Glossary

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Back Title Letter
A letter sent to an attorney that allows them to examine a property's title for insurance purposes.

Back to Back Escrow
The process of selling one property while simultaneously buying another.

Backup Offer
A bid that a seller will accept if their first choice offer falls through.

Balance Sheet
A written statement that shows the net worth of a person or organization.

Balloon Loan
A loan whose amortization does not work out to the entire sum of the loan. In this case, a large (or balloon) payment is made at the end.

Balloon Mortgage
A mortgage that has a short, fixed-rate period interest in which small amounts are payable each month. The payment at the end of this mortgage is the outstanding amount of the loan.

Bankruptcy
A stipulation of Federal Law that allows an insolvent debtor to receive relief from creditors. A Trustee is assigned to sell off the debtors assets in order to repay the debts. Bankruptcy appears on your credit report for seven years after the initial declaration.

Bargain Sale
A property that is put up for sale for less than current market value.

Basis Point
One one-hundreth of a percent, or .01%.

Before-Tax Income
The total of a person's salary, investments, etc., before taxes are assessed.

Beneficiary
A person who receives a benefit, usually cash or property.

Bequest
Property given to a beneficiary through a last will and testament.

Betterment
An addition or improvement to a property that increases its value (i.e., a second bathroom).

Bid
Offer.

Bidding War
Competing bids for the same property.

Bilateral Contract
See Reciprocal Contract

Bill of Sale
The document that transfers property from one person to another.

Binder
A document from a title insurance company stating that they will insure a property under a specific set of guidelines.

Biweekly Mortgage
A mortgage that requires payment every two weeks.

Blanket Mortgage
A single mortgage that covers two or more properties.

Blue-Ribbon Condition
A house that is close to its original condition. Like new.

Board of Equalization
A state organization that makes certain property taxes are assessed fairly and uniformly.

Boilerplate
Standard wording on mortgages and other documents.

Bond
An agreement or amount of money that protects a person from losses or defaults by another person.

Book Value
A property's value, based on cost plus additions, minus depreciation.

Breach of Contract/Covenant
Failure to follow the regulations set up in a contract or covenant.

Breach of Warranty
The inability of a seller to pass along a clear title to a buyer.

Break-Even Point
When an owner is bringing in enough rental income to match their expenses, they have reached the break-even point.

Bridge Loan
A short-term loan given to a buyer so that they can gain time to fully finance their mortgage.

Broker
A person who is licensed to deal in real estate. Also, a person who can help a buyer find mortgage financing.

Broom Clean
Ideal condition.

Building Code
Laws and regulations that dictate how a property can be built or remodeled.

Building Moratorium
Disallowing new construction, usually to increase the value of existing properties.

Building Permit
A permit that allows new homes to be built, or existing homes to be renovated.

Building Restriction Line
An imaginary line that represents the size limit for a building.

Buy-Down Mortgage
A mortgage in which the interest rate is lowered to attract buyers. This is usually accompanied by a small price increase.

Buyer Broker
A real estate agent who represents buyers exclusively.

Buyer's Market
A market advantageous to buyers, with many properties for sale and not many people to purchase them.

Buyer's Remorse
Mild depression that occasionally occurs with first-time homebuyers after they have closed on a property.

By-Laws
Rules and regulations that govern a corporation or an association. Usually seen with co-ops and condominiums.

Call Option
A mortgage provision that allows a buyer to find out their balance at any time.

Cancellation Clause
A mortgage provision that details how the interested parties may cancel the document.

Cap
A limit on how high the monthly interest on an adjustable rate mortgage can be risen.

Capital Expenditure
Spending money in order to improve a property.

Capital Gains
The profit made from selling investments, whether they are stocks or real estate.

Capital Gains Tax
A tax placed on capital gains.

Capital Improvement
Increasing the value of a property through capital expenditure.

Capitalization
A formula used to estimate a property's value based on net income.

Capitalization Rate
The capitalization of a property, expressed as a percentage.

Cash Flow
The cash income generated from renters living in an owned property, minus operating expenses, outstanding loans, etc.

Cashier's Check
A check made out from a bank's own account.

Cash-Out Refinance
Taking out a loan in order to completely pay off a previous loan, and still having additional funds to take care of other financial matters.

Caveat Emptor
Latin for "let the buyer beware." Always a sound principle when purchasing real estate.

Certificate of Deposit (CD)
A document that confirms a person has deposited money in an account. Usually used with banks.

Certificate of Deposit Index
An index based on the rates of six-month certificates of deposit. The interest on some adjustable rate mortgages is determined with this index.

Certificate of Eligibility
A certificate given to qualified veterans that proves they are eligible for a VA loan.

Certificate of Occupancy
A certificate that states a particular property is suitable to be lived in.

Certificate of Sale
A certificate that states a buyer is entitled to a property's deed.

Certificate of Satisfaction
A certificate issued once the terms of a lien, deed of trust, or mortgage are satisfied.

Certificate of Title
A certificate that summarizes the title on a particular property.

Chain of Title
The record of owners of a particular property.

Change Frequency
The frequency of rate changes on an adjustable rate mortgage.

Chattel
Personal property.

Chattel Mortgage
A mortgage that uses a person's chattel as collateral.

Class Action
A legal claim filed on behalf of a specified group of people.

Classified Property Tax
A tax levied on property that varies on how it is classified to be used.

Clear Title
A property's title that is free from liens or other legal proceedings.

Closing
The final meeting in which ownership of a property changes hands from seller to buyer.

Closing Costs
Fees associated with the transfer of property from seller to buyer.

Closing Day
The day on which a closing takes place.

Closing Statement
A statement that details the final monetary agreement between the seller and the buyer, including the fees which each party has paid.

Cloud on Title
A claim or other legal proceeding which clouds the marketability of a particular property's title.

