Real Estate Glossary

There are many different terms and phrases that people use within the world of real estate. Anyone who is looking to engage in Miami real estate should make it a point to become familiar with these terms and phrases to ensure that they fully understand what needs to be understood.

We have put together a list of terms and phrases to provide you with a clear idea on what you can expect as you venture into the property market. Nevertheless, if you have any questions and/or concerns, you are welcome to get in touch with us so that we can provide you with personal assistance.

A

Absorption Rate

The ratio of sold properties against the number of properties that remains available on the property market. It is used to measure the volatility of any given market.

Abstraction Method

A method which is used to estimate value for property by using similar properties within the same market in order to determine the value of a specific property.

Acceleration Clause

A provision which grants the lender the right to seek immediate payment for any outstanding loan balance in specific conditions such as borrower’s default.

Accessory Building

An infrastructure which is separate from the main building on any given property. Examples include garages, storage rooms, workshops and tool sheds.

Accretion

The growth of land which comes as a result of natural forces.

Acre

A measurement of area that is equivalent to 43,560 square feet.

Actual Age

The measurement of time which has passed since the property was built.

Adjustment Date

The date when interest rates are set to change on adjustable rate mortgages.

Ad Val Orem Tax

Taxes based on the value of the land as well as improvements to the land.

Addendum

Additional documents which contain information that is considered to be pertinent to the subject. Often used by appraisers to explain any items in the event that the space provided in the standard appraisal form is insufficient for all details.

Adjustable-Rate Mortgage (ARM)

A specific type of mortgage with interest rates that tend to vary depending on an actual index which is usually the prime lending rate for any given market.

Adjusted Basis

The value of an asset which is inclusive of the original price plus the the value of any applicable improvements as well as deductions on any applicable depreciation factors.

Adjusted Sales Price

The sales price for a property after price adjustments have been granted for existing differences between one property and another similar property.

Aesthetic Value

The value of a property which is gained based on its appearance.

Affirmation

A statement of declaration regarding the truth of any given set of facts.

Affordability Analysis

A method which helps to determine whether or not an individuals will be able to meet the corresponding obligations of a mortgage for specific property.

Agent

An individual that has been appointed to act on behalf of someone for a specific transaction process.

Amenity

Features which increase the value of any given property. Examples include natural amenities such a location as well as man-made amenities such as swimming pools.

Amortization

The method of paying for a mortgage loan over a regular period of payments.

Amortization Schedule

The actual breakdown of payments over the duration of an amortized loan which enlists principal contribution as well as interest fees.

Amortization Term

The period of time wherein an amortized loan is paid for. More often than not, mortgages are amortized over a term of fifteen or thirty years.

Amperage

A measurement of electric current pertaining to magnitude.

Annual Percentage Rate (APR)

The interest rate charged each year for any given loan.

Annuity

Refers to a sum of money which is paid on a regular basis.

Application

AQ form which is to be filled out by borrowers in order to acquire a mortgage loan. It contains personal information regarding the applicant’s income, savings, assets, debts, and more.

Appraisal

An opinion of property value which is derived through recent sales of similar properties which is carefully assessed by a licensed appraiser.

Appraisal Foundation

A non-profit organization established in the United States in 1987. It promotes professional valuation and improvements for the Uniform Standards of Professional Appraisal Practice within the country.

Appraisal Institute

An international organization focused on real estate appraisal education.

Appraisal Principles

The basic factors in the property valuation process which includes inspection of the property, market analysis, as well as basic economic ideas.

Appraisal Report

A report which is intended to convey the opinion of value of any given property with supporting documentation and information regarding the property.

Appraised Value

A developed opinion regarding the market value of any given property which has been derived upon observance of accepted appraisal principals.

Appraiser

A certified professional that is knowledgeable when it comes to real estate markets, values, as well as practices. Usually an independent party which has no vested interst in the value or sales price of the subject property.

Appreciation

The term used to describe the natural increase in property values which is influenced by market conditions.

Arms Length Transaction

Any given transaction wherein parties involved are not connected to one another. Transactions of this nature are known to demonstrate the true market value of real estate.

Assessed Value

The value that is assigned to any given property based on jurisdictional tax assessment.

Assessment

The process of assigning value to any given property for the purpose of taxes.

Assessment Ratio

The relationship of a property’s assessed value against its actual market value.

Assessor

The jurisdictional representative who conducts the assessment on property value.

Asset

Any valuable item belonging to an individual.

Assignment

The act of transferring ownership of a mortgage.

Assumable Mortgage

A specific type of mortgage on property which can be taken over by a person once the property has been sold.

