A
B C D
E F G H
I J K
L M N O
P Q R
S T U V
W X Y
Z
ABSORPTION RATE Back to top
The ratio of the number of properties in an area that have been sold
against the number available. Used to show the volatility of a market.
ABSTRACTION METHOD Back to top
This method of estimating the value of property uses similar
properties available in the same market to extract the value of a
parcel of land.
ACCELERATION CLAUSE Back to top
A provision in a mortgage that gives the lender the right to demand
immediate payment of the outstanding loan balance under certain
circumstances. Usually when the borrower defaults on the loan.
ACCESSORY BUILDING Back to top
A building separate from the main structure on a property. Often used
for a specific purpose, such as a workshop, storage shed or garage.
ACCRETION Back to top
The natural growth of a piece of land resulting from forces of nature.
ACRE Back to top
43,560 square feet. A measurement of area.
ACTUAL AGE Back to top
The amount of time that has passed since a building or other structure
was built. See also: EFFECTIVE AGE
ADJUSTMENT DATE Back to top
The date the interest rate changes on an adjustable rate mortgage.
AD VAL OREM TAX Back to top
Taxes assessed based on the value of the land and improvements.
ADDENDUM Back to top
A supplement to any document that contains additional information
pertinent to the subject. Appraisers use an addendum to further
explain items for which there was inadequate space on the standard
appraisal form.
ADJUSTABLE-RATE MORTGAGE (ARM) Back to top
A type of mortgage where the interest rate varies based on a
particular index, normally the prime lending rate.
ADJUSTED BASIS Back to top
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 Back to top
An estimate of a property's sales price, after adjustments have been
made to account for differences between it and another comparable
property.
AESTHETIC VALUE Back to top
The additional value a property enjoys based on subjective criteria
such as look or appeal.
AFFIRMATION Back to top
A declaration that a certain set of facts are truthful.
AFFORDABILITY ANALYSIS Back to top
A calculation used to determine an individual's likelihood of being
able to meet the obligations of a mortgage for a particular property.
Takes into account the down payment, closing costs and on-going
mortgage payments.
AGENT Back to top
A person who has been appointed to act on behalf of another for a
particular transaction.
AMENITY Back to top
Any feature of a property that increases its value or desirability.
These might include natural amenities such as location or proximity to
mountains, or man-made amenities like swimming pools, parks or other
recreation.
AMERICAN SOCIETY OF APPRAISERS Back to top
An organization of appraisal professionals and others interested in
the appraisal profession.
AMORTIZATION Back to top
The repayment of a loan through regular periodic payment.
AMORTIZATION SCHEDULE Back to top
The breakdown of individual payments throughout the life of an
amortized loan, showing both principal contribution and debt service
(interest) fees.
AMORTIZATION TERM Back to top
The length of time over which an amortized loan is repaid. Mortgages
are commonly amortized over 15 or 30 years.
ANNUAL PERCENTAGE RATE (APR) Back to top
The rate of annual interest charged on a loan.
ANNUITY Back to top
A sum of money paid at regular intervals, often annually.
APPLICATION Back to top
A form used to apply for a mortgage loan that details a potential
borrowers income, debt, savings and other information used to
determine credit worthiness.
APPRAISAL Back to top
A ''defensible'' and carefully documented opinion of value. Most
commonly derived using recent sales of comparable properties by a
licensed, professional appraiser.
APPRAISAL FOUNDATION Back to top
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 Back to top
A world-wide organization dedicated to real estate appraisal
education, publication and advocacy.
APPRAISAL PRINCIPLES Back to top
The basic building blocks of the property valuation process, including
property inspection, market analysis and basic economics.
APPRAISAL REPORT Back to top
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 estimated value of the subject property and support that estimate
with corroborating information.
APPRAISAL STANDARDS BOARD (ASB) Back to top
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 Back to top
The estimated fair market value of a property as developed by a
licensed, certified appraiser following accepted appraisal principals.
APPRAISER Back to top
An educated, certified professional with extensive knowledge of real
estate markets, values and practices. The appraiser is often the only
independent voice in any real estate transaction with no vested
interest in the ultimate value or sales price of the property.
APPRECIATION Back to top
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION Back to top
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 Back to top
The value of a property according to jurisdictional tax assessment.
ASSESSMENT Back to top
The function of assigning a value to a property for the purpose of
levying taxes.
ASSESSMENT RATIO Back to top
The comparative relationship of a property's assessed value to its
market value.
ASSESSOR Back to top
The jurisdictional official who performs the assessment and assigns
the value of a property.
ASSET Back to top
Any item of value which a person owns.
ASSIGNMENT Back to top
Transfer of ownership of a mortgage usually when the loan is sold to
another company.
ASSUMABLE MORTGAGE Back to top
A mortgage that can be taken over by the buyer when a home is sold.
ASSUMPTION Back to top
When a buyer takes over, or assumes the sellers mortgage.
ATTACHED HOUSING Back to top
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.
