several payments the borrowers could owe more than they did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren’t high enough to cover the interest.

Neighborhood Life-cycle– The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts that can effect the life cycle.

Neighborhood– A subsection of a municipality that has been designated by a developer, economic forces or physical formations.

Net Cash Flow – The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowner’s association dues, leasehold payments, and subordinate financing payments.

Net Leasable Area– The space in a development, outside of the common areas, that can be rented to tenants.

Net Worth – The value of all of a person’s assets, including cash, minus all liabilities.

New England Colonial– An architectural style dating from the early American history typified by a two-story building with clapboard siding.

No Closing Cost Loan – Many lenders offer loans that you can obtain at “no-cost”. You should inquire whether this means there are no “lender” costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transaction, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a “no-cost” loan , the interest rate will be higher than if you obtain a loan that has costs associated with it.

No-point Loan– A loan with no “points” . The interest rate on such a loan will be higher that a closing loan with points paid. Also sometimes refers to a refinance loan where closing costs are included on the loan.

Non-Conforming Loan – See Jumbo Loan. The use of land for purposes contrary to the applicable municipal zoning specifications. Often occurs when the zoning changes after a property is in use.

Non-Liquid Asset– Any asset which can not be quickly converted into cash at little or no cost.

“No Out of Pocket Cost” Loan– A loan in which the borrowerAi??is not required to pay out of pocket at closing for the normal closing costs.Ai?? The lender typically includes the closing costs in the principle balance or charges a higher interest rate than for a loan with closing costs to cover the advance of closing costs.

Notary– An official authorized by law to attest and certify certain documents by his or her hand and official seal.

Note – A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Note Rate– The interest rate stated on a mortgage note.

Notice of Default– Formal written notice from a lender to a borrower that default has occurred.

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Obsolescence- The process of an assets value diminishing due to the development of more desirable alternatives or because of the degradation of its capabilities.

Occupancy- A physical presence within and control of a property.

Occupancy Rate- The percentage of properties in a given area that are occupied.

Octopus Receptacle– An outlet with too many devices plugged into it, using a power strip or other device to multiply the outlets.

Off-site Improvements– Buildings, structures or other amenities which are not located on a piece of property, but are necessary to maximize the use of the property or in some way contribute to the value of the propery.

Off- street Parking– Designated parking spaces associated with a particular building or other structure which are not located on public streets.

Old Termite Activity– Where no termites are currently active, but indications of past activity can be seen.

On-site Improvements– Buildings, structures or other amenities that are erected on a piece of property and contribute to its value.

Open Space– Any land which has not had any significant buildings or structures erected on it. Most often used to describe desirable neighborhood features like parks.

Open Splice– An uncovered electrical connection.

Original Equity– The amount of cash a home buyer initially invests in the home.

Original Principal Balance– The total amount of principal owed on a mortgage loan at the time of closing.

Origination Fee– Refers to the total number of points paid by a borrower at closing.

Owner Financing– A transaction where the property owner provides all or part of the financing.Ai?? A fee is paid to a lender for processing a loan application, making a home loan, and recording a mortgage against the borrower’s real property as security for repayment of the loan.Ai?? The origination fee is stated in the form of points.Ai?? One point is 1% of the mortgage amount.

Owner Occupied– The state of property wherein the owner occupies at least some portion of the property.

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Parging– The cement coat applied to block foundations.

Partial Interest– A shared ownership in a piece of property. May be divided among two parties or more.

Partial Payment– A payment of less that the regular monthly amount. Usually, a lender will not accept partial payments.Ai?? A payment that is not sufficient to cover the scheduled monthly principal and interest payment on a mortgage loan.

Payment – Your monthly mortgage payment, including principal and interest, but excluding tax and insurance payments.

Payment Cap – The maximum amount the payment can adjust in any given time frame.

Payment Change Date – The date when a new monthly payment amount takes effect on an adjustable rate mortgage.Ai?? Generally, the payment change date occurs in the month immediately after the adjustment date and the borrower is notified 30 days prior as to the new rate.