Assumption

The handing over of a mortgage from one person to another after a sales transaction has been completed.

Attached Housing

A series of homes that are attached physically despite being occupied by a variety of people.

B

Backfill

The slope of ground that surrounds a home property.

Ball Cock Valve

The valve found on the inside of a toilet tank which regulates the flow of water into the tank.

Back-End Ratio

The percentage which is used to in order to determine what portion of an individual’s income can be utilized for the purpose of paying any debts which is inclusive of all necessary expenses. It is used by lenders in the mortgage approval process.

Balloon Mortgage

A specific type of mortgage loan wherein monthly payments are not big enough to cover for the loan which leads to a single large payment for the remaining balance at the end of the agreed term.

Bankruptcy

The state of inability of any person or group to settle their debts for which they seek protection from the state. It can prevent a person from securing a loan and can remain on their records for up to a decade.

Beam

A supporting structure.

Bill Of Sale

A physical receipt that indicates the sale of any given property.

Biweekly Mortgage

A specific type of mortgage wherein borrowers are required to settle payments every two weeks as opposed to making payments on a monthly basis. It equates to thirteen monthly payments which helps to reduce the period of time that will be needed in order to settle a thirty-year mortgage.

Blighted Area

An area which has grown undesirable due to conditions that cannot be fixed.

Bona Fide

A genuine offer that is made with good intentions.

Bond Market

The environment wherein debt securities are issued and traded. It serves as a mechanism for long-term funding of both public and private expenditures.

Bridge Financing

A specific type of loan which is made in order to facilitate the purchase of a new home even before the buyer’s current home has been sold. Its equity is then utilized in order to fund the new home purchase.

Bridging

A supporting structure that is used between beams.

Broker

Any person who brings together a buyer and a seller.

British Thermal Unit (BTU)

A measurement used to describe heating or cooling capacity.

Buffer Zone

A segment of land which is located between two municipal zones. Usually utilized to separate residential communities from commercial areas.

Building Code

A set of regulations which looks into the safety and material compliance of new constructions. They are typically localized to look into common hazards.

Building Line

The distance between infrastructures and the property line as imposed by local municipalities, homeowners associations, or other applicable agreements.

Built-Ins

Any items which are installed into a property as an improvement such as built-in appliances.

Bungalow

A single-story style of home which dates back to the early twentieth century.

Buy Down

Additional money which is paid in one sum in order to reduce the interest rate of a fixed-rate mortgage over time.

BX Cable

An electrical cable which has been wrapped in a galvanized steel cover.

C

Call Option

A clause in a specific mortgage which enables the lender to demand payments for an outstanding balance.

Cap

The set limit on how monthly payments or interest rates may vary within a specific period of time.

Cape Cod Colonial

A single-story home style which became popular in New England.

Capital

The funds and items which have been accumulated and used to generate additional income.

Capital Expenditure

The funds which have been designated to increase the potential of an asset to generate profitable income or to extend its life cycle.

Cash-Out Refinance

The process of refinancing a mortgage for a much higher amount than its current balance in order to turn a portion of the equity into cash.

Caulking

A material used to seal any cracks which may be found around windows.

Caveat Emptor

A business tenet which places emphasis on the buyer’s responsibility to verify claims by any property seller. Literal translation: “Let the buyer beware.”

Certificate of Deposit

A document which indicates that an individual has a specific amount of money deposited in a financial institution.

Certificate of Deposit Index

An index which is based on the interest rate of six-month certificates of deposit which is used to determine the interest rates on adjustable rate mortgages.

Certificate of Eligibility

A document that is issues by the Veterans Administration which is used to certify one’s eligibility for a loan.

Certificate of Occupancy

A document that is issued by a jurisdictional entity to certify that a building is fully compliant with building codes and safety for use.

Certificate of Reasonable Value (CRV)

A document based on an independent appraisal of a property to establish the highest amount that can be secured by a mortgage.

Certificate of Title

A document which assigns legal ownership over real estate.

Certified General Appraiser

A professional that has passed state requirements and exams for property appraisal.

Certified Residential Appraiser

A specific type of appraiser who is licensed to appraise residential property options.

Chain of Title

The full history of ownership on any given property.

Chattel

A personal property which is not considered to be integral to a property which is usually left out when appraising property value.

Circuit Breakers

A set of electrical devices which open electrical circuits in the event that they become overloaded.

Clear Title

The ownership over property that is not involved in any lien or counter-claims.

Closing

The process wherein the sale of a property is consummated with completion of all necessary documents as well as the signing of the mortgage obligation and payments on all applicable costs along with the sale.

