Rate Mortgage (ARM) - A loan for which the interest
rate is subject to change on a periodic basis (i.e. every
1, 3, or 5 years).
- Acts on behalf of another, representing that person's interests.
- A payment plan by which a loan is reduced through
monthly payments of principal and interest.
Percentage Rate (APR) - The annual cost of credit
over the life of a loan, including interest, service charges,
points, loan fees, mortgage insurance and other items.
- An evaluation to determine the price for which a property
would sell in the current marketplace.
- An increase in the value of a property.
- A tax levied on a property or a value placed on the worth
of a property by a taxing authority.
- A transaction allowing the buyer to assume responsibility
for an existing loan instead of originating a new loan.
- A loan that has a series of monthly payments with the remaining
balance due in a large lump sum payment at the end.
- A subsidy (usually paid buy a builder or developer) to reduce
the monthly payments on a mortgage loan.
Representation - Historically, an agent represented
only the seller in a real estate transaction (agents working
with buyers were actually "sub-agents" of the seller's listing
agent). Buyers today have the opportunity to be fully represented
by an agent and brokerage firm.
- A limit to the amount an interest rate or a monthly payment
can increase for an adjustable rate loan either during an
adjustment period or over the life of the loan.
- The completion of documents that transfer property from
a seller to a buyer (also referred to as a settlement). Also
used loosely to mean "reaching final agreement."
Costs - Charges paid at closing for obtaining a
mortgage loan and transferring a real estate title.
Market Analysis (CMA) - A survey of attributes
and selling prices of comparable houses listed for sale, recently
sold or expired from the market; used to help determine correct
pricing strategy for a seller's property.
Covenants and Restrictions - The standards that
define how a property may be used and the protections the
developer makes for the benefit of all owners in a subdivision.
(Condo) - Type of real estate ownership where the
owner has title to a specific unit and shared interest in
- A condition in a contract that must be met for the contract
to be binding.
Loan - A mortgage loan not insured by a government
agency (such as FHA or VA).
Option - The ability to change a loan from an adjustable
rate to a fixed rate.
Report - A report ordered from a credit bureau
that indicates if a borrower is a good credit risk.
- Legal document that formally conveys ownership of property
from seller to buyer.
- A breach of a mortgage contract (i.e., not making the required
Payment - The difference between the sale price
and the mortgage amount. A down payment is usually paid at
- A clause in a mortgage contract requiring the borrower to
pay the entire outstanding balance upon sale or transfer of
Money - A sum deposited with the broker at the
time an offer is presented to show that a potential purchaser
is serious about buying.
- The right-of-way granted to a person or company authorizing
access to the owner's land; for example, a utility company
may be granted an easement to install pipes or wires. An owner
may voluntarily grant an easement, or can be ordered to grant
one by a local jurisdiction.
- The difference between the value of a home and
what is owed on it.
- The handling of funds or documents by a third party on behalf
of the buyer and/or seller.
Mae - A privately owned corporation created by
Congress that buys mortgage notes from local lenders and is
responsible for the guidelines a majority of lenders use to
Duties - Obligations owed by an agent/broker to
a client (buyer or seller). In real estate, these include
loyalty, obedience, full disclosure, skill, care, diligence,
and accounting of all monies.
Charge - The total cost, including all fees, points,
and interest payments a borrower pays to obtain credit.
Mortgage - A mortgage with an interest rate that
remains constant over the life of a loan.
- A recognizable object (such as a chandelier, kitchen cabinet,
or light unit) that is permanently attached to property and
belongs to the property when it is sold, unless otherwise
specified in the sale agreement.
Insurance - Protection against damage cause by
fire, wind or other common hazards. Most lenders require borrowers
to carry it in an amount at least equal to the mortgage.
Finance Agency - A state agency that offers below-market-rate
home financing for low- and moderate-income households.
- The interest rate or adjustment standard that determines
the changes in monthly payments for an adjustable rate loan.
Tenancy - A form of ownership in which the tenants
own a property equally. If one dies, the other would inherit
the entire property.
Payment Mortgage - A mortgage with identical monthly
payments over the life of the loan.
- Security claim on property until a debt is satisfied.
Contract - Agreement whereby an owner engages a
real estate company for a specified period to market a property,
for which (upon sale) the broker receives a commission.
Value - The price that is established by present
economic conditions, location and general trends.
Broker - A broker who represents numerous lenders
and helps consumers find affordable mortgages, the broker
charges a fee only if the consumer finds a loan.
Commitment - A formal written communication by
a lender, agreeing to make a mortgage loan on a specific property,
specifying the loan amount, length of time and conditions.
Company - A company that borrows money from a bank,
lends it to consumers to buy homes, then sells the loans to
Loan - A contract in which the borrower's property
is pledged as collateral. It is repaid in installments. The
mortgagor (buyer) promises to repay principal and interest,
keep the home insured, pay all taxes and keep the property
in good condition.
Listing Service (MLS) - A system that provides
to its members detailed information about properties for sale.
Amortization - An increase in the outstanding amount
when a monthly payment does not cover the monthly interest
- A formal document showing the existence of a debt and stating
the terms of repayment.
Fee - A charge for the work involved in preparing
and servicing a mortgage application (usually one percent
of the loan amount).
- Principal, interest, taxes, and insurance. The four major
components of monthly housing payments.
- A one-time charge paid by a borrower at closing to receive
a lower rate. Each point is one percent of the mortgage amount.
Date - The day on which a property's new owner
is actually entitled to occupy that property.
- A mortgage approval obtained before negotiating a contract
on a specific home.
- An informal estimate of how much financing a potential borrower
might expect to obtain.
- Payment of a debt prior to maturity.
- The amount borrowed, excluding interest and
Mortgage Insurance (PMI) - Insurance required on
most conventional loans with less than 20% down payment to
protect the lender against default.
Survey - A survey to determine the boundaries of
your property. The cost depends on the complexity of the survey.
- The resistance of insulation material (including windows)
to heat passing through it. The higher the number, the greater
the insulating value.
Estate Settlement Procedures Act (RESPA) - A federal
law requiring lenders to provide home buyers with information
about known or estimated settlement costs.
- Registered trade name which may be used only by members
of state and local real estate boards affiliated with (and
subscribing to the Code of Ethics of) the National Association
Fee - A charge for recording the transfer of a
property, paid to a city, county, or other appropriate branch
Contract - An agreement between a buyer and seller
that should be explain, in detail, exactly what the purchase
includes, if there are any warranties, when the buyer can
move in, what the closing costs are, and what recourse the
parties have if the contract is not fulfilled or if the buyer
cannot obtain a mortgage commitment at the agreed-upon terms.
in Common - A form of ownership in which the tenants
own separate but equal parts. To inherit the property, a surviving
tenant would either have to be mentioned in the will or, in
the absence of a will, be eligible through state inheritance
- Evidence (usually in the form of a certificate or deed)
of a person's legal right to ownership of a property.
Taxes - Taxes levied on the transfer of property
or on real estate loans by state and/or local jurisdiction.
Administration (VA) - A federal agency that guarantees
mortgage loans for honorably discharged veterans and their
surviving spouses. Down payment requirements are very liberal.
Borrowers may make little or no down payment
- A final inspection of a home before title transfer to search
for problems that need to be corrected before ownership changes.
- Regulations established by local governments regarding the
location and use for any given piece of property within a