Payoff – To pay the outstanding balance of a loan in full.

Periodic Payment Cap – A provision of an adjustable-rate mortage that limits how much the interest rate or loan payments may increase or decrease.Ai?? In upward rate markets, it protects the borrower from large increases in the interest rate or monthly payment at each adjustment period.

Periodic Rate Cap– The limit on how much regular monthly payments on an adjustable rate mortgage can change during one adjustment period.

Personal Property– Owned items which are not permanetely affixed to the land.

Personal Residence– the primary domicile of a person or a family.

Piggyback – A combination of two loans.

PITI – Principal, interest, taxes, and insurance.

PITI Reserves – A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home.Ai?? The principal, interest, taxes, and insurance reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD) – A zoning designation for property development at the same or slightly greater overall density than a conventional development, sometimes with improvements clustered between open common areas. Use may be residential, commercial, or industrial. A coordinated, real estate development where common areas are shared and maintained by an owner’s association or other entity.

Plat– A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.

PMI– Stands for Private Mortgage Insurance.Ai?? PMI is an insurance policy the borrower buys to protect the lender from non-payment of the loan.Ai?? PMI policies are usually required if you make a down payment that is below 20% of the sales price of the home.

Points (Loan Discount Points) – An amount equal to one percent of the principal amount of the investment or note. Lender assesses loan discountAi??points at closing to increase the yield on the mortgage to a position competitive with other types of investments.Ai?? Points are prepaid interest on your mortgage.Ai?? A one-time fee charged by the lender at the time of closing for originating a loan.Ai??Ai??One point is 1% of the loan amount – that is, 2 points on a $100,000 mortgage would be $2,000.00

Power of Attorney – A legal document authorizing one persn to act on another’s behalf.Ai?? A POA can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre- approval– The process of applying for a mortgage loan and becoming approved for a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers.

Prefabricated– Any building or portion thereof which is manufactured and assembled off site, then erected on a property.

Preforeclosure Sale – A procedure in which the investor allows a mortgagor to avoid foreclosure by selling the property, typically for less that the amount that is owed to the lender.

Pre-Paid Interest – Mortgage interest that is paid in advance of when it is due.

Pre-Paid Items (Prepaids) – Items required by lender to be paid at closing prior to the period they cover such as prorated property taxes, homeowners insurance and pre-paid interest.

Prepayment- Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.

Prepayment Penalty – A fee charged to a borrower who pays a loan before it is due. Not allowed for FHA and VA Loans.

Pre-Qualification– Less formal than pre-approval, usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage.

Primary Residence – The place someone lives most of the time.

Prime Rate– The interest rate that banks and other lending institutes charge other banks or preferred customers.

Principal– The amount owed on a mortgage which does not include interest or other fees.

Principal Balance– The outstanding balance of principal on a mortgage. This does not include interest due.

Principal, Interest, Taxes,and Insurance (PITI)– The most common constituents of a monthly mortgage payment.

Principal Payment – Portion of your monthly payment that reduces the remaining balance of a home loan.

Private Mortgage Insurance (PMI) – Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage.

Processing– The preparation and documentation of a mortgage loan application for underwriting.

Promissory Note– A written promise to repay a specified amount over a specified period of time.

Property– Any item which is owned or possessed.

Property Value – LTV or loan to value ratio refers to the realtionship between the unpaid principal balance of the mortgage and the property’s appraised value.

Public Auction -Ai??A meeting in an announced public location to sell property to repay a mortgage that is in default.

PUD– A project or subdivision that includes common property that is owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.Ai?? See also Planned Unit Development.

Purchase Agreement – A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. Also called a sales contract, earnest money contract, or agreement for sale.

Purchase Money Transaction – A loan used in part as payment for a purchase.Ai?? A loan that is used to buy a home is called a purchase money mortgage.

Purchase price – The total amount paid for a home.

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Quadraplex– Any building designed to accommodate four families.

Qualifying Ratios– Two ratios used in determining credit worthiness for a mortgage loan. One is the ratio of a borrower’s monthly housing costs to monthly income. the other is a ratio of all monthly debt to monthly income.