Closing Costs

The costs related to the sale of any given property which need to be settled in order to finalize the deal. Usually includes appraisal fees, origination fees, and taxes.

Closing Statement

A document which contains the final financial agreement between buyers and sellers, including the breakdown costs which are to be paid b\by both parties.

Co-Borrower

An individual that shares the obligations on any loan as well as the title on the subject property.

Collateral

Any asset which is intended to secure the payment of any given loan.

Collection

The process which is undergone by a lender in order to pursue a borrower who has failed to make their necessary payments. It includes documents which may be used in the event that the property should become foreclosed in the future.

Co-Maker

A second party whose signature is found on a loan agreement who becomes liable for the payments in the event that the initial borrower reaches default.

Common Law

A set of laws which have been established by custom and courts.

Commission

A sum of money which is determined based on a percentage of the sales price or a fixed amount which is agreed upon by an agent for an individual’s efforts to sell or purchase real estate.

Common Area Assessments

A certain set of fees which are to be settled by property owners in order to cover any costs which are intended for the maintenance of common areas such as those found in condominiums and commercial properties.

Common Areas

Any areas which are shared by property owners such as lobbies and recreational areas.

Community Property

Any given property which has been acquired by a married couple who share equal ownership over the property unless otherwise stated.

Comparables

A term which is used to describe properties which have similar factors such as size, location, and amenities.

Compound Interest

The amount of interest paid on a principal sum along with any other interest fees.

Concessions

Any additional value which has been added to make a specific deal more enticing.

Condemnation

The official process wherein a property is declared to be uninhabitable due to any internal damage conditions which make the property unusable.

Condensation

The process wherein water vapor turns to liquid which is common within areas that have high levels of humidity.

Condominium

A type of real estate development wherein people can own individual units while common areas and amenities within the property are equally shared by owners.

Condominium Conversion

The conversion of a rental property into a condominium complex where each of the units are owned instead of rented.

Condominium Hotel

A condominium development project which offers rental desks and operates as a commercial hotel despite the fact that the units are individually owned.

Conduit

The pipe feature where electric wirings are run through.

Construction Loan

A specific type of loan which are provided to builders or homeowners for the purpose of funding the construction of a property which is later on replaced with a traditional mortgage upon completion of the property construction.

Contiguous

A term used to describe something that is connected along unbroken boundaries.

Contingency

A term commonly used in real estate wherein a buyer is required to sell a current home property prior to the purchase of a new one. It basically means that one thing needs to be happen before another thing can take place.

Contract

A legal agreement which can either be oral or written.

Conventional Mortgage

A financing mechanism which does not receive any backing from the government or any other agency.

Convertible ARM

A specific type of mortgage which is initially adjustable in order to enable the borrower to switch to a fixed-rate loan within a specific period of time.

Cooperative (Co-Op)

A type of ownerships wherein residents of a multi-unit property has ownership over shared within the cooperative corporation that owns the building.

Corporate Relocation

The circumstance wherein an individual’s employer pays for some or all of the costs that are related to moving from one area to another.

Cost of Funds Index (COFI)

An index which is used by financial institutions to set interest rates for adjustable rate mortgages.

Covenant

A stipulation within any given mortgage which may serve as grounds for the lender to opt to foreclose.

Credit

A loan of money which is intended for property purchase that is secured by an asset.

Credit History

The records which contain an individual’s debt repayments.

Creditor

A person or group to whom an individual may owe money to.

Credit Report

A document which is set to contain complete details regarding an individual’s credit, employment, and residence history in order to determine credit worthiness.

Credit Repository

A group of companies that are dedicated in the collection and storage of financial and credit information pertaining to individuals who would like to apply for credit.

Cul De Sac

A street that only has one entrance and exit point. Also known as a dead-end street.

D

Date of Appraisal

The exact date when an appraiser has assessed and designated the value of a home property.

Debt

The obligation to pay back what is owed.

Debt Equity Ratio

The ratio of how much an individual still owes on a home property to the amount of equity that has already been acquired in the home. It is calculated based on the market value of the home minus any mortgage debts which remain outstanding.

Deed

A legal document which indicates under whom ownership of any real estate property is assigned.

Deed-In-Lieu

A document which hands the title of a property to a trustee whose powers are often stipulated.

Deed of Reconveyance

A document which hands the title of a property from a trustee and back to a borrower who has finally been able to fulfill their mortgage obligations.

Deed of Release

A document which is set to dismiss a lien or other applicable property claims.

Deed of Surrender

A document which is used in order to give up any claims that an individual may have over any property.