Co-Insurance
Any kind of insurance that involves more than one insurance company.

Collateral Security
Providing additional security (such as chattel) in order to get a loan.

Collection
Steps taken by a mortgage issuer to bring outstanding payments up to date.

Co-Maker
See co-signer.

Commercial Property
A property that has been zoned for commercial usage.

Commission
An occasionally negotiable fee paid to a real estate agent or broker for their services, generally a fixed percentage of the property's price.

Commitment
A written promise by a loaning institution that they will provide a mortgage, under specific conditions for a precise period of time.

Commitment Fee
A fee charged for making a commitment.

Common Area
An area within a property that is equally owned by all its residents.

Common Area Assessments
Fees paid to maintain or improve a property's common area.

Common-Interest Development
A property comprised of individual units that share a common area(s).

Community Property
Property acquired by joint effort of a married couple or other state-recognized partnerships.

Community Reinvestment Act
A federal law that encourages local lenders to loan to neighborhood applicants.

Comparables
Properties similar to the one currently being sold.

Comparative Market Analysis
The estimated value of a property, based on sales of comparables.

Compound Interest
Interest that is added onto existing interest.

Condemnation
Government takeover of a property against the owner's will, usually because the property is unsuitable to be lived in.

Conditional Commitment
A commitment granted by a loaning institution, as long as the person receiving the commitment meets certain stated conditions.

Condominium
A property that is split into individually owned units, with the owners all having a stake in the common areas.

Condominium Conversion
Changing the title on a property so that instead of being owned by a single person, each unit in the building is individually owned.

Conservator
A court-appointed guardian or committee that acts on behalf of a property's owner when the owner is unfit to manage their own affairs (i.e., a minor).

Consumer Credit Counseling Service (CCCS)
A nonprofit organization that helps people get themselves out of debt.

Contiguous Lots
Properties that are attached or directly adjacent to each other.

Contingency
A condition.

Contingency Listing
A property for sale with a specific contingency attached.

Contingent Fee
A fee that must be paid only if a certain contingency arises.

Contract
A legally binding agreement between two or more parties.

Contract for Deed
A contract in which a property's seller agrees to defer part or all of the price for a specific period of time. The seller retains the property's title until the buyer has paid the entire purchase price.

Contract to Purchase
See Agreement of Sale.

Contractor
A person who is under contract to build a new property or to make improvements to an existing property.

Contractual Lien
A voluntary contract or other legal obligation.

Controlled Growth
Restrictions placed on development in a specific area.

Conventional Loan
A loan made by a bank or other institution for the purchase of a property.

Conversion Clause
A provision in a convertible adjustable-rate mortgage that details the conditions under which the mortgage can be converted.

Convertible Adjustable-Rate Mortgage
A loan that begins as an adjustable-rate mortgage, but can be converted to a fixed-rate mortgage within certain time constraints.

Conveyance
Transfer of a property's title.

Conveyance Tax
A tax imposed on a conveyance.

Cooperative
A property split into individually owned units. Unlike a condominium, a person in a cooperative owns shares in a corporation that owns the building. The amount of monthly payments generally dictates how many shares a person has.

Cooperative Corporation
The corporation that owns a cooperative on behalf of its shareholders.

Cooperative Mortgage
A mortgage granted to a cooperative property.

Cooperative Project
See cooperative.

Corner Influence
The effect of a street corner's proximity to the value of a property.

Corrective Work
Work needed to fix flaws in a property.

Co-Signer
A person who signs a promissory note with a borrower. This person is responsible for paying the loan if the initial borrower cannot.

Cost Approach
The method an appraiser uses to determine how much an improvement will cost, minus any depreciation.

Cost-Plus Contract
A contract in which the builder determines the cost based on labor and materials, then adds a certain percentage to insure they make a profit.

Counteroffer
A response to an offer.

Co-Tenancy
Ownership of a property by more than one person.

Covenant
A written agreement promising certain acts.

Covenants, Conditions and Restrictions (CC&Rs)
A set of rules that lay out what tenants of condominiums and cooperatives can and cannot do in terms of improvements, and what obligations the tenants must fulfill while owning a unit within the property.

Creative Financing
Unique financing arrangements meant to make a property more enticing to buyers.

Credit
Money lent to a buyer in order to make a purchase, which must be repaid.

Creditor
A person or organization that extends credit.

Credit Life Insurance
Life insurance that pays off a mortgage in the event the borrower dies.

Credit Rating
The ability of a person to pay off debts incurred by receiving credit.

Credit Report
A report that details a person's prior history of paying off debts incurred by receiving credit.

Curable Defect
A property defect that is relatively easy or cheap to repair.

Debt-to-Income Ratio
The ratio of monthly payments on long-term debts divided by gross income, usually expressed as a percentage.

Deed
A legal document that conveys ownership of a property.

Deed of Trust
A legal document that allows a lender to foreclose on a property should a person not be able to meet their mortgage payments.

Default
Failure to meet the conditions set forth in a legal document (i.e., not making monthly mortgage payments).

Deferred Interest
Interest that does not require immediate payment. Generally this interest is added to the balance of the loan.

Deferred Maintenance
Property maintenance that has been put off, usually resulting in a lower value.

Deficiency Judgment
A judgment rendered in favor of a person who has sold off a foreclosed property, but has not made enough capital to cover their costs. The judgment allows the property's seller to collect the balance from the previous owner.

Delinquent Mortgage
A mortgage given to a buyer who is already behind on other payments.

Delivery
The transfer of a deed from one owner to the next.

Deposit
An initial cash outlay towards the purchase of a property.

Depreciation
A decline in value of a property from its original price.

Dimension Plans
A document that lays out the physical dimensions of a property. Not to be confused with blueprints, which are more detailed.