BALLOON MORTGAGE Back to top
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 Back to top
The final large payment at the end of a balloon mortgage term.
BANKRUPTCY Back to top
When a person or business is unable to pay their debts and seeks
protection of the state against creditors. Bankruptcies remain on
credit records for up to ten years and can prevent a person from being
able to get a loan.
BILL OF SALE Back to top
A physical receipt indicating the sale of property.
BIWEEKLY MORTGAGE Back to top
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.
BLIGHTED AREA Back to top
Any region of a city or town that has fallen into disrepair or
otherwise has become undesirable.
BONA FIDE Back to top
Any genuine offer, made without intent to defraud or deceive.
BRIDGE FINANCING Back to top
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.
BROKER Back to top
An individual who facilitates the purchase of property by bringing
together a buyer and a seller.
BUFFER ZONE Back to top
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 Back to top
Regulations that ensure the safety and material compliance of new
construction within a municipality. Building codes are localized to
ensure they are adequate to meet the risk of common hazards.
BUILDING LINE OR SETBACK Back to top
The statutory distance between buildings and the property line,
imposed by municipalities, home associations, or other agreements.
BUILT-INS Back to top
Specific items of personal property which are installed in a real
estate improvement such that they become part of the building.
Built-in microwave ovens and dishwashers are common examples.
BUNGALOW Back to top
A one-story, home-style dating from the early twentieth century. Often
characterized by a low-pitched roof.
BUY DOWN Back to top
Extra money paid in a lump sum to reduce the interest rate of a fixed
rate mortgage for a period of time. The extra money may be paid by the
borrower, in order to have a lower payment at the beginning of the
mortgage. Or paid by the seller, or lender, as incentive to buy the
property or take on the mortgage.
CALL OPTION Back to top
A clause in a mortgage which allows the lender to demand payment of
the outstanding balance at a specific time.
CAP Back to top
Associated with Adjustable Rate Mortgages. A limit on how high monthly
payments or how much interest rates may change within a certain time
period or the life of the mortgage.
CAPE COD COLONIAL Back to top
A single-story house style made popular in New England. Often
characterized by a steep roof with gables.
CAPITAL Back to top
Accumulated goods and money which is most often used to generate
additional income.
CAPITAL EXPENDITURE Back to top
An outlay of funds designed to improve the income-producing
capabilities of an asset or to extend its economic life.
CASH-OUT REFINANCE Back to top
Refinancing a mortgage at a higher amount than the current balance in
order to transform a portion of the equity into cash.
CAVEAT EMPTOR Back to top
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.
CERTIFICATE OF DEPOSIT Back to top
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 Back to top
An index based on the interest rate of six month CDs. Used to set
interest rates on some Adjustable Rate Mortgages.
CERTIFICATE OF ELIGIBILITY Back to top
A document issued by the Veterans Administration that certifies
eligibility for a VA loan.
CERTIFICATE OF OCCUPANCY Back to top
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) Back to top
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 Back to top
A document designating the legal owner of a parcel of real estate.
Usually provided by a title or abstract company.
CERTIFIED GENERAL APPRAISER Back to top
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 Back to top
A sub-classification of appraiser who is only licensed to appraise
residential property, usually up to four units.
CHAIN OF TITLE Back to top
The complete history of ownership of a piece of property.
CHATTEL Back to top
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 real property.
CLEAR TITLE Back to top
Ownership of property that is not encumbered by any counter-claim or
lien.
CLOSING Back to top
A torturous process designed to induce cramping in a home buyer's
hands by requiring signature on countless pieces of documentation that
nobody has ever read. Or, the process whereby the sale of a property
is consummated with the buyer completing all applicable documentation,
including signing the mortgage obligation and paying all appropriate
costs associated with the sale (CLOSING COSTS).
CLOSING COSTS Back to top
All appropriate costs generated by the sale of property which the
parties must pay to complete the transaction. Costs may include
appraisal fees, origination fees, title insurance, taxes and any
points negotiated in the deal.
CLOSING STATEMENT Back to top
The document detailing the final financial arrangement between a buyer
and seller and the costs paid by each.
COLLATERAL Back to top
An asset which is placed at risk to secure the repayment of a loan.
CO-BORROWER Back to top
A second person sharing obligation on the loan and title on the
property.
COLLECTION Back to top
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 may be used in foreclosure.
CO-MAKER Back to top
A second party who signs a loan, along with the borrower, and becomes
liable for the debt should the borrower default.
COMMON LAW Back to top
As opposed to statute law. Laws that have been established by custom,
usage and courts over many years.
COMMISSION Back to top
A percentage of the sales price or a fixed fee negotiated by an agent
to compensate for the effort expended to sell or purchase property.
COMMON AREA ASSESSMENTS Back to top
Fees which are charged to the tenets or owners of properties to cover
the costs of maintaining areas shared with other tenets or owners.
Commonly found in condominium, PUD or office spaces.