Default

The condition wherein a borrower fails to meet the obligations which come with a mortgage or loan.

Delinquency

The inability of a borrower to make payments on time.

Deposit

Cash which has been given along with an offer to purchase real estate property.

Depreciation

The natural decrease in property values which is influenced by market conditions and the depletion of necessary resources.

Detached Single-Family Home

A one-building improvement which is intended to provide one family with a home.

Discount Points

Points which are paid in addition to the origination fee of a loan in order to get lower interest rates.

Distressed Property

A mortgaged property which has been foreclosed.

Down Payment

The amount of money equivalent to a portion of a property’s purchase price that has been paid in cash without financial assistance of a mortgage. It is settled with the intention to mortgage the remaining due amount.

Downspout

The pipe which brings water from the rain gutter down to the ground.

Due-On-Sale Provision

A clause in a mortgage agreement which grants the lender the right to demand full payment of the outstanding balance in the event that the borrower decides to sell the property.

Duplex

A one-building improvement which has been set into divisions to provide two separate units that are designed to serve as a home for two separate families.

Dwelling

A property that serves as a home.

E

Earnest Money Deposit

A cash deposit that has been made to a seller in order to secure the offer to make the purchase. In the event that the buyer changes their mind, the amount can be forfeited.

Easement

The right which is given to a non-owner to exercise control over a property. Examples include the easement of power companies to have access to power lines within certain residential properties.

Eave

The portion of roofing which goes beyond exterior walls.

Economic Depreciation

The decrease in property value as a result of external forces such as adverse developments or even blight.

Economic Life

The period of time in which any property is able to provide income for the owner.

Effective Age

The term used to describe an estimate age of a property which is determined based on its physical condition instead of the actual year in which the property wae built.

Eminent Domain

The legal process which grants the government the right to take ownership over property with the intention of converting the property for public use.

Encroachment

A building or improvements on an existing property which tend to invade another real estate.

Encumbrance

A term used to describe any claims against real estate property such as mortgages and liens.

Energy Efficiency Ratio

A rating system which is used for air conditioning units which are relative to the number of BTUs output per watt of electricity that is being consumed.

Equal Credit Opportunity Act (ECOA)

A federal law which requires lenders to grant people an equal chance of obtaining credit without any discrimination that may be based on race, age, gender, religion, et cetera.

Equity

The difference between the fair market value of a property and the amount that the owner has yet to settle on mortgages or loans which have been secured in relation to the property.

Equity Buildup

The process of natural increase in the amount of equity that an owner may have in a property which is accumulated through debt repayment as well as overall market appreciation.

Errors and Omissions Insurance

An insurance policy which has been removed by appraisers to cover liability for any applicable errors which may have been made during the appraisal process.

Escrow

The funds which have been acquired by a third party in a trust for the purpose of securing money for future obligations such as insurance and taxes.

Escrow Account

An account which has been prepared by a mortgage company to accommodate to funds intended for the payment of insurance and taxes. Additional funds are settled with regular principal and interest payments which are made each month.

Escrow Analysis

The assessment process which is performed by the lender on an annual basis in order to see whether the amount of funds that are paid into the escrow account are sufficient for future expenses.

Escrow Disbursements

The payout of funds from an escrow account in order to settle property expenses.

Estate

The absolute total of all assets owned by a specific individual.

Eviction

The act of legally removing a tenant from a specific rental property which occurs in the event that the tenant fails to make due payments, when the terms of agreement have been breached, or any similar situation.

Examination of Title

A report which is conducted on the title of a property from public records.

Exclusive Listing

A specific agreement which is made between the owner of a real estate property and a real estate agent wherein the agent is given exclusive rights to sell the property on the market.

Executor

The term used to refer to the person who is named within a will as the administrator of the estate.

F

Fair Credit Reporting Act

A federal law which regulates the manner in which credit agencies disclose consumer credit report.

Fair Market Value

The price at which two parties are willing to transact business.

Fannie Mae

The biggest source for financing on home mortgages in the United States.

Federal Deposit Insurance Corporation (FDIC)

A government agency in the United States that works towards the overall maintenance of the national financial system by way of ensuring proper banking practices.

Federal Housing Administration (FHA)

A sub-agency of the United States Department of Housing and Urban Development which is responsible for facilitating the transactions of low-income homebuyers who are making their first home purchase.

Fee Appraiser

A professional appraiser who provides their opinion on what the fair market value of any given property is for a fee.

Fee Simple

A full ownership right for any property.

Fee Simple Estate

The most complete form of title for real estate.