Disclosure
A document that lists any potential defects of a property (i.e., asbestos insulation, failing appliances, etc.)

Discount Points
See points.

Distressed Property
A property in poor shape.

Document Needs List
A list of documents needed by a lending institution in order to process a mortgage application.

Dower
The interest in a property retained by the spouse of a deceased partner.

Down Payment
The difference between the purchase price of a property and a mortgage, to be paid up front.

Dual Agency
A real estate agency that represents both the seller and buyer in a transaction.

Due-on-Sale Clause
A provision in a mortgage that states that a buyer must pay the entire outstanding balance should they sell the property being mortgaged.

Duplex
A property spread over two floors.

Early Occupancy
Being able to move into a property before the official sale is completed.

Earnest Money
Money accompanying an offer to purchase. See deposit.

Easement
The temporary or permanent right for a third party to use a property for a specific purpose (i.e., power lines).

Effective Age
The estimate age of a property, if the actual age cannot be established.

Effective Gross Income
Additional income (other than base salary) taken into consideration by a mortgage lender.

Eminent Domain
The right of the government to take over private property for public use, with monetary compensation to be made to the owner.

Employer-Assisted Housing
Company programs that assist their employees in purchasing property.

Empty Nesters
Couples who are looking for a smaller property because their children have moved out of their previous home.

Encroachment
A physical portion of a property that extends onto another property (i.e., a driveway).

Encumbrance
A lien or other claim against a property.

Endorser
A person who signs over their property to another person.

Environmental Impact Statement
A government-mandated statement that details the environmental impact the construction of a new property will incur.

Equal Credit Opportunity Act (ECOA)
A federal law that prohibits lenders from discriminating against potential buyers on the basis of their race, sex, marital status, religion, age, national origin or the fact that they are currently receiving public assistance.

Equity
The current value of a property to its owner, minus outstanding mortgage payments or other debts.

Equity Sharing
Joint ownership between the occupant of a property and another investor. Each receives a portion of tax write-offs, and any profit made from the later sale of the property is split between them.

Errors and Omissions Insurance
Insurance that protects against mistakes made by a builder when constructing a new property.

Escheat
Property that transfers to the state if its owner dies without a will or heirs.

Escrow
A party other than a buyer or seller who holds documents and moneys for property transactions until closing.

Escrow Account
An account opened for a buyer to deposit money to cover expenses such as property taxes or homeowners insurance.

Escrow Agent
The person in charge of an escrow account.

Escrow Analysis
An analysis of an escrow account to determine if a buyer has enough money set aside to cover expenses such as property taxes or homeowners insurance.

Escrow Closing
The closing of an escrow account once a property has officially changed hands from seller to buyer.

Escrow Company
A company that specializes in handling escrow accounts.

Escrow Payment
A deduction from an escrow account to pay expenses such as property taxes or homeowners insurance.

Estate
Total assets of a person who is recently deceased.

Eviction
Legal proceedings to evict a tenant. Most evictions occur when a tenant fails to pay rent.

Examination of Title
A title company's inspection of public records to determine a property's entire ownership history.

Exclusive Listing
A property that is being shown by one particular real estate agent or agency.

Executor
The person appointed to carry out the terms of a will and distribute the items of estate. If a person dies without a will, the courts generally appoint an executor.

Executrix
A female executor.

Fair Credit Billing Act
A federal law that allows consumers to sue credit card companies to recover funds lost due to billing errors.

Fair Credit Reporting Act
A federal law that allows consumers easy access to their credit reports, and to request changes if any information is outdated or inaccurate. The law also states who besides the consumer may have access to this information.

Fair Debt Collection Practices Act
A federal law that provides guidelines for creditors to follow in collecting outstanding debts.

Fair Housing Act
A federal law that makes it illegal to refuse to sell a property based on a potential buyer's race, religion, national origin, family status, color, or disability.

Fannie Mae
The Federal National Mortgage Association. The association buys mortgages from lenders and sells them on the secondary mortgage market.

Federal Home Loan Mortgage Corporation
A corporation that buys mortgages from lenders and sells shares to investors. Also known as Freddie Mac.

Federal Housing Administration (FHA)
A government agency that provides mortgages to qualified buyers for a small down payment.

Federal National Mortgage Association
See Fannie Mae.

Federal Reserve Board
An economic committee that controls inflation by raising and lowering interest rates, which directly influences the interest rate on mortgages.

Federal Trade Commission
A government agency in charge of regulating certain companies and industries, including some mortgage lenders.

Fee Simple
The maximum amount of interest a person can have in a property.

Fee Simple Defeasible
A person holding fee simple title to a property, with certain stated conditions.

FHA Loans
A loan insured by the Federal Housing Administration.

Feng Shui
The belief that a property's physical aspects will influence the life of its owner.

Fiduciary Relationship
Any relationship of trust between two or more parties (i.e., a real estate agent and a potential buyer).

Financing Statement
A statement of property improvements that are subject to liens.

Finder's Fee
A fee paid to a person for finding a suitable property for a buyer.

Firm Commitment
See commitment.

First Mortgage
The primary mortgage, which must be paid off before all other property debts.

Fixed Installment
A monthly mortgage payment.

Fixed-Rate Mortgage
A mortgage whose interest rate remains fixed throughout its entire term.

Fixed Time
The specific amount of time an owner of a timeshare can use the property.

Fixer Upper
Any property that requires a significant amount of maintenance, but is still habitable.

Fixture
Anything permanently affixed to a property (i.e., a toilet).

Flat Fee
A set fee charged by a real estate agent in lieu of a percentage of a property's sale value.

Forbearance
A delay in foreclosure proceedings or other legal proceedings against a delinquent borrower.

Foreclosure
The process by which a lender sells off the property of a delinquent borrower in order to pay off the balance of a mortgage or other loan.