COMMON AREAS Back to top
Any areas, such as entryways, foyers, pools, recreational facilities
or the like, which are shared by the tenets or owners of property near
by. Commonly found in condominium, PUD or office spaces.
COMMUNITY PROPERTY Back to top
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 Back to top
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 Back to top
Interest paid on the principal amount, as well as any accumulated
interest.
CONCESSIONS Back to top
Additional value granted by a buyer or seller to entice another party
to complete a deal.
CONDEMNATION Back to top
The official process by which a property is deemed to be uninhabitable
or unusable due to internal damage or other external conditions.
CONDOMINIUM Back to top
A development where individual units are owned, but common areas and
amenities are shared equally by all owners.
CONDOMINIUM CONVERSION Back to top
Commonly, the conversion of a rental property such as an apartment
complex into a CONDOMINIUM-style complex where each unit is owned
rather than leased.
CONSTRUCTION LOAN Back to top
A loan made to a builder or home owner that finances the initial
construction of a property, but is replaced by a traditional mortgage
one the property is completed.
CONTIGUOUS Back to top
Connected to or touching along an unbroken boundary
CONTINGENCY Back to top
Something that must occur before something else happens. Often used in
real estate sales when a buyer must sell a current home before
purchasing a new one. Or, when a buyer makes an offer the requires a
complete home inspection before it becomes official.
CONTRACT Back to top
A legally binding agreement, oral or written, between two parties.
CONVENTIONAL MORTGAGE Back to top
A traditional, real estate financing mechanism that is not backed by
any government or other agency (FHA, VA, etc.).
CONVERTIBLE ARM Back to top
A mortgage that begins as and adjustable, that allows the borrower to
convert the loan to a fixed rate within a specific timeframe.
COOPERATIVE (CO-OP) Back to top
A form of ownership where each resident of a multiunit property owns a
share in a cooperative corporation that owns the building. With each
resident having rights to a specific unit within the building.
CORPORATE RELOCATION Back to top
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.
COST OF FUNDS INDEX (COFI) Back to top
An index of financial institutions costs used to set interest rates
for some Adjustable Rate Mortgages.
COVENANT Back to top
A stipulation in any mortgage that, if not met, can be cause for the
lender to foreclose.
CREDIT Back to top
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 Back to top
A record of debt payments, past and present. Used by mortgage lenders
in determining credit worthiness of individuals.
CREDITOR Back to top
A person to whom money is owed.
CREDIT REPORT Back to top
A detailed report of an individuals credit, employment and residence
history prepared by a credit bureau. Used by lenders to determine
credit worthiness of individuals.
CREDIT REPOSITORY Back to top
Large companies that gather and store financial and credit information
about individuals who apply for credit.
CUL-DE-SAC Back to top
A dead-end street. One with only one entrance/exit.
DATE OF APPRAISAL Back to top
The specific point in time as of which an appraiser designates the
value of a home. Often stipulated as the date of inspection.
DEBT Back to top
An obligation to repay some amount owed. This may or may not be
monetary.
DEBT EQUITY RATIO Back to top
The ratio of the amount a mortgagor still owes 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.
DEED Back to top
A document indicating the ownership of a property.
DEED-IN-LIEU (OF FORECLOSURE) Back to top
A document given by a borrower to a lender, transferring title of the
property. Often used to avoid credit-damaging foreclosure procedures.
DEED OF TRUST Back to top
A document which transfers title in a property to a trustee, who's
obligations and powers are stipulated. Often used in mortgage
transactions.
DEED OF RECONVEYANCE Back to top
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 Back to top
A document which dismisses a lien or other claim on a property.
DEED OF SURRENDER Back to top
A document used to surrender any claim a person has to a property.
DEFAULT Back to top
The condition in which a borrower has failed to meet the obligations
of a loan or mortgage.
DELINQUENCY Back to top
The state in which a borrow has failed to meet payment obligations on
time.
DEPOSIT Back to top
Cash given along with an offer to purchase property, Also called
EARNEST MONEY.
DEPRECIATION Back to top
The natural decline in property value due to market forces or
depletion of resources.
DETACHED SINGLE-FAMILY HOME Back to top
A single building improvement intended to serve as a home for one
family.
DISCOUNT POINTS Back to top
Points paid in addition to the loan origination fee to get a lower
interest rate. One point is equal to one percent of the loan amount.
DISTRESSED PROPERTY Back to top
A mortgaged property which has been foreclosed on.
DUE-ON-SALE PROVISION Back to top
A clause in a mortgage giving the lender the right to demand payment
of the full balance when the borrower sells the property.
DUPLEX Back to top
A single-building improvement which is divided and provides two units
which serve as homes to two families.
DWELLING Back to top
A house or other building which serves as a home.
DOWN PAYMENT Back to top
An amount paid in cash for a property, with the intent to mortgage the
remaining amount due.
EARNEST MONEY DEPOSIT Back to top
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 Back to top
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 Back to top
The decline in property value caused by external forces, such as
neighborhood blight or adverse development.