FHA Mortgage

A type of mortgage which is insured by the Federal Housing Administration.

Final Value Estimate

The term used to describe the opinion of value of any real estate property which is derived from as appraisal that adheres to USPAP guidelines.

First Commitment

An agreement which is made by the lender to provide a loan to a specific borrower for a specific real estate property.

First Mortgage

The primary loan which is secured for any real estate property.

First-Rate Mortgage (FRM)

A type of mortgage which has a fixed interest rate.

Fixture

The term used to describe any items which become permanently attached to the property.

Flood Insurance

A supplemental type of insurance which holds coverage for any losses which may occur as a result of water damage due to flooding.

Floor Plan

The term used to describe representations which showcase the basic outlines within the structure along with any applicable details regarding the position of rooms, doors, and other features within the property.

Flush Valve

The apparatus which is located between the toilet bowl and its tank.

Footing

The term used to describe the partially buried support which is intended to hold up structures such as posts.

Foreclosure

The process which enables the lender to claim the rights over any real estate property connected to mortgage or loans which have been secured by a borrower who has become unable to meet their legal obligations to the lender.

Forfeiture

The term used to describe losses as a result of the inability to meet legal obligations that are related to a mortgage or loan connected to that real estate property.

Foundation

The solid base element upon which a real estate property is constructed.

Frontage

The segment of a real estate property which runs down any specific point of access such as streets, roadways, bodies of water, et cetera.

Front-End Ratio

The percentage which is used to in order to determine what portion of an individual’s income can be utilized for the purpose of making mortgage payments. It is calculated based on an individual’s monthly expenses divided by their monthly income.

Functional Obsolescence

Any drop in value for real estate property which occurs as a result of any particular feature which may render the property undesirable to buyers.

G

Gable Roof

A triangular roof that has a steep angle.

Galvanized Pipe

A specific type of iron pipe which has a galvanized coating made of zinc.

Gambrel Roof

A type of roof which is similar to that of a barn.

General Lien

A general claim against properties which belong to a defaulting borrower.

Georgian

A distinctive style of classic architecture which usually utilizes rectangular shapes and multiple story-levels for home properties.

GFI

A specific type of breaker which is considered necessary in areas near water.

Ginnie Mae

A corporation established in 1968 to accommodate to low and moderate-income homebuyers.

Girder

The term used to describe the main supporting beam within a structure.

Government Mortgage

A type of mortgage which is issued by a government agency.

Grade

A slope of land that surrounds a property building.

Grantee

A person who is granted ownership of real estate property.

Grantor

A person who grants ownership of real estate property to someone else.

Gross Area

The term used to describe the sum total of all floor space within a property which is typically measured based on the lengths of external walls of the property.

Grouting

The material which is used to secure the surroundings of ceramic tile surfaces.

Gutter

The trough which surrounds the edges of a roof which is responsible for catching and redirecting the flow of rain from the roof of a property.

H

Half-Section

A measurement term which is equivalent to 320 acres.

Hazard Insurance

A type of insurance which is specific to any damage caused to a property as a result of fire, wind, and other applicable accidents.

Header

The framing located above openings such as windows or doors in a property.

Hearth

The flooring of a fireplace, including the area which is located right in front of the fireplace.

Height Zoning

A specific restriction within municipalities which regulate the maximum height of any building or infrastructures located within the area.

Hidden Amenities

Assets within a property which add to its existing value which are not necessarily obvious such as high-grade building materials and such.

Highest and Best Use

The most profitable use of real estate property.

Home Equity Conversion Mortgage (HECM)

Also referred to as “Reverse annuity mortgage” which enables homeowners to convert home equity into cash.

Home Equity Line of Credit

A specific type of mortgage loan which enables the borrower to draw cash from the equity in a home property.

Home Inspection

The process of examining a building in order to identify any applicable defects and determine the integrity of the structure which may influence the overall value of the real estate property.

Home Inspector

An individual who conducts home inspections.

Homeowner’s Association

An organization composed of homeowners within a specific neighborhood or community which is joined in their efforts to properly facilitate restrictions and regularly maintain any applicable common areas.

Homeowner’s Insurance

A specific type of insurance policy which covers any losses that a homeowner may incur as a result of an accident, intrusion, or any applicable hazard.

Homeowner’s Warranty

A specific type of insurance policy which covers any necessary repairs for systems and appliances which are found within the home over the duration of the coverage period.

HUD Median Income

The median family income for a particular area as estimated by the Department of Housing and Urban Development (HUD) of the United States.