Forfeiture
The loss of property rights by a delinquent mortgage borrower.

For Sale By Owner
A property being sold through its owner instead of a real estate agent.

Freddie Mac
See Federal Home Loan Mortgage Corporation.

Frontage
The portion of a property that faces a street.

Fully Amortized Adjustable-Rate Mortgage
Any adjustable-rate mortgage that completely pays off the balance of a loan.

Fully Indexed Note Rate
The index of an adjustable rate mortgage plus the gross margin.

Gag Rule
A contract provision that prevents property owners from publicly complaining about that property's builder.

General Contractor
The contractor in charge of hiring subcontractors and suppliers during any construction process.

General Plan
The long-range plans for land usage by the local or federal government.

General Warranty Deed
A grantor's guarantee that a property's title is free of liens or other debts.

Gift
A monetary sum given by a buyer's relative or other source for purchasing a property that does not need to be repaid.

Ginnie Mae
See Government National Mortgage Association.

Good Faith Estimate
An estimate of costs a mortgage lender gives to a potential buyer which includes all foreseen fees.

Government National Mortgage Assocation
An agency that buys mortgages from lenders and sells them in shares along with other federally backed loans. Also known as Ginnie Mae.

Grace Period
The time in which a mortgage payment can be made after its due date without incurring a late fee.

Graduated-Payment Mortgage (GPM)
A mortgage that requires larger payments over time until it reaches certain point, when payments then remaining fixed.

Grantee
A person receiving an interest in a property.

Grantor
The person giving up interest in a property.

Greenbelt
A park located in the vicinity of a property.

Gross Income
A household's total income before expenses.

Gross Margin
The points added to the current index value of an adjustable rate mortgage when it is adjusted to its new rate.

Ground Lease
When a property's owner grants a long-term lease to a buyer, who may use the property as they see fit. At the end of the lease, the property rights revert back to the owner.

Ground Rent
Money paid for usage of a leasehold estate.

Growing-Equity Mortgage
A fixed-rate mortgage whose payments increase over time in order to pay down the principal.

Guarantee Mortgage
A mortgage guaranteed by someone other than the lender, usually a government institution.

Guardian
A person appointed by the court to oversee the affairs of a minor.

Hazard Insurance
Insurance that protects against common hazards such as fire or winds. It is generally required by all lenders before a mortgage is approved.

Hiatus
A gap between properties that is not included in the description of either property.

High-Rise
A building over six stories tall.

Historic Preservation
The preservation of historic structures.

Historic Structure
A property certified as historic by the Secretary of the Interior, and listed in the National Register of Historic Places.

Home Equity Conversion Mortgage
A mortgage made to allow borrowers to convert property equity into cash without having to sell their property. Payments are made to the borrower on a monthly basis, and the mortgage becomes due if the borrower sells their property.

Home Equity Loan
A loan that allows property owners to borrow against their property's equity. This loan is paid out in one lump sum, and is usually repaid in installments.

Homeowners' Association
An association that collect fees and oversees maintenance of common areas in a community.

Homeowners' Insurance
Insurance that typically includes hazard insurance, and protects a property from damages that may adversely affect a property's value.

Homeowners' Warranty
A special insurance policy that is issued for a limited period of time, usually to cover improvements or repairs as they are being done.

Home Rule
The power of local government to create their own general plan.

Homestead Deed
A document that protects a certain amount of a property's equity against the claims of creditors.

Home Warranty
A special insurance policy that covers unforeseen repairs to certain property items.

Housing Discrimination
Denying a person the right to own property based on their race, color, religion, sex, national origin, family status or disability.

Housing Expense Ratio
See debt-to-income ratio.

Impact Fees
Fees paid by property developers to finance community parks, schools, etc.

Implied Warranty of Habitability
A court case that determines new properties are suitable for human habitation.

Impounds
The portion of a borrower's mortgage payment that is used to pay for items such as hazard insurance, property taxes, etc.

Income Approach
The value of a property, estimated from the income it generates.

Income Property
A property that a buyer uses to generate income rather than provide housing.

Incurable Defect
A defect in a property that would cost more than the value of that property to fix.

Indemnity
Protection against a specific event that allows for compensation should the event occur.

Index
Any financial table used to set the interest rate on adjustable rate mortgages.

Individual Retirement Account (IRA)
A tax-deferred account that allows individuals to save money for their retirement.

Infill Development
Significant property development in a previously established area.

Infill Housing
Individual property developments in a previously established area.

Inflation
An economic event that occurs when there is more money than items to be purchased generally marked by high interest rates.

Ingress and Egress
The ability to cross over an easement, but not to park on it.

Initial Interest Rate
The first interest rate on an adjustable rate mortgage.

Initial Note Rate
The initial rate of a note, usually less than the index rate. Applies only to adjustable rate mortgages.

Inspection Report
A report that lists all the details of a property inspection, including the condition of the property's exterior, electrical system, plumbing and items pertinent to determining the value of the property.

Installment Contract
A contract in which a buyer does not own the property until they have completely paid for it.

Insurable Title
A property's title that is insured against certain legal disputes, liens or other claims.

Insurance
Any policy that provides compensation against a specific type of loss.

Insurance Binder
A temporary insurance policy that serves until a permanent policy is granted.

Insured Closing Letter
A document that provides a mortgage lender with indemnity should the funds from a loan be misappropriated by the closing agent.

Interest
A fee property buyers must pay in order to receive a mortgage, usually expressed as a percentage of the mortgage.

Interest-Only Loan
A loan whose payments only goes toward the interest on the loan, leaving the principal unchanged.

Interest Rate
The amount charged for a loan, expressed as a percentage.

Interest Rate Buy-Down Plan
A plan in which a property's seller advances cash from the sale to the buyer in order to buy-down the monthly mortgage payments.

Interest Rate Cap
See cap.