Quit Claim Deed – A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made. A legal document that transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear.

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Ranch House– An architectural style typified by a single story, low roof construction. Popular in the western U.S.

Rate – This is the annual interest rate applied to the outstanding balance of the loans.

Rate Gap – The difference between where the rate is now and where it could adjust to on an ARM. Also used to compare the difference between a current conventional rate and that of an ARM.

Rate Lock– A commitment issued by a lender to a borrower guaranteeing a specified interest rate for a specified period of time.Ai?? See lock-in.

Rate Reduction Option– A fixed-rate mortgage that includes a provision that gives the borrower an option to reduce the interest rate (without refinancing) at a later date.Ai?? It is similar to a prearranged refinancing agreement, except that it does not require re-qualifying.

Raw Land– Any land which has not been developed.

Real Estate-Ai??A piece of land and any improvements or fixtures that are located on that land.

Real Estate Agent – Me!Ai?? Shannon Register is a Real Estate Agent in Texas.Ai?? This is a person who is licensed by the state and who, for a commission or fee, assists in negotiating a real estate transaction.

Real Estate Settlement Procedures Act (RESPA)– A federal consumer protection law requiring lenders to give full disclosure of closing costs (settlement cost) to borrowers.Ai?? It also prohibits certain types of referral fees, sets rules for escrow accounts, and requires notice to borrowers when servicing of a home loan is transferred.

Real Property– Land, improvements and appurtenances, and the interest and benefits thereof.Ai?? Examples:Ai?? trees, minerals, and structures.

Realtor – A real estate broker or associate active in a local real estate board affiliated with the National Association of Realtors. The best one in the North Houston area is Shannon Register with Coldwell Banker United, Realtors!Ai?? I am associated with the Houston Association of Realtors and the National Association of Realtors.

Receptacle– An electrical outlet to plug into.

Recorder– A local government employee whose role is to keep records of all real estate transactions within the jurisdiction.

Recording– The filing of a real estate transaction with the appropriate government agent (normally the Recorder). A real estate transaction is considered final when it is recorded.Ai?? The noting in a book of public record of the terms of a legal document affecting title to real property, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage.

Reduced Documentation – A method used to determine income when qualifying a borrower for a loan.Ai?? Borrowers provide their income, however no verification documentation is typically required.

Refinance Transaction– A new loan to pay off an existing loan. Typically to gain a lower interest rate or convert equity into cash.

Register– Where air from a furnace or air-conditioning system enters the room.

Regulation Z – The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection Act.

Rehabilitation Mortgage – A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Relocation Service– Any company that assists corporate employees in relocating from one place to another. Services may include hiring and coordinating real estate agents, moving companies, utilities and the like.Ai?? Coldwell Banker is affiliated with the largest relocation company in the Houston area – CARTUS.

Remaining Balance- The amount of principal, interest and other costs that has not yet been repaid.

Remaining Term– The amount of time remaining on the original amortization schedule.

Remodel– An activity designed to improve the value or desirability of a property through rebuilding, refurbishing, redecorating, or adding on to it.

Rent with Option to Buy – This can be written up by a lawyer, but it cannot be done by Realtors because there are no promulgated forms to write it on.Ai?? It can be written in that renters have the first option to buy (Right of First Refusal) if the owner decided to sell the property.Previously this was called a lease-purchase mortgage loan.

Repayment Plan– A plan to repay delinquent payments, agreed upon between a lender and borrower, in an effort to avoid foreclosure.

Replacement Reserve Fund trazodone buy online in united states – An account, or fund, setup for the replacement of short life terms, such as carpeting, in the common areas of a cooperative property.

Request For Notice of Default – A recorded document that obligates the holder of the first mortgage lien to notify subordinate lien holders in the event of default by the borrower.

Rescission – The act of cancellation or annulment of a transaction or contract by the operation of a law.Ai?? Borrowers usually have the option to cancel certain credit transactions, including a refinance or home equity transaction, within three business days after consummation (when the consumer becomes contractually obligated by, for example, signing the loan documents.)

