Glossary of Real Estate Terms
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1003 Application: Federal Fannie Mae form that is used to qualify a Buyer for a loan.
Absenteee: one who is not present.
Accrued: To come to one as a gain, addition, or increment.
Adjustable-rate mortgage (ARM): A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change. This interest rate is generally less than a fixed rate mortgage, but can become higher in the future.
Amortize: The process of paying the principal and interest on a loan through regularly scheduled installments.
Appreciation: Appreciation is the increase in the value of a real property. Real estate can appreciate for a number of reasons, including inflation, improvements, and increased demand in the area.
Appraisal: A written analysis of the estimated value of a real property prepared by a qualified appraiser.
Arrearage: Amount of money behind in payments. Includes back payments, late penalties, legal fees and accrued interest.
Balloon: A date when the entire remaining principle balance is due.
Bridge loan: A short-term loan used until permanent financing can be arranged.
Capital gains tax: A tax placed on the profits from the sale of real estate or investments.
Caveat Emptor: Let the buyer beware. The buyer must examine the goods or property and buy at his or her own risk.
Chain of Title: A history of the conveyances and encumbrances affecting a title from the time the original patent was granted, or as far back as records are available.
Collateral: Additional security pledged for the payment of a dept.
Commission: A fee charged for brokerage services.
Compounding: The process of accruing interest on the remaining balance on a monthly basis.
Contract: A legally enforceable agreement.
Contract For Deed: A contract between a buyer and seller. When all the terms of the contract are satisfied, the Seller conveys the Deed.
Conventional Loan: A mortgage loan other than one guaranteed by the Veteran's Administration (VA) or insured by the Federal Housing Administration (FHA). This term usually refers to a fixed-rate, fixed-term mortgage loan.
Convertible ARM: An Adjustable Rate Mortgage that offers the borrower the option to convert payments to a fixed-rate schedule at a specified period within the term of the loan. Conversion is made for a nominal fee, and the interest rate on the fixed-rate loan is determined by a rule specified in the ARM agreement.
Conveys: To give, or deliver the deed to the new buyer.
Cure: To repay the Lender the amount if paymentsand late fees that are past due.
Deed: Warranty Deed. The legal document that transfers ownership of a piece of property.
Default: Not making a mortgage payment, or not performing as agreed upon by the terms of a promissory note.
Earnest Money: Down payment made by purchaser of real estate as evidence of good faith.
Equity: The amount of money between what the property is worth, and the amount owed. (Sample: if you sold a house for $100,000 and paid off a $70,000 loan, you would receive $30,000 for your equity)
Eviction: A legal proceeding by a landlord to recover possession of real property.
FHA: Mortgage loan insured by the Federal Housing Administration. Also see HUD.
Foreclosure: The legal process of getting a house back for default of a mortgage.
Grantee: The person to whom the title to real estate is given (conveyed).
Grantor: The person who conveys real estate by deed; Seller.
HUD Homes: When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the property; HUD pays the lender what is owed; and HUD takes ownership of the home. Then HUD sells it at market value as quickly as possible.
In Lieu of Foreclosure: Giving a deed to the note/mortgage holder to prevent a foreclosure.
Instrument: A written legal document.
Interest Only: Payments are made on the interest only. The principle balance remains the same. When the loan is paid off, the original principle balance is due.
Joint Tenancy: Ownership of real property by two or more persons, each of whom has an undivided interest with the right of survivorship. See also Tenacy in Common.
Judgment: Money owed by a court order. Judgments can be recorded against real property and must be paid and released from the property before the property can be sold.
Junior Mortgage: A mortgage second or subsequent in lien (subordinate) to a previous mortgage.
Landlord: One who rents or leases property to another.
Lease: A contract whereby, for consideration, usually termed rent, one who is entitled to the possession of real property, transfers such rights to another for a specified time.
Lease w/Option: A lease with the option to buy.
Lease/Purchase: A contract whereby, for consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for a specified time, afterwhich that time has expired, the renter purchases the property outright and pays off the Landlord/Seller in full.
