Agent

A person who acts for or in the place of another individual or entity by authority from them.

               Buyer Agent

               A real estate broker who represents the buyer and, as the agent of the buyer, is normally paid for                     his/her services by the buyer.

               Listing Agent

                A real estate broker who has a listing on a property and cooperates with the auction company by                      allowing the auction agreement to supersede his/her listing agreement.

 

Apprai​sal

The act or process of estimating value.

 

Adjustable-Rate Mortgage (ARM)

An ARM is an Adjustable-Rate Mortgage. Unlike fixed rate mortgages that have an interest rate that remains the same for the life of the loan, the interest rate on an ARM will change periodically. The initial interest rate of an ARM is lower than that of a fixed rate mortgage, consequently, an ARM may be a good option to consider if you plan to own your home for only a few years; you expect an increase in future earnings; or, the prevailing interest rate for a fixed rate mortgage is too high.

 

"As Is"

Selling the property without warranties as to the condition and/or the fitness of the property for a particular use. Buyers are solely responsible for examining and judging the property for their own protection. Otherwise known as "As Is, Where Is" and "In its Present Condition."

 

Assessed Value:

Typically the value placed on property for the purpose of taxation.

 

Auction

A method of selling real estate in a public forum through open and competitive bidding. Also referred to as: public auction, auction sale or sale.

 

Balloon Mortgage

A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.

 

Bankruptcy:

Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.

 

Before-tax Income:

Income before taxes are deducted. Also known as “gross income.”

 

Bid

A prospective buyer's indication or offer of a price he or she will pay to purchase property at auction. Bids are usually in standardized increments established by the auctioneer.

 

Buydown:

An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower’s monthly payments typically in the early years of the loan.

 

Certificate of Eligibility:

A document issued by the U.S. Department of Veterans Affairs (VA) certifying a veteran’s eligibility for a VA-guaranteed mortgage loan

 

Chain of Title:

The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

 

Clear Title:

Ownership that is free of liens, defects, or other legal encumbrances.

 

Closing:

The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions. See also “Settlement.”

 

Closing Agent:

The person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds. (May be referred to as an escrow agent or settlement agent in some jurisdictions.) Typically, the closing is conducted by title companies, escrow companies or attorneys.

 

Closing Costs:

The upfront fees charged in connection with a mortgage loan transaction. Money paid by a buyer (and/or seller or other third party, if applicable)

 

Contract

An agreement between two or more persons or entities which creates or modifies a legal relationship.

 

Concession:

Something given up or agreed to in negotiating the sale of a house. For example, the sellers may agree to help pay for closing costs.

 

Condominium (Condo)

Individual ownership of a portion of a building, with common areas shared by all owners. Maintenance fees called "assessments" are paid to the condominium association to maintain, repair, or improve the property.

 

Contingency:

A condition that must be met before a contract is legally binding. For example, home purchasers often include a home inspection contingency; the sales contract is not binding unless and until the purchaser has the home inspected.

 

Co-operative (Co-op):

An arrangement in which a corporation made up of residents owns a building. The buyer owns a proprietary lease, rather than real property, and a corresponding number of shares in the corporation.

 

Counter Offer

A new offer as to price, terms, and conditions, made in response to a prior, unacceptable offer. A counter offer terminates an original offer.

 

Deed:

The legal document transferring ownership or title to a property.

 

Deed-in-Lieu of Foreclosure:

The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure. Also called a “voluntary conveyance.”

 

Depreciation:

A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

 

Discount Point:

A fee paid by the borrower at closing to reduce the interest rate. A point equals one percent of the loan amount.

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Down Payment:

A portion of the price of a home, usually between 3-20%, not borrowed and paid up-front in cash. Some loans are offered with zero downpayment.

 

Dual Agency

The representation of opposing principals (buyers and seller) at the same time.

 

Due Dili​gence

The process of gathering information about the condition and legal status of assets to be sold.

 

Earnest Money Deposit:

The deposit to show that you’re committed to buying the home. The deposit usually will not be refunded to you after the seller ac

 

Easement:

A right to the use of, or access to, land owned by another.

 

Encroachment:

The intrusion onto another’s property without right or permission.

 

Encumbrance:

Any claim on a property, such as a lien, mortgage or easement.

 

Escrow:

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

 

Escrow Account: 

An account that a mortgage servicer establishes on behalf of a borrower to pay taxes, insurance premiums, or other charges when they are due. Sometimes referred to as an “impound” or “reserve” account.

 

Estate Sale

The sale of property left by a person at his or her death. An estate auction can involve the sale of personal and/or real property.

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First-Time Home Buyer:

A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the security property.

 

Fixed-Rate Mortgage:

A mortgage with an interest rate that does not change during the entire term of the loan.

 

Foreclosure:

A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

 

Fully Amortized Mortgage:

A mortgage in which the monthly payments are designed to retire the obligation at the end of the mortgage term.

 

Gross Monthly Income:

The income you earn in a month before taxes and other deductions. It also may include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

 

Home Inspection:

A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation, and pest infestation.

