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Real Estate Glossary of Terms


Adjustable-rate Mortgage (ARM)

A mortgage that permits the lender to adjust the interest rate periodically on the basis of changes in a specified index.

 

Amortization Schedule

A timetable schedule showing the amount of each payment applied to interest and principal and the remaining balance after each payment is made.

 

Annual Percentage Rate (APR)

The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage, and loan origination fee (points).

 

Appraisal

A written analysis of the estimated value of a property prepared by a qualified appraiser.

 

Biweekly Payment Mortgage

A mortgage requiring payments every two weeks instead of the standard monthly payment. The result for the borrower is a substantial savings in interest.

 

Broker

A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

 

Certificate of Title

A statement provided by an abstract company or attorney stating that the title to real estate is legally held by the current owner.

 

Closing

A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs.

 

Collateral

An asset (such as a car or a home) that guarantees the repayment of a loan.

 

Commission

The fee charged by a broker or agent for providing services related to a real estate transaction such as procuring the property, bringing the parties together, and negotiating a purchase contract or loan.

 

Deed

The legal document conveying title to a property.

 

Fixed-rate Mortgage

A mortgage on which the lender guarantees the interest rate will never change during the life of the loan.

 

Earnest Money Deposit

A deposit made by the potential home buyer to show that he or she is serious about buying a home.

 

Equity

A homeowner's financial interest in a property.

 

Exlusive Listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner's right to sell the property himself without the payment of a commission.

 

Fair Credit Reporting Act

A consumer protection law that regulates the disclosure of consumer reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

 

Home Inspection

A thorough inspection that evaluates the structural and mechanical condition of a property.

 

Lien

The legal claim against a property that must be satisfied before the property may be sold.

 

Lock-in

A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time.

 

Mortgage

A legal document that pledges a property to the lender as security for payment of debt.

 

Mortgage Insurance

A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage.

 

Mortgagee

A person or lender to whom property is mortgaged.

 

Mortgagor or Mortgager

A person or entity that mortgages a property.

 

Net Worth

The value of all a person's assets, including cash, minus all liabilities.

 

P.I.T.I

The principal, interest, taxes and insurance that a mortgagor will pay on a mortgage, used by buyers and lenders in formulas that determine the level of mortgage payments the buyer can reasonably afford to pay.

 

Prime Rate

The interest that banks charge to their preferred customers.

 

Principal

The amount borrowed or remaining unpaid.

 

Real Estate Agent

A person licensed to negotiate and transact the sale or real estate on behalf of the property owner.

 

REALTOR®

A registered collective membership mark which identifies real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics.

 

Survey

A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachment, and other physical features.

 

Title Search

A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

 

Truth in Lending

A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate and other charges.

 

Underwriting

The process of evaluating a loan application to determine the risk involved for the lender.