REAL ESTATE TERMINOLOGY

Acceleration Clause: Mortgage phrasing which allows the lender to demand complete payment of debt if a mortgage payment is missed.
Adjustable Rate Mortgage (ARM): A mortgage with changing interest rates over time according to an index. Also called adjustable mortgage loan or variable rate mortgage
Adjustment Period: The length of time between changes in interest rate payments of an adjustable rate mortgage.
Adverse Action: A revocation or denial of credit.
Amortization: Describes the gradual repayment of a loan in equal installments of principal and interest, as opposed to interest only payments.
Amortization Schedule: A payment timetable showing payments, interest, principal and balance due.
Annual Percentage Rate (APR): The yearly sum of charges including interest, points, insurance and fees calculated as a percentage.
Appraisal: a professional opinion on the market value of property.
Assessed Value: The value assigned by a public tax assessor for tax purposes.
Assignment of Rents: A clause which provides the lender, in cause of a default, to collect rents and manage the property to apply to the remaining debt.
Appreciation: The increase in value to a home due to market changes.
Assumption of Mortgage: An agreement that a buyer will assume the liability under an existing note secured by a mortgage or deed of trust.
Balloon Loan: A loan in with amortization and remaining balance due at the end of the loan. Also "Bullet Loan," or "Call Loan."
Balloon Payment: The lump sum payment due at the end of a balloon loan, long term loan or mortgage.
Beneficiary: One legally entititled to a benefit.
Bridge Loan: A second mortgage secured by other property owned by the borrower.
Binder: A preliminary acknowledgment of deposit entered with a written agreement upon entering into a real estate sale.
Buydown: A method of reducing an interest rate by increasing points or fees.
Cap: A limit on how much an interest rate or monthly payment for an adjustable rate mortgage can change.
Cash Reserve: A requirement of some lenders that borrowers have enough funds at closing to make their first several mortgage payments.
Chain of Title: Chronological listing of any evidence of property ownership.
CC&R's: Covenants, Conditions and Restrictions.
Closing Costs: Costs incurred by buyers and sellers in transferring property, over and above the price of the property itself.
Closing Statement: a disclosure of all the costs associated with closing.
Collateral: Property which serves as security for a debt.
Condominium: A property characterized by ownership of a particular unit of a building and interest in common areas.
Contingency: A condition of sale which must be met to make a contract binding.
Conveyance: The deed or document allowing transference of title.
Conversion Clause: A clause which allows and Adjustable Rate Mortgage to be converted into a fixed-rate loan at some point.
Cooperative: a title held by multiple owners so that a corporation or business holds title and grants leases to the shareholders.
CRB: Certified Residential Broker, accredited by the National Association of Realtors.
Deed of Trust: Used as a form of mortgage in some states, allowing title to be transferred to a trustee until the loan as been paid off.
Due-On-Sale Clause: A provision which requires full payment of a mortgage to be made when the property changes ownership.
Earnest Money: Good faith money consisting of a portion of the down payment delivered with an offer by the buyer.
Effective Age: The estimated age of building, rather than its actual age, taking into account improvements and maintenance.
Equity: Market value of property minus any liens.
Escrow: Money, property, a deed, or bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified.
FHA Loan: A loan secured by the Housing and Urban Development Office of the Federal Housing Administration.
Federal National Mortgage Association (FNMA): A private corporation created by Congress to provide secondary mortgages, sometimes referred to as "Fannie Mae."
Fee Simple: A way of holding title which gives the holder unrestricted power to will the property to whomever he/she wishes.
Finance Charge: The total cost to obtain credit.
Growing Equity Mortgage: a fixed rate mortgage with a schedule of payment increases to accelerate payoff.
GRI: Graduate of the Realtors Institute.
Hazard Insurance: Protects owner and lender against damage from fire, wind, vandalism, etc.
Home Inspection Report: A report made by a qualified individual covering structural and mechanical conditions of a property.
Homeowners Insurance: A policy combining liability and hazard insurance.
Home Inspection Service: An inspection to determine defects or problems in a property.
Homeowner's Association: An association which manages the common areas of a condominium.
Home Warranty Plan: Protects against mechanical systems' failure, including pluming, installed appliances, heating.
Housing Expense Ratio: The amount of house payment compared to one's monthly gross income, used to help qualify for a mortgage.
Impound Account: Money held by the lender for paying taxes, insurance and debts.
Inclusionary Zoning: Legislation for certain areas requiring moneys to be set aside in new property development to benefit low/moderate income individuals.
Index: The economic indicators used to calculate rate adjustments on adjustable mortgage loans.
Interest Rate Cap: see "Cap."
Joint Tenancy: An equal shared interest in a property with right of survivorship.
Lease-Purchase Mortgage Loan: An option allowing low to moderate income buyers to lease a home from a nonprofit organization with the option to buy.
Lien: A voluntary or involuntary claim against property due to unpaid debt. Lifetime Cap: The limit on the total increase in interest rate during the period of a loan.
Listing: A property up for sale. Loan Servicing: The responsibility of a loan servicer to collect mortgage payments.
Loan-to-Value Ratio: The relationship between the mortgage amount and the total property value.
Margin: A predetermined percentage rate used to determine the interest rate of an adjustable rate mortgage.
Market Value: The value of a property acceptable to buyer and seller.
Mortgage: A document which states the terms of a loan.
Mortgage Banker: A company which resells mortgages in the secondary market.
Mortgage Note: The document which legally requires the borrower to repay a loan at the agreed interest rate.
Multiple Listing: A property listing distributed to all members of a real estate association.
Negative Amortization:
Notice of Default: A formal notice that legal action my be taken because of nonpayment.
Origination Fee: Payment to a lender for processing a loan application.
Owner Financing: Financing provided by the seller.
Payment Cap: see "cap." PITI: The sum total of a monthly mortgage payment which includes principal, interest, taxes and insurance.
Planned Unit Development (PUD): Describes a real estate development in which owners have title to a lot and building and easement onto common areas.
Point: A one-time charge equal to one percent of the mortgage.
Positive Amortization: Occurs when interest rates decline and monthly payments exceed the amount due, and are then applied to the principal balance.
Prepayment Penalty: A penalty paid for paying off a loan before the agreed date. Cannot be charged on FHA or VA loans.
Private Mortgage Insurance (PMI): Protects the lender in case the borrower defaults on a mortgage.
Purchase Agreement: A document which states the terms of sale between buyer and seller.
Real Estate Agent: a state-licensed representative of a broker.
Realtor: A real estate broker affiliated with the National Association of Realtors.
Regulation Z: Rules governing consumer lending in accordance with the Consumer Protection act.
Settlement: see "closing"
Tenants in Common: Joint ownership which does not include right of survivorship.
Title: A document establishing proof of ownership.
Title Insurance: Protects against previously undiscovered pre-existing encumbrances or liens on a property.
VA Loan: A private loan partially guaranteed by the Veterans' Administration.
Vesting: Transferring or conveying ownership.