Interest Rate Ceiling
The highest amount of interest that can be charged on an adjustable rate mortgage.

Interim Financing
A loan granted during the construction of a property until a permanent loan is found.

Intestate
An estate without a will.

Investment Proeprty
See income property.

J

Joint Liability
When two or more people are liable for the terms of a mortgage.

Joint Ownership Agreement
An agreement that details the rights and responsibilities of two or more co-owners of a property, even if only one person actually lives there.

Joint Tenancy
Property ownership between two or more people, all of whom live on the property. The property automatically passes onto the co-owner(s) if one of the others is deceased.

Judgment Lien
A lien placed on a property by a court of law.

Judicial Foreclosure
A foreclosure handled by a court of law.

Jumbo Loan
A loan higher than those insured by such organizations as Fannie Mae.

Junior Mortgage
Any mortgage that is of lesser priority than the first mortgage.

Land Contract
See contract for deed.

Landscape
A property's exterior surroundings.

Late Charge
A fee imposed when a mortgage payment is not made on schedule.

Late Payment
Any mortgage payment made after it is due.

Latent Defect
Any defect in a property that is not immediately noticable.

Lease
An agreement that lays out the terms to a tenant in a property owned by someone else.

Leasehold Estate
A long-term agreement that allows a tenant property rights under the provision of a lease.

Lease Option
A lease that allows the renter to purchase the property after a certain amount of a time, for a fixed price.

Lender
Any bank or similar institution that offers mortgages and other loans.

Legal Blemish
A negative reflection on a property's title, such as a prior zoning violation.

Legal Description
A description of a property recognized by a court of law.

Letter of Intent
A document stating that a buyer intends to purchase a property by a certain date for a fixed price.

Leverage
Purchasing a property with only a 5 to 10 percent down payment.

Liabilities
Any debts or financial obligations that count against a potential buyer's gross income.

Liability Insurance
An insurance policy that protects property owners from personal injury and other liability lawsuits.

Lien
A claim laid against a property. Liens must be removed from a property's title before it can be sold.

Life Cap
A cap on an adjustable rate mortgage that states how high the interest rate can rise over the life of the loan.

Life Estate
The right of a person to own a property for their entire life.

Limited Partnership
A partnership of individuals with one person making the majority of the decisions.

Liquid Assets
Any asset that can be converted into cash in a short period of time.

Liquidated Damages
A sum of money given to a particular party if the terms of a property transaction are violated. For instance, a buyer may state beforehand that their liquidated damages will cover the amount of their initial deposit.

Lis Pendens
A document showing that there is pending litigation against a property's title.

Listing
A property placed on the market by a listing real estate agent.

Listing Inventories
The number of properties for sale in a given real estate market.

Live-In Partnership
An agreement in which two unrelated and unmarried people purchase a property.

Live-Work Space
A property in which the owner both lives and works.

Loan Application
A preliminary form that must be filled out by potential property buyers that details their basic financial information, the property being mortgaged, and the amount of the loan.

Loan Application Fee
A fee charged to process a loan application.

Loan Commitment
A commitment from a lender to furnish a mortgage or other loan.

Loan Officer
A person who works at a loaning institution (i.e., a bank) who processes loans and loan applications.

Loan Origination Fee
A fee charged by loan institutions when granting mortgages, usually expressed as points on the amount of the loan.

Loan Processing Fee
A fee charged by loaning institutions to gather information to help them process a loan application.

Loan Term
The time period in which a mortgage or other loan must be repaid. Most mortgages have 15 to 30-year terms.

Loan-to-Value Ratio (LTV)
The percentage value of a property as compared to the amount of a mortgage, expressed as a percentage.

Lock-In
A guarantee that a mortgage's interest rate will be the same at the end of the loan approval process as it was in the beginning. Especially sought after when interest rates are fluctuating.

Lowball Offer
An offer for a property that is significantly below its listed price.

Low-Documentation Loan
A mortgage or other loan that requires very little evidence of assets or income.

Low Down Payment Loan
A mortgage or other loan that requires only a small down payment on the part of the buyer.

Majority
The age at which a person is no longer considered a minor.

Manufactured Housing
Prefabricated properties such as trailer homes.

Maintenance Fee
A monthly fee paid by members of a homeowners' association to finance the upkeep of a property's common areas.

Margin
The amount in percentage points that a mortgage lender adds to an adjustable rate mortgage.

Market Conditions
The conditions in the real estate market that affect a property's price.

Market Value
The value of a property given the current market conditions.

Marketable Title
A property's title that can be accepted by a buyer without liens or other outstanding claims.

Maximum Financing
A mortgage or other loan that falls within 5 percent of a property's loan-to-value ratio.

Mechanic's Lien
A lien filed against a property's title by an unpaid contractor.

Median Value
A property price that falls in the middle of prices for other properties in the same neighborhood.

Median Credit Report
A credit report that garners its information from the major credit-reporting companies.

Mediation
The process in which a neutral third party is brought in to settle a dispute.

Metes and Bounds
A method of describing a property by distances and directions.

Mint Condition
Like new.

Mixed-Income Housing
Any area that has a broad spectrum of property prices.

Mixed-Use Development
Any property development that has more than one use (i.e., both residential and commercial).

Modification
Any change in a mortgage or other loan.

Mortgage
A legal document that states that a certain amount of money is being used to purchase a property. If the loan is not paid back according to the terms set forth in the document, the loan is forfeit, and the property may be seized in order to pay it back.

Mortgage Acceleration Clause
A clause in a mortgage that allows a mortgagee to demand the entire remaining sum of the loan.

Mortgage Banker
Any institution that grants mortgages using their own money.

Mortgage Broker
Any institution that directs potential property buyers to appropriate mortgage lenders.