Lien: A Tax Lien, Mechanics Lien or any other kind of lien recorded against real property for money owed.
Liquidity: The quality of being readily convertible into cash.
LTV: Loan To Value. The ratio of the loan to the value of the property. (Example: $100,000 house / $70,000 loan, equals a 70% LTV)
Mortgage: The instrument securing a note to a piece of property. A note is simply a promise to pay. A mortgage secures that promise, using real estate as the collateral. When someone mortgages their property, they are conveying an interest in their property as security for payment of a debt.
First Mortgage: A first mortgage is in superior position to all other mortgages, liens and judgments (except property taxes)
Second Mortgage: A mortgage secured by property after the first mortgage. If the first mortgage is paid off and released, the second mortgage becomes the first mortgage.
Mortgagee: The party who lends money and takes a mortgage to secure their payment.
Mortgagor: A person who borrows money and gives a mortgage on his or her property as security for the payments of the debt.
Note: A promise to repay a debt, loan or other instrument.
Notice of Default: Letter sent to a defaulting party as a reminder of the default. It may state a grace period and the penalties for failing to cure the default.
Offer to Purchase: A document to use when purchasing a property.
Option: A right given for a consideration to purchase or lease a property upon specific terms within a specific time; if the right is not exercised, the option holder is not subject to liability for damages; if exercised, the grantor of the option must perform.
Points: Discount charges imposed by the lenders to buy down the interest rate of a new mortgage. One(1) point equals 1% of the loan amount. (Example: $100,000 loan; 1 point (1%) = $1,000)
Power of Attorney: A written instrument duly signed and executed by an owner of property that authorizes an agent to act on behalf of the owner.
Principle: The amount of money owed on the loan.
Promissory Note: A written instrument signed and promises to pay back the amount borrowed. Usually signed along with a deed of trust.
Purchase Money Mortgage: A mortgage received by an owner of real property from a new buyer. Similar to a Contract for deed, except that the Deed is transferred and the owner is selling the property, and taking back a mortgage rather than having the buyer go down to the bank and get a new mortgage to pay off the seller.
Quitclaim Deed: A Deed that conveys simply the grantor's rights or interest, if any, in real property; generally considered inadequate except when interests are being passed from one spouse to the other.
Real Property: Land and generally whatever is erected upon or affixed thereto.
Realtor®: A term used to identify active members of the Nation Association of Realtors® (NAR). This term is commonly used to refer to anyone licensed to sell real estate, however, the term "Realtor® " only applies to those who have joined the Nation Association of Realtors® (NAR) and paid their dues.
Rehab: The process of restoring/fixing up a house. Bring the property back to a like new condition.
Reinstate: To make current again.
Restructure: Change the terms of a mortgage. Usually adding back payments, late fees and accrued interest to the principle balance. Can also change the interest and/or monthly payments.
Security: Something given, deposited, or pledged to make certain the fulfillment of an obligation the evidence of debt or of ownership.
Subject To: The term used to denote the existing mortgage is not being assumed by the buyer. The property can be transferred without assuming the existing mortgage. The mortgage stays with the property, but remains in the sellers name until it is paid off. (Example: Upon performance by Buyer, Seller shall deliver a Warranty Deed joined in by
Survey: The process by which a parcel of land is measured and its area ascertained; also the blueprint showing the measurements, boundries and area.
Tax Value: The assessed value made by the county.
Tenancy in Common: An ownership of real property by two or more persons, each of whom has an undivided interest, without the right of survivorship. See also Joint Tenancy.
Third Party Administrator: (TPA). A Third party set up to administer your investments.
Title: Evidence of ownership of land.
Title Report: An examination of the public records to determine ownership and encumbrances affecting real property.
Trustee: One who holds legal title to property in trust for the benefit of another person and who is required to carry out specific duties with regard to the property, or who has been given power affecting the disposition of property for another's benefit.
UCC Filing: A recorded document utility companies use to secure payment of a debt.
VA Loan: Mortgage loan insured by the Veterans Administration.
Yield: A profit obtained from an investment; a return.
