Real Estate Terms
The terms are in alphabetical order. By clicking on the first letter
of the
term here, you can go directly to the appropriate section of this
list.
A B C D
E F H L
M N O P
S T
V
Adjustable rate mortgage A
type of mortgage rate loan that allows the interest rate to change periodically
up or down, usually once or twice a year.
Agent A person who acts, or has the
power to act for another. A real estate agent acts on behalf of the principal
(the buyer or seller) and has fiduciary responsibilities towards the principal.
See Buyer's agent or Seller's
agent below.
Agreement of sale A written agreement
or contract in which the seller agrees to sell and the buyer agrees to
buy under specific terms and conditions
Amenities Features that enhance and
add to the value or desirability of real estate. Common amenities include
a swimming pool, clubhouse and a good view.
Amortization The reduction of a debt
over time by making periodic payments (usually monthly) a portion of which
is interest and a portion of which reduces the outstanding amount of the
debt. The monthly mortgage payments remain the same over the life of the
loan, even though the proportion of principal to interest changes over
time. In the early part of the loan, principal repayment is very small
and interest repayment very high; at the end of the loan, that relationship
is reversed.
Appraisal The act or process of estimating
value; an estimate of value.
Appraiser Someone who practices appraisal.
Appraisers' work involves appraisal (see above), review (the process of
critically studying a report prepared by another), or consulting (the process
of providing information, analysis of real estate data, and recommendations
on diversified problems in real estate, other than estimating value).
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Balloon mortgage A
mortgage for a fixed term shorter than necessary to fully repay the debt.
As a result, the remaining amount of principal is due at the maturity of
the loan.
Bridge loan A loan, usually short term,
that finances the portion of the purchase price not provided by the mortgage
loan and the down payment. A bridge loan is commonly used when a purchaser
has not sold his existing home before he closes on his purchase of a new
home. The bridge loan is paid off when the old home is sold, out of the
proceeds of that sale.
Broker, as in real estate broker A
real estate professional who has acquired a higher level of training and/or
experience than a sales agent. Generally, the legal representative or proprietor
of the office.
Buyer's agent An
agent who represents the buyer and owes fiduciary duties to the buyer.
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Capital gain Income
that results from sale of a capital (tangible) asset.
Closing The end of the transaction;
when the seller hands over the title to the buyer in exchange for payment.
Closing costs Costs the buyer must
pay at the time of the closing in addition to the down payment which may
include points, title charges, mortgage insurance premium, prepayments
for property taxes, and homeowners insurance. Closing costs can be as much
as three to four percent of the loan amount.
Condominium or condo A condominium,
literally, is a home in a shared building or development. The buyer owns
title to his or her unit, shares the common areas with other unit owners,
and pays a maintenance fee to the condominium association to pay for needed
maintenance, repairs and improvements to the property.
Contingency A condition that must be
met before a contract is binding.
Conventional loan A fixed-rate, fixed-term
loan that is made without government insurance.
Co-operative or co-op In a residential
co-operative, the buyer purchases shares in the co-op corporation, made
up of the residents in the co-op property. The buyer owns the shares rather
than owning real property. In exchange, he has the right to lease and occupy
a co-op unit.
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Deed A legal document
by which property title is transferred from one owner to another.
Down payment The down payment is the
percentage of the purchase price that the buyer must pay in cash and may
not borrow from the lender. The downpayment amount, in addition to the
mortgage, equals the purchase price of a property.
Dual agency Representing both parties
in a transaction. In virtually all states, it is unethical and illegal
for a broker to represent both buyer and seller in a real estate transaction
without written consent of both.
Earnest money The deposit
money given to the seller by the potential buyer as evidence of good faith
in purchasing real estate. The broker places the money in an escrow/trust
account until closing, when it becomes part of the down payment .
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Equity The value of the property,
less the amount of unpaid mortgages and any outstanding liens.
Escrow Money or other valuables given
to a third party with directions to deliver them to another party upon
the fulfillment of a specific act or condition.
Exclusive agency listing A written
agreement giving the broker the right to market an owner's property for
a certain period of time, but also allowing the owner to sell the property
during that period without paying a commission.
Exclusive right-to-sell A written agreement
between the agent and the owner, whereby the owner promises to pay a fee
or commission to the broker if his property is sold during the listing
period, regardless of whether the broker is responsible for the sale.
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Fannie Mae Nickname
for the Federal National Mortgage Association, FNMA is a public corporation
originally established by the federal government. Fannie Mae purchases
mortgage loans from lenders, and thus, is a major source of funds for mortgage
companies.