 

Homeowner’s Insurance:

A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances.

 

Housing Expense Ratio:

The percentage of your gross monthly income that goes toward paying for your housing expenses.

 

Income Property:

Real estate developed or purchased to produce income, such as a rental unit.

 

Individual Retirement Account (IRA):

A tax-deferred plan that can help you build a retirement nest egg.

 

Inflation:

An increase in prices.

 

Initial Interest Rate:

The original interest rate for an adjustable-rate mortgage (ARM). Sometimes known as the “start rate.”

 

Investment Property:

A property purchased to generate rental income, tax benefits, or profitable resale rather than to serve as the borrower’s primary residence. Contrast with “second home.”

 

Liquid Asset:

A cash asset or an asset that is easily converted into cash.

 

Lock-In Rate:

A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.

 

Market Value

The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

 

Mortgage:

A loan using your home as collateral. In some states the term mortgage is also used to describe the document you sign (to grant the lender a lien on your home). It also may be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage often is the purchase price of the home minus your down payment.

 

Mortgage Insurance (MI):

Insurance that protects lenders against losses caused by a borrower’s default on a mortgage loan. MI typically is required if the borrower’s down payment is less than 20 percent of the purchase price.

 

Mortgage Insurance Premium (MIP):

The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (PMI) company.

 

Multiple Listing Service (MLS):

A clearinghouse through which member real estate brokerage firms regularly and systematically exchange information on listings of real estate properties and share commissions with members who locate purchasers. The MLS for an area is usually operated by the local, private real estate association as a joint venture among its members designed to foster real estate brokerage services.

 

Negative Amortization:

An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due.

 

Offer:

A formal bid from the home buyer to the home seller to purchase a home.

 

Open House:

When the seller’s real estate agent opens the seller’s house to the public. You don’t need a real estate agent to attend an open house.

 

Owner-Occupied Property:

A property that serves as the borrower’s primary residence.

 

PITI:

An acronym for the four primary components of a monthly mortgage payment: principle, interest, taxes, and insurance (PITI).

 

PITI Reserves:

A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

 

Power of Attorney:

A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

 

Pre-Approval:

A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This process typically includes a review of the applicant’s credit history and may involve the review and verification of income and assets to close.

 

Pre-Approval Letter:

A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

 

Pre-Qualification:

A preliminary assessment by a lender of the amount it will lend to a potential home buyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.

 

Prepayment Penalty:

A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principal balance.

 

Principal:

The amount of money borrowed or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

 

Purchase and Sale Agreement:

A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.

 

Radon:

A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

 

Real Estate Settlement Procedures Act (RESPA):

A federal law that requires lenders to provide home mortgage borrowers with information about transaction-related costs prior to settlement, as well as information during the life of the loan regarding servicing and escrow accounts. RESPA also prohibits kickbacks and unearned fees in the mortgage loan business.

 

Real Property:

Land and anything permanently affixed thereto — including buildings, fences, trees, and minerals.

 

Replacement Cost:

The cost to replace damaged personal property without a deduction for depreciation.

 

Right of First Refusal:

A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

 

Sale-Leaseback:

A transaction in which the buyer leases the property back to the seller for a specified period of time.

 

Second Mortgage:

A mortgage that has a lien position subordinate to the first mortgage.

 

Settlement:

The process of completing a loan transaction at which time the

mortgage documents are signed and then recorded, funds are disbursed, and the property is transferred to the buyer (if applicable). Also called closing or escrow in different jurisdictions. See also “Closing”

 

Settlement Statement:

A document that lists all closing costs on a consumer mortgage transaction.

 

Single-Family Properties:

One- to four-unit properties including detached homes, townhouses, condominiums, and cooperatives, and manufactured homes attached to a permanent foundation and classified as real property under applicable state law.

 

Survey: 

A precise measurement of a property by a licensed surveyor, showing legal boundaries of a property and the dimensions and location of improvements.

 

Taxes and Insurance:

Funds collected as part of the borrower’s monthly payment and held in escrow for the payment of the borrower’s, or funds paid by the borrower for, state and local property taxes and insurance premiums.

 

Termite Inspection:

An inspection to determine whether a property has termite infestation or termite damage. In many parts of the country, a home must be inspected for termites before it can be sold.

 

Title:

The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land.

 

Title Insurance:

Insurance that protects lenders and homeowners against legal problems with the title.

 

Title Search:

A check of the public records to ensure that the seller is the legal owner of the property and to identify any liens or claims against the property.

 

Truth-In-Lending Act (TILA):

A federal law that requires disclosure of a truth-in-lending statement for consumer credit. The statement includes a summary of the total cost of credit, such as the annual percentage rate (APR) and other specifics of the credit.

 

Two- to Four- Family Property:

A residential property that provides living space (dwelling units) for two to four families, although ownership of the structure is evidenced by a single deed; a loan secured by such a property is

considered to be a single-family mortgage.

 

Underwriting:

The process used to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

 

Uniform Residential Loan Application:

A standard mortgage application you will have to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

 

Walk-Through:

A common clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing, for example, within the 24 hours before closing.