ECONOMIC LIFE Back to top
The amount of time which any income-producing property is able to
provide benefits to its owner.
EFFECTIVE AGE Back to top
The subjective, estimated age of a property based on its condition,
rather than the actual time since it was built. Excessive wear and
tear can cause a property's effective age to be greater than its
actual age.
EMINENT DOMAIN Back to top
The legal process whereby a government 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.
ENCROACHMENT Back to top
A building or other improvement on one property which invades another
property or restricts its usage.
ENCUMBRANCE Back to top
A claim against a property. Examples are mortgages, liens and
easements.
EQUAL CREDIT OPPORTUNITY ACT (ECOA) Back to top
U.S. federal law requiring that lenders afford people equal chance of
getting credit without discrimination based on race, religion, age,
sex etc
EQUITY Back to top
The difference between the fair market value of a property and that
amount an owner owes on any mortgages or loans secured by the
property.
EQUITY BUILDUP Back to top
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 Back to top
An insurance policy taken out by appraisers to cover their liability
for any mistakes made during the appraisal process.
ESCROW Back to top
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 property.
ESCROW ACCOUNT Back to top
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 Back to top
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 forecasted expenses.
ESCROW DISBURSEMENTS Back to top
The payout of funds from an escrow account to pay property expenses
such as taxes and insurance.
ESTATE Back to top
The total of all property and assets owned by an individual.
EXAMINATION OF TITLE Back to top
The report on the title of a property from the public records or an
abstract of the title.
EXCLUSIVE LISTING Back to top
An agreement between the owner of a property and a real estate agent
giving the agent exclusive right to sell the property.
EXECUTOR Back to top
The person named in a will to administer the estate.
FACADE Back to top
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 Back to top
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 Back to top
The price at which two unrelated parties, under no duress, are willing
to transact business.
FANNIE MAE Back to top
A private, shareholder-owned company that works to make sure mortgage
money is available for people to purchase homes. Created by Congress
in 1938, Fannie Mae is the nation's largest source of financing for
home mortgages.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) Back to
top
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 HOUSING ADMINISTRATION (FHA) Back to top
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 home buyers. It currently provides
federally-subsidized mortgage insurance for private lenders.
FEE APPRAISER Back to top
A certified, professional appraiser who estimates the fair market
value of property and receives a set fee in exchange.
FEE SIMPLE Back to top
A complete, unencumbered ownership right in a piece of property.
FEE SIMPLE ESTATE Back to top
A form or 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 MORTGAGE Back to top
A mortgage that is insured by the Federal Housing Administration
(FHA).
FINAL VALUE ESTIMATE Back to top
The estimated value of a piece of property resulting from an appraisal
following the USPAP guidelines.
FIRST MORTGAGE Back to top
The primary loan or mortgage secured by a piece of property.
FIXED-RATE MORTGAGE (FRM) Back to top
A mortgage which has a fixed rate of interest over the life of the
loan.
FIXTURE Back to top
Any piece of personal property which becomes permanently affixed to a
piece of real property.
FLOOD INSURANCE Back to top
Supplemental insurance which covers a home owner for any loss due to
water damage from a flood. Often required by lenders for homes located
in FEMA-designated flood zones.
FLOOR PLAN Back to top
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 features. Often includes
detailed information about other fixtures and amenities.
FORECLOSURE Back to top
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 Back to top
The loss of property or money due to the failure to meet the
obligations of a mortgage or loan secured by that property.
FRONTAGE Back to top
The segment of a property that runs along a point of access, such as a
street or water front.
FUNCTIONAL OBSOLESCENCE Back to top
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
unusable for its originally intended purpose.
GABLE ROOF Back to top
A steeply angled, triangular roof.
GAMBREL ROOF Back to top
A ''barn-like'' roof, where the upper portion of the roof is
less-steeply angled than the lower part.
GENERAL LIEN Back to top
A broad-based claim against several properties owned by a defaulting
party.
GEORGIAN Back to top
A classic, English-style hose characterized by simple rectangular
shape and multiple stories.
GINNIE MAE Back to top
A wholly owned corporation created in 1968 within the U.S. Department
of Housing and Urban Development to serve low-to moderate-income
homebuyers.
GOVERNMENT MORTGAGE Back to top
Any mortgage insured by a government agency, such as the FHA or VA.
GRADE Back to top
The slope of land around a building.
GRANTEE Back to top
Any person who is given ownership of a piece of property.
GRANTOR Back to top
Any person who gives away ownership of a piece of property.
GROSS AREA Back to top
The sum total of all floor space, including areas such as stairways
and closet space. Often measured based on external wall lengths.
HALF-SECTION Back to top
320 acres
HAZARD INSURANCE Back to top
Insurance covering damage to a property caused by hazards such as
fire, wind and accident.
HEIGHT ZONING Back to top
A municipal restriction on the maximum height of any building or other
structure.