Mortgage Insurance
Insurance usually required by mortgage lenders when a buyer is making a down payment of less than 20 percent of the property value. The insurance protects the lender should the buyer default on the mortgage.

Mortgage-Interest Deduction
A deduction granted by the Internal Revenue Service that allows mortgagors to deduct the interest paid on a mortgage.

Mortgage Life Insurance
A life insurance policy that pays off the remainder of a property's mortgage should its owner die.

Mortgagee
The person or institution granting a mortgage.

Mortgagor
The person being granted a mortgage so that they may purchase a property.

Motivated Buyer
A person looking to purchase a property as quickly as possible.

Motivated Seller
A person looking to sell a property as quickly as possible.

Move-In Condition
Any property currently ready for a buyer to move in.

Move-Up Buyer
Any buyer who is looking to purchase a larger property than the one they currently own.

Multi-Dwelling Property
Any property with one mortgage that contains several dwellings (i.e., an apartment building).

Multi-Family Mortgage
Any mortgage on a multi-dwelling property that contains more than four units.

Multiple Listing Service (MLS)
A listing of all properties for sale in a particular area, with the exception of those that are for sale by owner.

Municipal Housing Inspector
Any locally-approved inspector who assures that new property construction meets municipal requirements.

Needs-Based Pricing
A seller basing the price of their property on items that need to be fulfilled (i.e., buying another property). This may add to (or subtract from) the property's asking price.

Negative Amortization
Monthly mortgage payments that are not large enough to pay off accrued interest, which actually increases the mortgage's principal.

Net Cash Flow
Any investment property that produces a profit after expenses.

Net Effective Income
Gross income after income taxes are deducted.

Net Worth
The amount of a person's assets after total liabilities have been deducted.

No Cash-Out Refinance
A new mortgage that covers all the costs and fees of an old mortgage, but doesn't contribute more than 1 percent cash to the new loan.

No-Documentation Loan
A mortgage that does not require documentation of income and other assets.

Non-Assumption Clause
A mortgage clause that states that the mortgage cannot be assumed by another buyer without first receiving permission from the lender.

Non-Liquid Assets
Any asset that cannot be quickly converted to cash.

Non-Recurring Closing Costs
Any one-time closing cost (i.e., title insurance).

Notary Public
Any person authorized by law to certify signatures and documents.

Note
A legal document signed by a buyer to repay the stated amount of a loan by a certain date.

Note Rate
The interest rate set forth in a note.

Notice of Default
A legal document that states that a mortgagor is in default, and that further legal action is most likely forthcoming.

Offer
A monetary proposal for a property, usually from the buyer to seller.

Open House
A property open to be viewed by the general public.

Open Listing
Any property given to several real estate brokers to list simultaneously.

Option
A right exercised by a buyer to keep an offer to purchase a property open for a certain amount of time.

Oral Agreement
Any agreement not made in writing. Oral agreements are not usually considered legally binding.

Original Principal Balance
The amount of principal on a mortgage before payments have begun.

Origination Fee
See loan origination fee.

Owner Financing
A property transaction in which the owner agrees to finance some or all of the purchase price.

Parcel
Any officially designated plot of land.

Partition
The division of land between acrimonious co-owners. Also, an interior wall.

Patent Defect
Any immediately obvious property defect (i.e., not having any windows).

Payment Cap
The limit on the amount a monthly payment can increase on an adjustable rate mortgage.

Pay-Off Amount
The amount needed to pay-off a mortgage in full.

Per-Diem Interest
Interest that accrues daily.

Personal Property
Any item in a dwelling not considered a fixture.

Pest-Control Inspection
An inspection of a property for the presence of common pests (i.e., mice, termites, roaches, etc.)

Pipestem Lot
A property lot with a narrow strip connecting it to a nearby street.

PITI
Principal, Interest, Taxes and Insurance. These four items are combined to calculate a buyer's monthly housing expense.

Planned Community
A community originally developed with a certain plan in mind (i.e., a retirement community).

Plat
A map that outlines how a piece of land is to be developed into lots and streets.

Point
A fee charged by a mortgage lender, typically at closing. Each point is worth one percent of a loan's total principal (i.e., a point on a $150,00 loan would $1,500).

Portfolio Lender
Any mortgage institution that finances a loan with its own money and does not sell that mortgage on the secondary market. Thus, the mortgage remains in that institution's portfolio.

Possession
The point at which a property's buyer has closed a deal and received the keys to their new home.

Power of Attorney
A document stating that a certain individual is an attorney in fact, and may act on behalf of someone else.

Pre-Approval Letter
A document stating that a buyer will be able to obtain a mortgage for a specified amount.

Prepaid Expenses
Expenses such as taxes that are paid before they are due.

Prepaid Interest
Interest paid before it is due.

Prepayment Penalty
A financial penalty tacked onto mortgages that are paid off before they are due.

Prequalification
An assessment by a mortgage lender that a potential buyer will be able to secure a loan. Not considered as valuable as a pre-approval letter.

Pre-Sold Property
Any property that is sold before it is actually built.

Price Range
The range a buyer is willing to pay for a property.

Prime Rate
The best interest rate a lender can offer for a short-term loan.

Principal
The base amount of a mortgage, minus interest.

Principle of Conformity
The notion that the more a property conforms to those around it, the more likely it is to appreciate in value.

Principle of Progression
The notion that high-value properties will bring up lower-valued properties around them.

Principle of Regression
The notion that numerous low value properties will bring down the value of nearby higher-valued properties.

Private Mortgage Insurance (PMI)
See mortgage insurance.

Probate
The legal process to prove the validity of a will.

Probate Sale
The sale of a property whose owner has died, with proceeds either split amongst surviving relatives or used to pay off any outstanding debts.

Promissory Note
A note that promises payment of a specific amount on demand, which can be transferred much like a check.