HUD-1 Statement

The itemized list of all closing costs that are in relation to a specific property purchase which has been published by the Department of Housing and Urban Development (HUD).

I

Improved Land

A parcel of land which has been altered from its natural state by the development of roads and other infrastructures.

Improvements

Items which have been added to empty land in order to create an increase in its overall value.

Improvement Ratio

The comparative value of land in its natural state against its value after improvements have been made.

Income Approach

The process in which the value of real estate property is estimated based on the present value of income which the property is able to generate.

Income Property

A real estate property whose highest and best use is in the profitable generation of income through options such as rentals.

Independent Appraisal

An estimation of value from a professional appraiser who has no vested interest in the actual value of the real estate property.

Inspection

The process of examining real estate property, buildings, et cetera.

Insurable Title

A property title which has been reviewed by a title insurance company which has shown the viability of providing the property with insurance.

Interest Rate

The percentage value of a mortgage or loan which is to be paid to the lender as an act of compensation for the funds which have been used in the loan.

Investment Property

A real estate property which is slated to generate a profitable income for the owner which may be achieved through rentals or property value appreciation.

J

Jamb

The vertical panels which are found on the sides of a door frame or other openings within a property.

Joint Tenancy

A specific situation wherein two or more parties share ownership over a real estate property with equal shares which prevent them to dispose or act upon their shares without any consent from the other individuals involved.

Joists

The horizontal beams which are laid on the edges of a structure in order to support flooring or ceiling structures.

Judgment

An official decision which has been made by the court.

Judicial Foreclosure

A specific type of foreclosure which has been conducted as a civil suit within a court of law.

Jumbo Loan

A specific type of mortgage which is intended for an amount that is much bigger than that which has been set by lending groups such as Fannie Mae.

L

Lally Column

A steel pipe which has been filled with concrete as support for beam structures.

Late Charge

An additional fee which is charged as a penalty on top of a regular mortgage payment which has not been paid in accordance with the agreement made on the loan.

Latent Defects

Any applicable defects in a property which is not made apparent but can influence the value of the property such as any damage to the structure.

Lease

A specific type of contract between a property owner and a tenant in which all terms and conditions are included along with the agreed amount of money which is to be paid over a specific amount of time.

Leasehold Estate

A specific type of ownership over property wherein the buyer is given long-term lease.

Lease Option

A specific type of agreement wherein the tenant is given the option to purchase the property which may include having a percentage of the monthly rental amount to be used as down payment.

Legal Description

The description of a real estate property in which its specific location is identified in relation to the municipality or any other applicable jurisdiction in which the property is located.

Lender

An individual or entity that provides a loan to a borrower.

Liabilities

The term used in reference to an individual or entity’s remaining debt obligations.

Liabilities Insurance

A specific type of insurance which holds coverage over any potential lawsuits which may be brought up against a property owner for negligence that may result to any damage to others.

Lien

A claim which is made against real estate property as a result of debt or other applicable forms of legal obligations.

Life Cap

The term used in reference to the limit on how much the interest rate is allowed to move for an adjustable rate mortgage agreement.

Like-Kind Property

Any real estate property which is closely similar to another.

Line of Credit

An extension of credit which is granted to a borrower for a specific amount for a specific period of time.

Liquid Asset

The term used to describe any asset which is either already in cash form, or can be converted to cash with little to no cost.

Loan

Money which has been borrowed that will be returned with a specific interest rate on top which is in accordance to the terms and conditions which have been made on the loan.

Loan Officer

An individual that sells loans who also serves as the middleman between the lender and the borrower.

Loan Origination

The term used by lenders in reference to the process of preparing new loans.

Loan Servicing

The administrative process in which payments are collected and processed, monthly statements are sent out, records of payments are maintained along with taxes, follow ups on delinquencies are made, et cetera.

Loan-To-Value Ratio (LTV)

The ratio on the actual amount which is remaining on a mortgage property against the fair market value of the subject property.

Lock-In

A specific agreement which is made between a lender and a borrower in which an interest rate is guaranteed for a specific loan in the event that the loan is completed and closed within a set period of time.

Lock-In Period

A set amount of time in which a lender agrees to guarantee a set interest rate to a borrower regardless of the market rate.

M

Major Deficiency

A deficiency which has strong influence over the usability of a home property.

Manufactured Housing

Any building that has previously been constructed off-site and later on moved to another parcel of land.

Margin

The measure of difference between the interest rate and the index on any adjustable rate mortgage. It is known that the margin remains stable over the life of the loan but the index has a tendency to fluctuate over time.

Marginal Land

A parcel of land which has experienced a decline in value as a result of defects or poor conditions which could cost more to correct than the actual returns which could be made from the property itself.