HIDDEN AMENITIES Back to top
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 Back to top
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) Back to top
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. HECMs typically dont have to be
repaid until the borrower is no longer occupying the home.
HOME EQUITY LINE OF CREDIT Back to top
A type of mortgage loan that allows the borrower to draw cash against
the equity in his home.
HOME INSPECTION Back to top
A complete examination of a building to determine its structural
integrity and uncover any defects in materials or workmanship which
may adversely affect the property or decrease its value.
HOMEOWNER'S ASSOCIATION Back to top
An organization of home owners in a particular neighborhood or
development formed to facilitate the maintenance of common areas and
to enforce any building restrictions or covenants.
HOMEOWNER'S INSURANCE Back to top
A policy which covers a home owner for any loss of property due to
accident, intrusion or hazard.
HOMEOWNERS WARRANTY Back to top
An insurance policy covering the repair of systems and appliances
within the home for the coverage period.
HUD MEDIAN INCOME Back to top
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 STATEMENT Back to top
A standardized, itemized list, published by the U.S. Department of
Housing and Urban Development (HUD), of all anticipated CLOSING COSTS
connected with a particular property purchase.
IMPROVED LAND Back to top
Any parcel of land which has been changed from its natural state
through the creation of roads, buildings or other structures.
IMPROVEMENTS Back to top
Any item added to vacant land with the intent of increasing its value
or usability.
IMPROVEMENT RATIO Back to top
The comparative value of a improved piece of land to its natural,
unaltered state.
INCOME APPROACH Back to top
The process of estimating the value of property by considering the
present value of a stream of income generated by the property.
INCOME PROPERTY Back to top
A piece of property whose highest and best use is the generation of
income through rents or other sources.
INDEPENDENT APPRAISAL Back to top
An estimation of value created by a professional, certified appraiser
with no vested interest in the value of the property.
INSPECTION Back to top
The examination of a piece of property, its buildings or other
amenities.
INSURABLE TITLE Back to top
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.
INTEREST RATE Back to top
A percentage of a loan or mortgage value that is paid to the lender as
compensation for loaning funds.
INVESTMENT PROPERTY Back to top
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.
JOINT TENANCY Back to top
A situation where two or more parties own a piece of property
together. Each of the owners has an equal share, and may not dispose
of or alter that share without the consent of the other owners.
JUDGMENT Back to top
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.
JUDICIAL FORECLOSURE Back to top
A type of foreclosure conducted as a civil suit in a court of law.
JUMBO LOAN Back to top
A mortgage loan for an amount greater than the limits set by Fannie
Mae and Freddie Mac. Often called non-conforming loans.
LATE CHARGE Back to top
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 Back to top
Any defect in a piece of property which is not readily apparent, but
which has an impact of the value. Structural damage or termite
infestation would be examples of latent defects.
LEASE Back to top
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.
LEASEHOLD ESTATE Back to top
A type of property ''ownership'' where the buyer actually has a
long-term lease on the property.
LEASE OPTION Back to top
A lease agreement that gives the tenant an option to buy the property.
Usually, a portion of the regular monthly rent payment will be applied
towards the down payment.
LEGAL DESCRIPTION Back to top
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 Back to top
The person or entity who loans funds to a buyer. In return, the lender
will receive periodic payments, including principal and interest
amounts.
LIABILITIES Back to top
A persons outstanding debt obligations.
LIABILITY INSURANCE Back to top
Insurance that covers against potential lawsuit brought against a
property owner for alleged negligence resulting in damage to another
party.
LIEN Back to top
Any claim against a piece of property resulting from a debt or other
obligation.
LIFE CAP Back to top
A limit on how far the interest rate can move for an Adjustable Rate
Mortgage.
LIKE-KIND PROPERTY Back to top
Any property which is substantially similar to another property.
LINE OF CREDIT Back to top
An extension of credit for a certain amount for a specific amount of
time. To be used by the borrower at his discretion.
LIQUID ASSET Back to top
Any asset which can be quickly converted into cash at little or no
cost, or cash itself.
LOAN Back to top
Money borrowed, to be repaid with interest, according to the specific
terms and conditions of the loan.
LOAN OFFICER Back to top
A person that sells loans, representing the lender to the borrower,
and the borrower to the lender.
LOAN ORIGINATION Back to top
How a lender refers to the process of writing new loans.
LOAN SERVICING Back to top
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 (LTV) Back to top
The comparison of the amount owed on a mortgaged property to its fair
market value.
LOCK-IN Back to top
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 Back to top
The amount of time the lender has guaranteed an interest rate to a
borrower.
MANUFACTURED HOUSING Back to top
Once known as ''mobile homes,'' manufactured housing is any building
which has been constructed off site, then moved onto a piece of real
property.
MARGIN Back to top
The difference between the interest rate and the index on an
adjustable rate mortgage.
MARGINAL LAND Back to top
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 Back to top
An umbrella organization that is made up of multiple, smaller home
owner's associations. Often found in very large developments or
condominium projects.