Property Line
The official boundary line of a property.

Property Tax
A local tax assessed on those who own property of approximately 1.5 percent of the property's value.

Property Tax Deduction
The federal tax law that permits property owners to deduct their property taxes from their income tax return.

Property Value
The value of a property based on how much a buyer will pay for it at a specific point in time.

Proration
A percentage of purchase fees that must be paid by either the buyer or seller of a property at the closing, usually agreed upon beforehand.

Public Sale
A sale or auction open to the general public.

Punch List
A list buyers make of property defects that need to be fixed before closing.

Purchase Agreement
An agreement detailing the purchase price and other relevant details of a property transaction.

Purchase Money Mortgage (PMM)
A mortgage given from buyer to seller as part of a property's purchase price.

Qualifying Ratio
A ratio used by a mortgage lender to determine how much a buyer can afford to borrow.

Quiet Title
A lawsuit brought to remove a lien or other claim from a property title.

Quit-Claim Deed
A document releasing a person from any interest they may hold in a property.

Rate-Improvement Mortgage
A mortgage that includes a clause entitling a property buyer to a one-time interest reduction without having to go through the process of refinancing.

Rate Lock
See lock-in.

Real Estate
Land and anything physically attached to it (i.e., an apartment building, a barn, etc.).

Real Estate Agent
A person who has a state license to assist buyers and sellers in property transaction and is generally paid by commission.

Real Estate Attorney
Any attorney who specializes in real estate affairs.

Real Estate Broker
In essence, the Ph.D. of real estate agents. Brokers must pass much more stringent tests than agents, and are usually only consulted if the agent is encountering difficulty in a transaction. They generally also receive a portion of the commission made by the agents beneath them.

Real Estate Investment Trusts (REIT)
A trust, much like a mutual fund, that buys interest in properties rather than companies. Investors can buy shares of a REIT on most major stock exchanges.

Real Estate Settlement Procedures Act (RESPA)
The federal law that allows buyers and sellers to be aware of the various settlement charges associated with buying a property.

Real Property
See real estate.

Realtist
Any real estate broker who is a member of the National Association of Real Estate Brokers.

Realtor
Any real estate agent or broker who is a member of the National Association of Real Estate Realtors.

Reciprocal Contract
A contract in which both signing parties promise to take an action for the other.

Recission
The cancellation of a mortgage or other contract by law or the mutual consent of those involved.

Reconveyance
The transfer of a property's title once the buyer has completely paid off its mortgage.

Recorder
The local public official in charge of keeping the records for all property transactions.

Recording
Filing a document with the proper government agency.

Recording Fee
A fee charged by a real estate agent or mortgage lender to have a property's sale placed in the public record.

Redlining
The illegal practice of denying a loan or insurance based on an applicant's ethnicity or current neighborhood.

Refinancing
Replacing an old mortgage or loan with one that has more favorable terms.

Regulation Z
A provision in the federal Truth-in-Lending Act that requires a property buyer to be informed in writing of all the costs associated with acquiring credit.

Rehabilitation Mortgage
A mortgage that includes money to repair a property in addition to the sale price.

Reissue Rate
A discounted rate given by a title insurance company when they have previously insured the same title within the past ten years.

Remainder
An interest in a property that is put off until another interest is terminated.

Remaining Balance
The amount of principal remaining on a mortgage.

Remaining Term
The amount of time left on a mortgage.

Renter's Insurance
An insurance policy that covers the cost of replacing a renter's possessions.

Rent Loss Insurance
An insurance policy that covers the loss of rent income should a property be rendered uninhabitable.

Repayment Plan
A plan offered by mortgage lenders to assist delinquent borrowers in making their payments rather than taking them to court.

Replacement Reserve Fund
Money reserved by homeowners' associations to replace furniture and other items located in common areas.

Repossession
The process of seizing a property by a mortgage lender when a buyer is extremely delinquent in payments.

Resale Value
The future value of a property, based on the current or future development of a neighborhood.

Reserve Fund
Funds set aside by homeowners' organizations to pay for any major future repair or improvement.

Restructured Loan
A mortgage or other loan that has been renegotiated with different terms.

Return on Investment (ROI)
The profit a property generates from its initial investment.

Reverse Mortgage
See home equity conversion mortgage.

Reversion
A conveyance provision that allows the previous property owner to regain the property under certain circumstances.

Right of First Refusal
An agreement that a property owner will make with another party to allow them the chance to buy or rent a property before it is placed on the market.

Right to Recission
A provision in the Truth-in-Lending Act that allows a buyer to cancel a mortgage or other loan within three days of signing it.

Riparian Rights
The rights of an owner of property located adjacent to water.

Sale-Leaseback
A property arrangement in which the buyer agrees to lease back the property to the seller for a period of a time.

Sales Contract
A contract that details the terms of a property sale.

SBA
Small Business Administration.

Second Mortgage
A mortgage taken out after a first mortgage that ranks second in payment priority.

Secondary Market
The market used by mortgage lenders to sell mortgages as securities to increase their liquid assets.

Secured Loan
A loan backed by collateral.

Security
A section of property designated as collateral.

Seller Broker
A real estate agent who represents sellers exclusively.

Seller's Market
A market advantageous to sellers, with not many properties for sale and many buyers.

Servicer
A company that collects mortgage payments and oversees escrow accounts.

Setback
See building restriction line.

Settlement Statement
A statement that documents exactly what has been paid and by whom.

Seventy-Two Hour Clause
If a buyer has to sell a property before being able to purchase a new one, the seller of the new property must furnish them with seventy-two hours notice should a better offer be presented. If the buyer cannot sell their old property by then, the seller can accept the better offer.

Shared-Appreciation Mortgage
A mortgage that allows the lender or other specified party to take a portion of the buyer's profit (if any) once a property is sold.

