Agent- A person acting on behalf of another, called
the principal.
Appraisal- An expert judgment or estimate of the quality or value of real estate as
of a given date.
Assessed Value- The valuation placed upon property by a
public tax assessor as the basis for taxes.
Bill of Sale- An instrument which transfers title to personal
property (chattels); a "Deed" transfers real property.
CC&R's: Covenants, conditions and
restrictions- A document
that controls the use, requirements and
restrictions of a property.
Certificate of Reasonable Value
(CRV)- A document that establishes the maximum
value and loan amount for a VA
guaranteed mortgage.
Certificate of Title- A document signed by a title examiner
or attorney stating that the seller has a good marketable and
insurable title.
Closing Statement
(Settlement)- The computation of financial adjustments
between buyer and seller as of the day of closing a sale to determine the net
amount of money which buyer must pay to seller to complete purchase of the real
estate and seller's net proceeds. Also, "settlement
sheets," "HUD-1."
Commission- Payment to a real estate broker for services
performed.
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 surfaces
(walls, floors and ceilings) serve as its
boundaries.
Contingency- A condition that must be satisfied before
a contract is binding. For instance, a sales agreement may be contingent
upon the buyer obtaining
financing.
Deed- A formal written
instrument by which title to real property is transferred from one owner
to another. Also, "conveyance".
Deed of Trust- Like a mortgage, a security instrument whereby
real property is given as security for a debt. However, in a deed of trust
there are three
parties to the instrument; the borrower, the trustee, and the lender (or
beneficiary).
Due-On-Sale Clause- An acceleration clause that requires
full payment of a mortgage or deed of trust when the secured
property changes ownership.
Earnest Money- The portion of the down payment delivered
to the seller or escrow agent by the purchaser with a written
offer as evidence of good faith.
Equity- The interest or value which owner has in real estate over and above the debts
against it. (Sales Price -
Mortgage Balance - Equity).
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 assumes responsibility
for handling all of the paperwork and distribution of
funds.
Federal National Mortgage
Association (FNMA)- Popularly known as Fannie
Mae. A privately owned corporation 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
mortgages.
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.
Fixture- What was formerly personal property which is now permanently attached to
real property and goes with the
property when it is sold.
Graduated Payment Mortgage- A residential mortgage with monthly payments that start at a low level and
increase at a predetermined rate.
Hazard Insurance- Protects against damages caused to property
by fire, windstorms, and other common hazards.
Home Inspection Report- A qualified inspector's report on a property's overall condition. The report
usuallyincludes an evaluation of both the structure and mechanical systems.
Home Warranty Plan- Protection against failure of mechanical
systems within the property. Usually includes plumbing, electrical, heating
systems and installed appliances.
Joint Tenancy- An equal
undivided ownership of property by two or more persons. Upon the death of
any owner, the survivors take the decedent's interest in the property.
Lien- A legal hold or
claim on property as security for a debt or
charge.
Listing Contract- Between a home owner (as principal) and
a licensed real estate broker (as agent) by which the broker is employed
to market the
real estate
within a given time for which service the owner agrees to pay a commission.
Also, "listing agreement".
Loan Commitment- A written
promise to make a loan for a specified amount on specified terms.
Loan-To-Value Ratio- The relationship between the amount
of the mortgage and the appraised value of the property, expressed as a percentage
of the appraised value.
Market Value- The highest
price which a buyer, ready, willing and able but not compelled to buy, would
pay, and the lowest price a seller, ready, willing and able but, not compelled
to sell, would accept. Basis for "listing price', or "asking price".
Mortgage- A lien or claim against real property given by
the buyer to the lender as security for money borrowed.
Mortgage Life Insurance- A type of term life insurance often bought by mortgagors. The coverage decreases
as the mortgage balance declines. If the borrower dies while the policy is
in force, the debt is automatically covered by insurance proceeds.
Mortgage Note- A written agreement to repay a loan. The
agreement is secured by a mortgage, serves as proof of an indebtedness, and
states the manner
in which it shall be paid. Also, "deed of trust note."
Negative Amortization- 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 you could owe more than you
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.
Origination Fee- A fee or charge for work involved in evaluating,
preparing, and submitting a proposed mortgage loan. The fee is limited to
1 percent of FHA
and VA loans.
PITI- Principal, interest,
taxes and insurance.
Planned Unit Development (PUD)- A zoning designation for property developed at the same or slightly greater
overall density than conventional development, sometimes with improvements
clustered between open, common areas. Uses may be residential, commercial
or industrial.
Point- An amount equal to 1 percent of the principal amount
of the investment or note. The lender assesses loan discount points at closing
to increase
the yield on the mortgage to a position competitive with other types of investments.
Prepayment Penalty- A fee charged to a mortgagor who pays
a loan before it is due. Not allowed for FHA or VA loans.
Principal- This word
has several meanings:
a) to denote the most important;
b) a capital sum lent on interest;
c) one who appoints an agent to act on their behalf;
d) either party to a contract.
Private Mortgage Insurance (PMI)- Insurance written by a private company protecting the lender against loss
if the
borrower defaults on the mortgage.
Prorate- To allocate between seller and buyer their proportionate
share of an obligation paid or due. For example a prorate on real property
taxes,
fire insurance, or condominium fee.
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.
Realtor- A real estate broker or associate active in a
local real estate board affiliated with the National Association of RealtorsÆ.
Regulation Z- The set of rules governing consumer lending
issued by the Federal Reserve Board of Governors in accordance with the Consumer
Protection act.
Survey- A map or plat
made by a licensed surveyor showing the results of measuring the land with
its elevations, improvements, boundaries, and its relationship to surrounding
tracts of land. A survey is often required by the lender to assure a building
is actually sited on the land according to its legal description.
Tenancy in Common- A type of joint ownership of property
by two or more persons with no right of survivorship.
Title Insurance- Protects lenders and home owners against
loss of their interest in property due to legal defects in title.
Title Search or Examination- A check of the title records, generally at the local courthouse, to make
sure the buyer is purchasing a house from the legal owner and there are no
liens, overdue special assessments, or other claims.
Transfer tax- State tax, local tax (where applicable) and
tax stamps (in some areas) required by law when title passes
from one owner to another.