MATURITY Back to top
The date on which the principal balance of a financial instrument
becomes due and payable.
MERGED CREDIT REPORT Back to top
A credit report derived from data obtained from multiple credit
agencies.
METES AND BOUNDS Back to top
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 Back to top
The accumulated land in and around a city or other municipality which
falls under the political and economic influence of that entity.
MINERAL RIGHTS Back to top
The legal right to exploit and enjoy the benefits of any minerals
located below the surface of a parcel of land.
MISREPRESENTATION Back to top
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, some are rendered through
simple mistakes, oversights or negligence.
MORTGAGE Back to top
A financial arrangement wherein an individual borrows money to
purchase real property and secures the loan with the property as
collateral.
MORTGAGE BANKER Back to top
A financial institution that provides primary and secondary mortgages
to home buyers.
MORTGAGE BROKER Back to top
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.
MORTGAGEE Back to top
The entity that lends money in a real estate transaction.
MORTGAGE INSURANCE Back to top
A policy that fulfills that obligations of a mortgage when the policy
holder defaults or is no longer able to make payments.
MORTGAGE INSURANCE PREMIUM (MIP) Back to top
An fee that is often included in mortgage payments that pays for
mortgage insurance coverage.
MORTGAGE LIFE INSURANCE Back to top
A policy that fulfills the obligations of a mortgage when the policy
holder dies.
MORTGAGOR Back to top
The entity that borrows money in a real estate transaction.
MULTI-FAMILY PROPERTIES Back to top
Any collection of buildings that are designed and built to support the
habitation of more than four families.
NATIONAL SOCIETY OF REAL ESTATE APPRAISERS Back to top
An organization founded in 1956 which promotes standards of
professionalism in its members.
NATURAL VACANCY RATE Back to top
The percentage of vacant properties in a given area that is the result
of natural turnover and market forces.
NEGATIVE AMORTIZATION Back to top
When the balance of a loan increases instead of decreases. Usually due
to a borrower making a minimum payment on an Adjustable Rate Mortgage
during a period when the rate fluctuates to a high enough point that
the minimum payment does not cover all of the interest.
NEIGHBORHOOD LIFE-CYCLE Back to top
The evolution of neighborhood use and demographics over time. Economic
fluctuations, municipal zoning changes and population shifts can
effect the life cycle.
NEIGHBORHOOD Back to top
A subsection of a municipality that has been designated by a
developer, economic forces or physical formations.
NET LEASABLE AREA Back to top
The space in a development, outside of the common areas, that can be
rented to tenants.
NEW ENGLAND COLONIAL Back to top
An architectural style dating from early American history typified by
a two-story building with clapboard siding.
NO-COST LOAN Back to top
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 transactions, 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-point" loan, the interest rate
will be higher than if you obtain a loan that has costs associated
with it.
NO-POINT LOAN Back to top
A loan with no points. The interest rate on such a loan will be higher
than a loan with points paid. Also sometimes refers to a refinance
loan where closing costs are included in the loan.
NON-CONFORMING USE Back to top
The use of land for purposes contrary to the applicable municipal
zoning specifications. Often occurs when zoning changes after a
property is in use.
NONLIQUID ASSET Back to top
Any asset which can not be quickly converted into cash at little or no
cost.
NOTE Back to top
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 Back to top
The interest rate stated on a mortgage note.
NOTICE OF DEFAULT Back to top
Formal written notice from a lender to a borrower that default has
occurred.
OBSOLESCENCE Back to top
The process of an assets value diminishing due to the development of
more desirable alternatives or because of the degradation of its
capabilities.
OCCUPANCY Back to top
A physical presence within and control of a property.
OCCUPANCY RATE Back to top
The percentage of properties in a given area that are occupied.
OFF-SITE IMPROVEMENTS Back to top
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 property.
OFF-STREET PARKING Back to top
Designated parking spaces associated with a particular building or
other structure which are not located on public streets.
ON-SITE IMPROVEMENTS Back to top
Buildings, structures or other amenities that are erected on a piece
of property and contribute to its value.
OPEN SPACE Back to top
Any land which has not had any significant buildings or structures
erected on it. Most often used to describe desirable neighborhood
features like parks.
ORIGINAL EQUITY Back to top
The amount of cash a home buyer initially invests in the home.
ORIGINAL PRINCIPAL BALANCE Back to top
The total amount of principal owed on a mortgage loan at the time of
closing.
ORIGINATION FEE Back to top
Refers to the total number of points paid by a borrower at closing.
OWNER FINANCING Back to top
A transaction where the property owner provides all or part of the
financing.
OWNER OCCUPIED Back to top
The state of property wherein the owner occupies at least some portion
of the property.
PARTIAL INTEREST Back to top
A shared ownership in a piece of property. May be divided among two or
more parties.
PARTIAL PAYMENT Back to top
A payment of less than the regular monthly amount. Usually, a lender
will not accept partial payments.