FHA or Federal Housing Administration Part
of the US Department of Housing and Urban Development (HUD) -- established
in 1934 to encourage improvement in housing standards and communities.
The FHA insures mortgage loans. See HUD listing ahead.
FHA mortgage A mortgage loan insured
by the Federal Housing Administration.
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Home inspection An
examination of the physical structure, systems and condition of a home
Homeowners insurance Insurance that
protects the homeowner from "casualty" (losses or damage to the
home or personal property) and from "liability" (damages to other
people or property). Homeowners insurance is required by the lender and
is usually included in the monthly mortgage payment.
HUD or the US Department of Housing and Urban Development Department
of Housing and Urban Development, a government agency created to make the
American dream of home ownership a real possibility for everyone. HUD has
many programs involving homeownership assistance for low- and moderate-income
families, community planning and development, fair housing and equal opportunity,
and home improvement loans. The Housing and Urban Development home page
is a rich resource of information.
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Lien A hold or
a claim on the property of another to satisfy an unpaid debt.
Listing contract An agreement between
a homeowner and a licensed real estate broker that authorizes the broker
to market the property for sale during a given time period.
Loan origination fee A fee charged
by the lender for evaluating, preparing and submitting a proposed mortgage
loan.
Loan-to-value ratio The ratio of a
mortgage loan principal to the property's appraised value or its sales
price, whichever is lower. Loan-to-value ratios vary depending upon the
individual lender's policy.
Lock-in rate A commitment made by
a lender to make a mortgage loan at a specified rate, pending loan approval,
on or prior to a specified date.
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Market value The
highest price a buyer will pay for a property and the lowest price the
seller will accept.
Mortgage A lien on real estate given
by the buyer to secure repayent of money borrowed to purchase the real
estate.
Mortgage broker An individual or company
that obtains mortgages for others by finding lending institutions, insurance
companies, or private sources to lend the money; may also handle collections
and disbursements.
Mortgage insurance A policy that provides
protection for the lender in case of default and/or which guarantees repayment
of the loan if the borrower becomes disabled or dies.
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NATIONAL ASSOCIATION OF REALTORS® The
NATIONAL ASSOCIATION OF REALTORS® is the largest trade association
in the country serving over 700,000 REALTORS. The purpose of the NATIONAL
ASSOCIATION OF REALTORS® is to enhance the ability and opportunity
of its members to conduct business successfully and ethically, and to promote
the preservation of the right to own, transfer, and use real property.
Offer A proposal to
purchase real estate at a paraticular price and subject to other specified
terms and conditions. Acceptance of the offer by the seller creates a purchase
contract. (Counteroffer: An offer made in response to a different offer.)
Private mortgage insurance or PMI Insurance
Insurance issued to a lender to protect it
against loss on a defaulted mortgage loan. Its use is usually limited to
loans with high loan-to-value ratios (generally in excess of 80%). The
borrower pays the premiums.
PITI Payment A loan payment that combines
Principal, Interest, Taxes and Insurance.
Point An amount equal to one percent
of the loan amount paid to a lender for making the loan. A lender may charge
the borrower several points in order to provide the loan.
Principal One of the parties to a
transaction. For example, the buyer and seller are principals in the purchase
of real property.
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REALTOR® A
REALTOR® is a real estate professional who is a member of the NATIONAL
ASSOCIATION OF REALTORS® and subscribes to its strict Code of Ethics.
This distinguished professional is committed to protecting and promoting
private ownership of real property, establishing and maintaining high professional
standards of practice, and creating unity in the NATIONAL ASSOCIATION OF
REALTORS® organization and respect for the real estate profession.
When you want to buy or sell a home, call a REALTOR®.
Seller's agent An
agent who represents the seller and owes fiduciary duties to the seller.
Usually referred to as the listing agent, this agent is authorized by a
property owner to find a buyer or a tenant for the property.
Title Ownership of
real property. Title is transferred from one party to another through a
document called a deed.
Title insurance Protection for lenders
and homeowners against financial loss resulting from legal defects in or
other claims against the property's title.
Trust A property interest held by
one person for the benefit of another.
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VA or US Department of Veterans Affairs A
federal agency designed and operated to help veterans enter the housing
market. The VA assists veterans in terms of low or no down payment, mortgage
qualification assistance and low interest rates.
VA loan A mortgage loan guaranteed
by the US Department of Veterans Affairs against loss to the lender, and
made through a private lender.
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Source: Courtesy of The NATIONAL
ASSOCIATION OF REALTORS® |