Master Association

A collective group which is comprised of numerous homeowner’s associations.

Maturity

The date on which a principal balance on any financial instrument such as a loan or mortgage become due and payable to the parties involved.

Merged Credit Report

A credit report which contains data which has been derived from several credit agencies.

Misrepresentation

The statement made by one party in reference to a transaction that has proven to be incorrect or misleading.

Modification

A specific situation wherein the lender agrees to modify any existing terms within a mortgage without having to require the borrower to refinance.

Mortgage

A legal agreement wherein a real estate property is pledged to the lender as collateral on the loaned money will has been used for the purchase of the subject property.

Mortgage Banker

A type of lender who originates and funds their own loan agreements which are to be sold on the market.

Mortgage Broker

A person or group that originates loans which are then placed among other lending institutions with existing borrowers. Often acts as a middleman in the mortgage process between both parties.

Mortgagee

The lending party in a real estate purchase transaction.

Mortgage Insurance

A specific insurance policy which offers coverage for the lender against possible losses which may be incurred due to a default on a mortgage.

Mortgage Insurance Premium (MIP)

A fee which is paid alongside mortgage payments for the purpose of mortgage insurance.

Mortgage Life Insurance

A specific insurance  policy which covers any legal obligations in the event that the holder of the policy should die.

Mortgagor

The borrowing individual or group that signs into a mortgage agreement.

Multi-Family Properties

A series of infrastructures which are intended to serve as separate homes for a multiple number of families.

N

National Association of Master Appraisers (NAMA)

A non-profit organization which is dedicated to the professional upholding of real estate appraisal within the United States.

National Society of Real Estate Appraisers (NSREA)

An organization which is dedication to the promotion of professionalism among all its members through education and experience to achieve fair valuations on real estate.

Natural Vacancy Rate

The percentage amount of unoccupied properties which are located in any given area.

Negative Amortization

The term used in reference to situations wherein fluctuating interest rates are allowed within certain adjustable rate mortgages which is typically due to the borrower being able to settle a minimum payment during a specific period wherein the rate is higher than the rate at which the minimum payment would fail to cover all interest.

Neighborhood Life Cycle

A general pattern which depicts physical and social changes within a residential area which include phases of birth, growth, maturity, as well as decline.

Neighborhood

A district of locality within a municipality which has been designed with distinctive qualities and characteristics.

Net Leasable Area

Any space outside of common areas located within a specific development that can be leased out to potential clients.

New England Colonial

Also referred to as Post-Medieval, Late Medieval, or First Period English. It is a specific architectural style which is easily identified in two-story home properties which featured steep roofs with center chimneys, narrow eaves, and side gables.

No-Cost Loan

A specific type of loan transaction wherein borrowers are not necessarily required to pay for any settlement costs at the point of closing due to the fact that the higher rates which come with the loan are sufficient to cover for those costs.

No-Point Loan

A specific type of loan transaction wherein no points are applicable. Similar to a no-cost loan, a no-point loan has higher rates which prove to be sufficient to cover all aspects of the purchase.

Non-Conforming Use

A variance on an existing zoning ordinance which is allowed due to the fact that the land use was known to be legal prior to the passing of the ordinance.

Non-Liquid Asset

The term used to describe any asset which is not in cash form and cannot be converted to cash with little to no cost.

Note

A written, signed, and unconditional agreement which states the obligation of a borrower to pay back a mortgage loan at a set time wherein interest rates are to be acknowledged as part of the agreement.

Note Rate

The interest rate at which a mortgage is noted.

Notice of Default

A notice which is to be received by a borrower wherein a declaration is made on the occurrence of a default for which the lender may take any necessary legal action.

O

Obsolescence

A process wherein the desirability of a real estate property may be reduced as a result of outdated features which cannot easily be addressed.

Occupancy Rate

A percentage which is derived based on the number of units within a property that are being rented out against the total number of units within the same property.

Off-Site Improvements

Any portions found within a development which are not situated directly on the properties being sold on the market which add to the value of the development as a whole. Examples include access roads, sidewalks, sewers, and utility lines.

Off-Street Parking

Any parking spaces which are situated on a private real estate property.

Online Real Estate Listings

A collection of real estate properties which are listed for sale on the property market that can be viewed on the Internet.

On-Site Improvements

Any additional features or enhancements which are situated directly on properties which add to the value and utility of the development as a whole.

Open Space

Any land which has been left in its natural state which means that no infrastructures have been erected on the property. Examples include conservation areas, agricultural areas, and a variety of different recreational areas.