PERIODIC PAYMENT CAP Back to top
The limit on how much regular monthly payments on an Adjustable Rate
Mortgage can change during one adjustment period.
PERIODIC RATE CAP Back to top
The limit on how much the interest rate on an Adjustable Rate Mortgage
can change during any one adjustment period.
PERSONAL PROPERTY Back to top
Owned items which are not permanently affixed to the land.
PERSONAL RESIDENCE Back to top
The primary domicile of a person or family.
PLANNED UNIT DEVELOPMENT (PUD) Back to top
A coordinated, real estate development where common areas are shared
and maintained by an owner's association or other entity.
PLAT Back to top
A plan or chart of a piece of land which lays out existing or planned
streets, lots or other improvements.
POINT Back to top
A percentage of a mortgage amount (one point = 1 percent).
PRE-APPROVAL Back to top
The process of applying for a mortgage loan and becoming approved for
a certain amount at a certain interest rate before a property has been
chosen. Pre-approval allows the borrower greater freedom in
negotiations with sellers.
PREFABRICATED Back to top
Any building or portion thereof which is manufactured and assembled
off site, then erected on a property.
PREPAYMENT Back to top
Payment made that reduces the principal balance of a loan before the
due date and before the loan has become fully amortized.
PREPAYMENT PENALTY Back to top
A fee that may be charged to a borrower who pays off a loan before it
is due.
PRE-QUALIFICATION Back to top
Less formal that pre-approval, pre-qualification 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 loan.
PRIME RATE Back to top
The interest rate that banks and other lending institutions charge
other banks or preferred customers.
PRINCIPAL Back to top
The amount owed on a mortgage which does not include interest or other
fees.
PRINCIPAL BALANCE Back to top
The outstanding balance of principal on a mortgage. Does not included
interest due.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI) Back
to top
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI) Back to top
A form of mortgage insurance provided by private, non-government
entities. Normally required when the LOAN TO VALUE RATIO is less that
20%.
PROPERTY Back to top
Any item which is owned or possessed.
PURCHASE AGREEMENT Back to top
A written contract signed by the buyer and seller stating the terms
and conditions under which a property will be sold.
QUADRAPLEX Back to top
Any building designed to accommodate four families.
QUALIFYING RATIOS Back to top
Two ratios used in determining credit worthiness for a mortgage loan.
One is the ratio of a borrowers monthly housing costs to monthly
income. The other is a ratio of all monthly debt to monthly income.
QUITCLAIM DEED Back to top
A legal document which transfers any ownership an individual has in a
piece of property. Often used when the amount of ownership is not
known or is unclear.
RANCH HOUSE Back to top
An architectural style typified by a single-story, low-roof
construction. Popular in the western U.S.
RATE LOCK Back to top
A guarantee from a lender of a specific interest rate for a period of
time.
RAW LAND Back to top
Any land which has not been developed.
REAL ESTATE Back to top
A piece of land and any improvements or fixtures located on that land.
REAL ESTATE AGENT Back to top
A licensed professional who facilitates the buying and selling of real
estate.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Back to
top
A federal law requiring lenders to give full disclosure of closing
costs to borrowers.
REAL PROPERTY Back to top
Land, improvements and appurtenances, and the interest and benefits
thereof.
REALTOR Back to top
A real estate agent or broker who is a member of the National
Association of Realtors.
RECORDER Back to top
A local government employee whose role it is to keep records of all
real estate transactions within the jurisdiction.
RECORDING Back to top
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.
REFINANCE TRANSACTION Back to top
A new loan to pay off an existing loan. Typically to gain a lower
interest rate or convert equity into cash.
RELOCATION SERVICE Back to top
Any company or agency that assists corporate employees in relocating
from one place to another. Services may include hiring and
coordinating real estate agents, moving companies, utilizes and the
like.
REMAINING BALANCE Back to top
The amount of principal, interest and other costs that has not yet
been repaid.
REMAINING TERM Back to top
The amount of time remaining on the original amortization schedule.
REMODEL Back to top
An activity designed to improve the value or desirability of a
property through rebuilding, refurbishing, redecorating or adding on
to it.
REPAYMENT PLAN Back to top
A plan to repay delinquent payments, agreed upon between a lender and
borrower, in an effort to avoid foreclosure.
REPLACEMENT RESERVE FUND Back to top
An account, or fund, setup for the replacement of short life items ,
such as carpeting, in the common areas of a cooperative property.
RESIDENTIAL PROPERTY Back to top
A piece of property whose highest and best use is the maintenance of a
residence.
REVOLVING DEBT Back to top
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.
RIGHT OF FIRST REFUSAL Back to top
An agreement giving a person the first opportunity to buy or lease a
property before the owner offers it for sale to others.
RURAL Back to top
An area outside of an established urban area or metropolitan district.
SALE PRICE Back to top
The actual price a property sells for, exclusive of any special
financing concessions.
