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Real Estate Glossary
Enjoy our Glossary
Adjustable Rate Mortgage (ARM)
A mortgage where the interest rate and payments can adjust up(ward) or down(ward) at different times during the term of the mortgage.
Appraisal
An appraiser's estimate of the fair market value of a property. This instrument is required by most lenders and is a standard practice in real estate.
Appraiser
A licensed, independent party who provides an estimate of the fair market value of a property.
Asset
Any item you own (including property) that has a value.
Borrower
Someone who borrows money from a lender. Typically for a mortgage.
Buyer's Market
When supply is greater than demand, buyers will be able to receive a more beneficial deal typically including a lower purchase price.
Carriage Home
One of a group of homes in a two or three story residential building with or without a garage where the home consists of one floor only. These homes have a common wall on one or two sides and are usually smaller than a coach home.
Chinese Drywall
Drywall or sheetrock manufactured in China. Some of the drywall and sheetrock manufactured in China and installed in the United States during the housing boom of the early 2000's was defective. This defective drywall/sheetrock is known as "Chinese Drywall" which may cause damage to the home and is a potential health hazard.
Closing
The time when all documents are signed and ownership of the property transfers from seller to buyer.
Closing Agent
The person or company who handles all the necessary documents and processes the physical closing of a real estate transaction.
Closing Costs
A term covering various costs that occur at closing with the transfer of ownership to a property, and/or obtaining a mortgage.
Coach Home
One of a group of homes in a two or three story residential building typically with its own garage and entrance where the home consists of one floor only. These homes have a common wall on one or two sides and are usually larger than a carriage home.
Collateral
Assest(s) pledged as a security for a loan. In the event that a borrower defaults on the terms of a loan, the collateral is issued to the lender.
Comparative Market Analysis (CMA)
Also known as CMA, this is a report, usually prepared by real estate agents, detailing the value of a property based on a comparison of other homes currently on the market and closed homes within the same area.
Condominium
Multi-family units in a building of one or more stories all part of a condominium association. The units are individually owned, with each owner receiving a recorded deed to the individual unit purchased. Commonly referred as low-rise, mid-rise, or high-rise.
Condominium Association (COA)
Is generally a not for profit association of a condominium whose members are the condo owners. The association collects fees from the condominium owners to maintain the common elements and pay for common expenses of the condominium. The condominium association also sets rules and regulations for the betterment of the condominium.
Contingency (ies)
A common term for items that must be completed prior to a purchase and sale contract becoming binding. Anything that the P & S Contract is dependent upon that could void the contract if not met.
Contract (Purchase & Sale)
Known as the "Contract" or "Purchase and Sale" agreement. This document contains the terms agreed to, by both the buyer and seller, for the purchase/sale of a property.
Contract Offer
A document outlining the terms and conditions to which someone is willing to purchase a property.
Conventional Mortgage
Any mortgage loan that is not insured or guaranteed by a government agency.
Credit Repair
The process of improving or raising your FICO/Credit score.
Credit Report
A report that contains information about your credit history. This report shows your current and past credit balances and your history of payment(s).
Debt
The amount of money owed to a lender.
Debt to income ratio
A ratio as a percentage calculated by dividing your gross monthly housing debt (principal, interest, taxes, insurance & association dues-if applicable) by your gross monthly income. This ratio will allow lenders to determine how much of a loan you can afford. (ex. $1,000 gross monthly housing debt, $4,000 gross monthly income - $1000 ÷ $4000 = 25% - which is debt to income ratio)
Deed
The official document showing ownership of the property.
Documentary stamps/taxes
A fee charged by most states to transfer the property from one owner to another.
Down Payment
The amount of money a buyer uses to put towards the purchase price.
Duplex/Triplex, etc.
Multi-family housing terms that define the number of units contained in a multi-family building. A duplex consist of two attached homes, a triplex consists of three attached homes, etc.
Encroachment
Where an item in whole or part crosses over a property line into a neighboring property without permission.
Encumbrance
Anything that hinders title to a property. Such as a mortgage, lien, easement, or a restriction that limits the title.
Equity
A dollar amount, calculated by subtracting the amount owed on a property from the property's fair market value.
Escrow Account
An account set up to hold the down payment money until the property closes or the transaction is terminated.
Escrow Agent
The person or company, usually an attorney, title company, or real estate broker who holds the down payment money until the property closes or the transaction is terminated.
Estate Single Family
A free standing residential home of large size and property, containing one or more stories.
Estoppel
A letter certifying the exact balance and terms owed by Seller as of the date of closing. Such as mortgage payoff, outstanding association dues, etc.
FICO/Credit Score
A score a lender will utilize to determine your credit worthiness. This score is determined by your past credit history. FICO stands for Fair Issac Corporation.
Fixed Rate Mortgage
A mortgage where the interest rate and payments remain constant for the term of the mortgage. Most commonly known as a 15 year or 30 year fixed rate mortgage.
Flood/Earthquake Insurance, etc.
An insurance policy you purchase to protect your home against certain natural disasters.
Floor Plan
A common term for the interior layout of a home.