Residential Property– A piece of property whose highest and best use is the maintenance of a residence.

Revolving Debt– A type of credit that allows the borrower/customer to make charges against a predetermined line of credit. The customer then pays monthly installments on the amount borrowed, plus interest.

Revolving Liability – A credit arrangement, such as a credit card or HELOC, that allows a customer to borrow against a predetermined line of credit when purchasing goods and services.Ai?? The borrower makes payments on the amount that is actually borrowed plus any interest due.

Right of First Refusal- An agreement giving a person the first opportunity to buy or lease a property before the owner offers it for sale to others.

Right of Ingress or Egress – The right to enter or leave designated premises.

Right of Survivorship – In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Roof Pitch– the degree of the slope in a roof.

Rural– An area outside of an established urban area or metropolitan district.

Rural Housing Service (RHS) – An agency within the Department of Agriculture. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.

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Sale-Lease Back – A technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.

Sales Comparison Approach– An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.

Sales Price– The actual price a property sells for, exclusive of any special financing concessions.

Scarcity– An economic principal that dictates the price of a good or service through the interaction of supply and demand. When an item is scarce, its price tends to rise, given a constant demand. Real Estate is a classic example of scarcity.

Second Home – A property occupied part-time by a person in addition to his or her primary residence.

Second Mortgage – A mortgage that has a lien position subordinate to the first mortgage. A loan secured by the equity in a home, when a primary mortgage already exists.

Secondary Mortgage Market – An informal market where lenders and investors buy and sell existing mortgages. Government-sponsored entities and private investors buy mortgages from lenders who use the proceeds to make additional loans. An economic marketplace where mortgage bankers buy and sell existing mortgages.

Secured Loan – A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.Ai?? In the case of a mortgage loan, the collateral is the house.

Security – The property that will be pledged as collateral for a loan. If the borrower defaults, the lender can sell the collateral to satisfy the debt. The property used as collateral for a loan.

Security Interest – An interest a lender takes in the borrower’s property to assure repayment of a debt.Ai?? If the borrower defaults, the lender can sell the collateral to satisfy the debt.

Seller Take-Back – An agreement in which the owner of a property provides financing, often in combination with an assumable mortgage.Ai?? See owner financing.

Semidetached Housing– Two residences which share a common well.

Servicer– A financial institute which collects mortgage payments from borrowers and applies the appropiate portions to principal, interest and any escrow accounts.

Servicing– The processing of payments, mailing of monthly statements, management and disbursement of escrow funds, etc. Typically carried out by the company you make payments to.

Settlement – See closing.

Settlement Sheet – See HUD-1 settlement statement.

Sheetrock– Also called drywall, the gypsum board commonly used on interior walls.

Sill Cock– Garden hose pipe connection.

Single Family Residence – A residential structure designed and built to support the habitation of one family.Ai?? Also known as a single family property.

Special Deposit Account – An account that is established for rehabilitation mortgages to hold the funds needed for the rehabilitation work so that they can be disbursed from time to time as particular portions of the work are completed.

Stand Alone – A Home Equity Loan originated without obtaining a first mortgage at the same time.

Start Rate – See initial interest rate.

Still Plate– The lumber used around the foundation to support exterior wall framing.

Subdivision– A residential development that is created from a piece of land which has been subdivided into individual lots.

Sub-Escrow – Fees charged by the escrow company for allowing the borrower to be able to sign all the loan documents in the Escrow office instead of having to go to the lenders office.

Subject Property- A term which indicates a property which is being appraised.

Subordinate Financing – Any mortgage or other lien that has a priority that is lower than that of the first mortgage.Ai?? The subordinate loan has a claim to payment in a foreclosure only after the first mortgage is paid.

Subprime – Subprime lending is also called B&C Lending.Ai?? It refers to a category of loan programs that offer more lenient underwriting provisions and expanded credit guidelines.Ai?? These provisions allow more flexibility in approving loans for borrowers who have less-than-perfect credit.Ai?? Subprime loans are availbale at various interest rates and terms.Ai?? They also offer capabilities for debt consolidation allowing borrowers to get a morgtgage with enough extra cash to consolidate loans.