SALES COMPARISON APPROACH Back to top
An appraisal practice which estimates the value of a property by
comparing it to comparable properties which have sold recently.
SCARCITY Back to top
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 MORTGAGE Back to top
A loan secured by the equity in a home, when a primary mortgage
already exists.
SECONDARY MORTGAGE MARKET Back to top
An economic marketplace where mortgage bankers buy and sell existing
mortgages.
SECURED LOAN Back to top
A loan that is backed by collateral. In the case of a mortgage loan,
the collateral is the house.
SECURITY Back to top
The property used as collateral for a loan.
SEMIDETACHED HOUSING Back to top
Two residences which share a common wall.
SERVICER Back to top
A financial institution which collects mortgage payments from
borrowers and applies the appropriate portions to principal, interest
and any escrow accounts.
SERVICING Back to top
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.
SINGLE-FAMILY PROPERTY Back to top
A property designed and built to support the habitation of one family.
SUBDIVISION Back to top
A residential development that is created from a piece of land which
has been subdivided into individual lots.
SUBJECT PROPERTY Back to top
A term which indicates a property which is being appraised.
SURVEY Back to top
A specific map of a piece of property which includes the legal
boundaries and any improvements or features of the land. Surveys also
depict any rights-of-way, encroachments or easements.
SWEAT EQUITY Back to top
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.
TAX-EXEMPT PROPERTY Back to top
Any property which is not taxed.
TENANCY Back to top
The right to occupy a building or unit.
TENANCY IN COMMON Back to top
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.
THIRD PARTY ORIGINATION Back to top
When a lender uses a third party to originate and package loans for
sale to the secondary market (Fannie Mae, Freddie Mac).
TITLE Back to top
A specific document which serves as proof of ownership.
TITLE COMPANY Back to top
An organization which researches and certifies ownership of real
estate before it is bought or sold. Title companies also act at the
facilitator ensures all parties are paid during the real estate
transaction.
TITLE INSURANCE Back to top
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.
TITLE SEARCH Back to top
The process whereby the TITLE COMPANY researches a properties title
history and ensures that no outstanding claims exist.
TRANSFER OF OWNERSHIP Back to top
Any means by which the ownership of a property changes hands.
TRANSFER OF TAX Back to top
Taxes payable when title passes from one owner to another.
TRUSTEE Back to top
A fiduciary who holds or controls property for the benefit of another.
TRUTH IN LENDING Back to top
A federal law requiring full disclosure by lenders to borrowers of all
terms, conditions and costs of a mortgage.
TUDOR Back to top
A style of architecture typified by exposed stone, wood and brick
construction. Similar in style to English manor homes.
UNDER IMPROVED LAND Back to top
A piece of land which has been improved, but not to the full extent of
its potential.
UNENCUMBERED PROPERTY Back to top
Any property which has no outstanding claims or liens against it.
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP)
Back to top
Developed in 1986 by the Ad Hoc Committee on Uniform Standards and
copyrighted in 1987 by The Appraisal Foundation, USPAP forms the
guidelines followed by every licensed and certified real estate
appraiser in the United States. The purpose of these Standards is to
establish requirements for professional appraisal practice, which
includes appraisal, appraisal review, and appraisal consulting. The
intent of these Standards is to promote and maintain a high level of
public trust in professional appraisal practice.
USEFUL LIFE Back to top
The span of time over which a property can be used or can provide
benefits to its owner.
VACANCY RATE Back to top
The current percentage of vacant properties in a given area,
regardless of why they are vacant.
VA MORTGAGE Back to top
A mortgage that is guaranteed by the Department of Veterans Affairs
(VA).
VARIANCE Back to top
An exception to municipal zoning regulations granted for a specific
time period to allow for non-conforming use of the land.
VESTED Back to top
Having the right to use a portion of a fund such as an IRA. Typically
vesting occurs over time. If you are 100% vested, you have a right to
100% of the fund.
VETERANS AFFAIRS, DEPARTMENT OF (VA) Back to top
The successor to the Veteran's Administration, this government agency
is responsible for ensuring the rights and welfare of our nation's
veterans and their dependents. Among other duties, the VA insures home
loans made to veterans.
WALK-THROUGH INSPECTION Back to top
A process whereby an appraiser examines a property in preparation for
estimating its value. Also, the process of inspecting a property for
any damage prior to that property being bought or sold.
WARRANTY Back to top
An affidavit given to stipulate the condition of a property. The
person giving the warranty assumes liability if the condition turns
out to be untrue.
WEAR AND TEAR Back to top
A term used to indicate the normal damage inflicted on a property
through every-day use.
ZERO LOT LINE Back to top
A municipal zoning category wherein a building or other fixture may
abut the property line.
ZONE Back to top
A specific area within a municipality or other jurisdiction which
conforms to certain guidelines regarding the use of property in the
zone. Typical zones include single-family, multi-family, industrial,
commercial and mixed-use.
|