Free and clear
A term used to describe property where the owner of the property has no borrowed money that encumbers or places a lien against the property.
Homeowner's Association (HOA)
Is generally a not for profit association whose members are the homeowners. The association collects fees from homeowners within a community to maintain the common elements and pay for the common expenses of a community. The homeowners association also sets rules and regulations for the betterment of a community.
Homeowner's Insurance
An insurance policy you purchase to protect your home against damage from fire, storms and other hazards, as well as theft and liability. Also known as hazard insurance.
HUD 1 (Housing Urban Development)
Known as the closing or settlement statement, this standardized document compiles all the buyer's and seller's expenses and credits for the transaction to close.
Inspection Period (Due Diligence Period)
A period of time, upon signing a purchase and sale contract, when you can conduct various inspections on the property you are purchasing. Within the specified time period, a purchaser can usually cancel the purchase and sale contract or require the seller to make repairs if the property is in need of repair, depending upon the terms in your Purchase & Sale contract.
Insurance Agent (Insurance Broker)
A licensed person or company that represents various insurance companies, and can typically offer many insurance options.
Interest rate
The amount charged, expressed as a percentage of the amount borrowed, by a lender to a borrower for the use of money. (example - 5%)
Lender
A financial institution or individual who provides money in the form of a mortgage.
Lender Escrow account
An account set up by the lender to hold borrower's funds for payments of real estate taxes and insurance(s)
Lenders/Mortgage title insurance policy
Insurance that protects the lender against claims over the property's ownership. The buyer typically pays this at the property's closing.
Lien
A right given to another to secure a debt. A lien is a defect or "cloud" on the title and must be resolved before ownership of the home can be transferred.
Loan to value ratio (LTV)
A ratio as a percentage calculated by dividing the amount of your loan by the value of your property. (Example - $160,000 loan ÷ $200,000 value = 80% LTV).
Low-Rise, Mid-Rise, High-Rise
A low-rise is a vertical building typically 4 stories or less; a mid-rise is a vertical building typically 5-10 stories tall; a high-rise is a vertical building typically 11 or more stories.
Mortgage
The document you executed at closing that allows the lender to place a lien against your property and allows the lender to put a claim against your property if you do not make your payments required by the note.
Mortgage Application
The official documentation that is filled out with the buyers information when trying to obtain a mortgage. This documentation is then submitted to a lender(s).
Mortgage Broker
A mortgage professional who is licensed to accept mortgage applications and facilitates transactions between borrowers and lenders typically providing many mortgage options and rates.
Note
The debt instrument you execute at closing promising to pay back the money you borrowed from the lender.
Owner's title insurance policy
Insurance that protects the property owner against claims over the property's ownership (title). The buyer typically pays this at the property's closing.
Patio Home
Typically a one-story single family home situated on property not much bigger than the home itself.
Points
A closing cost typically paid by the borrower at closing that a lender charges to obtain a loan. A borrower can also pay additional points to reduce the interest rate a lender is charging. A point is equal to one percent.
Private Mortgage Insurance (PMI)
Also known as PMI, this is an insurance policy the lender obtains and is paid for by the borrower when the borrower's down payment on a purchase does not meet a minimum amount the lender requires (usually 20%).
Ranch Home
A one story, single family home, usually on a large home site
Real Estate Agent
A licensed real estate professional typically used to assist in showing , buying or selling, contract preparation and closing of a property.
Real Estate taxes
An amount of money charged by the local municipality (usually the county and/or city) where the property you own is located. This fee typically covers all the services the municipality provides, i.e. schools, parks, libraries, police, fire, etc.
Recording
The process of registering the mortgage and deed in the records of the municipality and/or state where the real estate transaction occurred.
Refinance
The process through which someone applies for and receives a new mortgage and pays off an existing mortgage on the same property.
Seller's Market
When demand is greater than supply, sellers will be able to receive a more beneficial deal typically including a higher purchase price.
Single Family Home (SFH)
A free standing residential home with property surrounding the home, containing one or more stories.
Square Footage
A common term for the measurement or size of a home, measured in square feet. (Ex. - 2,000 sq. ft.) There are two types of square footage: Living area square feet is the area which is air-conditioned and/or heated. Total square feet is the total area under roof, such as the house, garage, covered patio, etc.
Survey
A legal document that outlines the boundaries of a property. It also shows any and all improvements, easements, encroachments if any, as well as the positioning of a structure (usually a home) on the property.
Title Company
The company that issues the owner's and lender's title insurance policies.
Town Home
Typically a two or three story residential home attached on one or two sides with a common wall separating them. Can be with or without a garage.
Villa
Typically a one story smaller, residential home, on a smaller lot that may or may not be attached on one or both sides.
W-2
A form used for income tax purposes which reports your compensation and taxes withheld from your compensation for a particular calendar year.
Walk Through
The process where the buyer and seller walk through the home together prior to closing to determine what items, if any, are in need of repair or have been fixed.
Zero Lot Line Home
A detached, residential home where one side of the house is situated on or abutting the side property line.