Shared-Equity Transaction
A transaction in which more than two or more buyers purchase a property, with one co-owner using it as a residence and the other(s) using it as an investment.

Special Assessment
An additional assessment imposed by a local government or homeowners' association to procure extra money for neighborhood improvements.

Special Deposit Account
A stipulation in a rehabilitation mortgage that a special account must be made in which part of the mortgage money is deposited. This account is later used to pay contractors as they repair the property.

Special Warranty Deed
A deed in which the seller of a property warrants that the property's title is unimpaired, but that he warranty that title before his ownership.

Specific Performance
A legal action filed in order to insure the complete performance of a contract.

Square Footage
The amount of livable space in a property, measured in square feet.

Standard Payment Calculation
The calculation used to determine the monthly payments amounts so that a mortgage can be paid off in equal installments.

Starter Home
A property that falls in the low end of a buyer's price range.

Statute of Limitations
The time in which a law suit can be legally filed.

Step-Rate Mortgage
A mortgage that allows for a gradual increase in the interest rate over its first few years.

Subdivision
Dividing a piece of undeveloped land into lots and streets, with the eventual goal being to build properties on all the lots.

Subject To
A situation in which a buyer takes control of a property title that has a lien on it, but they do not agree to be responsible for that lien.

Subordinate Loan
Any mortgage that isn't the first mortgage.

Sweat Equity
Improving or refurbishing all or part of a property, not because it will increase the value, but because it's something the owner wants to do.

Tap Fee
A fee charged by utility companies to begin service.

Tax Lien
A lien placed on a property for non-payment of back taxes.

Tax Sale
The sale of a property by the government in order to collect back taxes.

Tax Shelter
Any investment that defers or reduces taxes (i.e., real estate or individual retirement accounts.)

Tear-Down Condition
Any property whose interior needs to be significantly rebuilt.

Teaser Rate
A mortgage that has a low initial interest rate in order to entice property buyers.

Tenants by the Entirety
Usually refers to a husband and wife living in the same property. If one spouse dies, the surviving spouse inherits the property. There also needs to be a consensus should the property have to be sold to pay off one partner's debts.

Tenants in Common
Two or more people who own a property without an established right of survivorship. Occasionally, if one partner dies, their interest may not be given to the co-owner(s).

Testate
An estate with a will.

Testator
A man who has drawn up a last will and testament.

Testatrix
A woman who has drawn up a last will and testament.

Third-Party Origination
A lending institution that originates a mortgage for another institution, who then grants the mortgage to a buyer.

Timeshare
The purchase of only a percentage of a property. Thus, the buyer may only occupy that property for a particular period of time. Generally used with vacation homes.

Title
A legal document that provides proof of property ownership.

Title Company
An institution that ensures a property title is free from liens and other claims, and also provides title insurance.

Title Insurance
An insurance policy that protects a buyer should someone else claim title to a property.

Title Risk
A possible danger in transferring a property title from seller to buyer.

Title Search
An examination of local records to provide proof positive of a title's owner, and to be certain that there are no liens or other claims against the property.

Top Producer
A real estate agent or broker who sells a large number of properties.

Total Expense Ratio
Percentage of monthly debt payments versus gross income.

Trade Equity
Assets given to a seller in lieu of, or in addition to, cash.

Trading Down
Purchasing a property that is less expensive than your current one.

Trading Up
Purchasing a property that is more expensive than your current one.

Transfer of Ownership
The legal transfer of a property from seller to buyer.

Transfer Tax
A tax assessed on a transfer of ownership, usually by local government.

Treasury Bill
A security issued and backed by the U.S. Treasury Department.

Treasury Index
One possible index used to determine the interest rate on adjustable rate mortgages.

Trust
A right to a property held by another, either written or implied.

Trust Account
An account used by a real estate agent, broker, or escrow agent to hold funds for either a property seller or buyer.

Trustee
A person who has holds a trust.

Truth-in-Lending Act
A federal law that requires a mortgage lender to disclose the annual percentage rate to a prospective buyer after they have applied for the loan.

Two-Step Mortgage
A mortgage that begins with one interest rate for the first five to seven years, then is adjusted to reflect current market conditions for the remainder of the loan.

Underwriting
A process by which mortgage lenders assess the risk of a potential property buyer, and adjust their loan terms accordingly.

Undisclosed Heir
A person who asserts a claim to a property or estate after its owner has died intestate.

Undisclosed Spouse
An unidentified spouse who may claim the right to a property.

Unrecorded Deed
A deed that has been transferred from seller to buyer without being noted in the public records.

Unsecured Loan
A mortgage not backed by collateral.

Usury
Charging interest on a mortgage or other loan higher than is allowed by law.

VA Loan
A Department of Veterans Affairs program that allows qualified veterans to secure a mortgage with little or no down payment.

Variable Rate
An interest rate that is subject to fluctuation.

Variable Rate Mortgage (VRM)
See adjustable rate mortgage.

Verification of Deposit (VOD)
A document signed by a potential property buyer's bank that verifies that the buyer's account and balance.

Verification of Employment (VOE)
A document signed by a potential property buyer's employer that verifies the buyer's employment and salary.

Voluntary Lien
A lien willingly taken on by a property owner.

Waiver
The voluntary relinquishment of a right.

Walk-Through
The final examination of a property by its buyer before closing.

Warranty
A legal document assuring a specified action in the future.

Warranty Deed
A deed that promises a property's title is free of liens or other claims.

Wild Deed
A deed that has been improperly recorded.

Will
A legal document that specifies how a person's estate is to be handled after their death.

Wraparound Mortgage
A mortgage that contains not only the amount to be loaned to purchase a property, but also the remaining balance of that property's previous mortgage.

Zoning
The local regulation of land usage.

Zoning Variance
A one-time change in an area's zoning law.