Sump– A basin into which drains and from which water is pumped out.

Survey– A specific map of a piece of property which indicates the legal boundaries and any improvements or features of the land. Surveys also depict any rights-of-way, encroachments or easements.

Sweat Equity- The method whereby a home owner develops equity in a property, either during the purchase or throughout its life, by personally constructing improvements rather than paying to have them built.

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Tax- exempt Property– Any property which is not taxed.

Tax Savings – This is the amount of money you save in income taxes.Ai?? You save this money because in most cases the interest you pay on your home loan is tax deductible.

Tax Service – A fee collected to set up a thrird-party to monitor the borrower’s property tax payments to ensure that the payments are made on time, and to prevent tax liens from occurring.

Tenancy– The right to occupy a building or unit.

Tenancy By The Entirety – A type of joint tenancy of property that provides right of survivorship and is available only to a husband and wife.Ai?? When one spouse dies the property goes to the other spouse.Ai?? Contrast with tenancy in common and joint tenancy.

Tenancy in Common – A type of joint ownership of property by two or more persons with no right of survivorship. A form of holding title, whereby there are two or more people on title to a property, ownership does not pass on to the others upon the death of one individual.

Term – The term of a home loan is the number of years the home loan is amortized for.Ai?? Home loans are generally amortized over 15, 20, or 30 years.

Termite Report – A report that results from an inspection by a professional to determine if the property has termites.

Third Party Fees – Fees collected by lender for services provided by other companies, such as an appraiser.

Third Party Origination– When a leader uses a third party to originate and package loans for sale to the secondary market.

Title- A specific document which serves as proof of ownership.

Title Company– An organization which researches and certifies ownership of real estate before it is bought or sold. Title companies also act as the facilitator to ensure all parties are paid during a real estate transaction.

Title Insurance– A policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. This also covers a lender should a question of ownership arise.Ai?? Insures against loss arising from disputes over ownership of a property.

Title Insurance Endorsements – This is an endorsement of insurance against losses that may result from claims of previously unknown ownership in insured property.

Title Insurance Policy – See Title Insurance.

Title Search – A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

Total Expense Ratio -Total obligations as a percentage of gross monthly income.Ai?? The total expense ratio includes monthly housing expenses plus other monthly debts.Ai?? Used to help qualify a potential borrower for a home loan.

Total Monthly Payment – See Monthly PITI payment.

Transaction Fee – A fee charged each time the borrower draws on the credit line.

Transfer of Ownership – Any means by which the ownership of a property changes hands.Ai?? Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property “subject to” the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

Transfer Tax – State or local tax payable when title to a property passes from one owner to another.

Treasury Index – An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) plans.Ai?? It is based on the results of auctions that the U.S. Treasury holds for its Treasury Bills and securities or is derived from the U.S. Treasury’s daily yield curve which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.Ai?? See adjustable-rate mortgage (ARM .)

Truth-in-Lending – A federal law that requires lenders to fully disclose, in writing, the terms and conditions of credit, such as a mortgage, including the annual percentage rate (APR) and other charges.

Two To Four-Family Property – A property that consists of a structure that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed.Ai?? See multi-unit housing.

Trustee – A fiduciary who holds or controls property for the benefit of another.

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Underwriting – The analysis of risk, the determination of the appropriate loan amount, and the setting of loan terms and conditions, based on the borrower’s creditworthiness and the value of the real property that will secure the loan.

Unsecured Loan – A loan that is not backed by collateral.

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VA Mortgage – A mortgage that is guaranteed by the Department of Veterans Affairs (VA).Ai?? Also known as a government mortgage.

Variable Rate – An interest rate that changes periodically in relation to an index.Ai?? Payments may increase or decrease per the terms of the loan agreement or note.

Vested – Having the right to use a portion of a fund such as an individual retirement fund.Ai?? For example, individuals who are 100 percent vested can withdraw all of the funds that are set aside for them in a retirement fund.Ai?? However, taxes may be due on any funds that are actually withdrawn.

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