Original Equity

The amount of money which is initially invested into real estate by a property owner.

Original Principal Balance

The total amount of principal which is owed by a borrower on a loan prior to making any payments.

Origination Fee

A specific fee which is charged by lenders for the processing of a loan which is one percent of the total amount of the loan although additional points called discount points may also be charged. In conventional loans, the fee is in reference to the total points which a borrower is expected to pay.

Owner Financing

A transaction wherein the seller is to finance either a portion or the full amount for the purchase.

Owner Occupied

A property situation wherein the owner is the occupant of a segment of the property.

P

Parcel

A term which is used to officially describe a section of land.

Parking Strip

A strip of grass which is located between the sidewalk and the street in front of any home property.

Partial Interest

Ownership rights to a real estate property which may be shared among numerous parties.

Partial Payment

Payments which are insufficient for the supposed monthly payment for a mortgage loan. Lenders typically do not accepted such payments but there may be exceptions, depending on the terms of agreement.

Payment Change Date

The date at which a new monthly payment amount scheme is to take affect on loans such as adjustable rate mortgages and graduated payment mortgages.

Periodic Payment Cap

The set limit on how much a payment amount is allowed to increase or decrease over any adjustment period of an adjustable rate mortgage.

Periodic Rate Cap

The set limit on how much the interest rate is allowed to increase or decrease over any adjustment period of an adjustable rate mortgage regardless of index levels.

Personal Property

Items owned which can be moved and are not affixed to the land.

Personal Residence

The primary home of an individual or family.

PITI

Stands for principal, interest, taxes, and insurance which are all included when monthly payments are made by borrowers for impounded loans.

PITI Reserves

The amount of cash which a borrower is required to have after the down payment is made along with all closing costs for any given home purchase which is required to be equal to the amount that the borrower would be expected to pay for PITI within a set period of time.

Plat

An outline chart which contains a map of a subdivision, community, or area which shows existing streets, boundary lines, and other features within the subject area.

Point

The equivalent of one percent of a mortgage amount.

Pre-Approval

The evaluation process made by a lender in order to determine whether a borrower is qualified for a loan based on the borrower’s income, expenses, and credit reports. It may also contain the maximum amount of money will a lender is capable of lending to a specific borrower.

Prefabricated

An infrastructure, or a part of an infrastructure, which has either been partially or completely manufactured and put together off-site prior to its installation upon any given property.

Prepayment

An amount which is paid in excess in order to create a reduction on the principal balance of a loan prior to its due date and final amortization.

Prepayment Penalty

A fee which is charged to a borrower in the event that the loan is paid prior to its due date. The fee is usually based on the percentage of the remaining mortgage balance.

Pre-Qualification

An evaluation process which is conducted in order to verify the credit worthiness of a borrower and to determine how much the borrower is capable of borrowing from a lender based on the borrower’s income and expenses.

Prime Rate

The rate at which lending institutions charge their clients and customers based on the federal funds rate.

Principal

The amount of money borrowed, or the partial amount which remains unpaid in a loan, exclusive of interest and other fees which may be incurred over the duration of the loan.

Principal Balance

The remaining balance of the original loan amount which is exclusive of any interest and has yet to be paid.

Private Mortgage Insurance (PMI)

A specific type of insurance policy which is provided in order to protect lenders against any possible losses in the event that a borrower should default.

Promissory Note

The legal proof of a specified debt which to be repaid within a set period of time.

Property Tax Deduction

A specific tax code which enables homeowners to enjoy the benefit of tax deductions from federal income taxes including real estate taxes.

Purchase Agreement

A contract which is to be signed by both the buyer and seller of the property which will outline the price which has been agreed upon on a home purchase transaction.

Purchase Money Mortgage

Also known as seller or owner financing. It is a specific type of loan which is issued by the seller of the property to the borrower in a purchase transaction wherein the buyer is unable to qualify for a mortgage through any of the available lending institutions.

Q

Quadruplex

An infrastructure which contains four separate units which can accommodate up to four separate families.

Qualifying Ratios

A set of figures which are used by lenders in the process of providing approval to borrowers prior to a mortgage. It is based on the borrower’s front-end ratio against their back-end ratio.

Quitclaim Deed

A deed which declares the release of a individual’s interest in a real estate property without making any mention of the nature of the individual’s interest or rights in order to prevent the grantor from making later claims regarding any interest in the real estate property.

R

Rate Lock

An agreement which enables a borrower to lock in the interest rate on a mortgage loan over a set period of time. The lender may opt to charge a fee for the lock, in which case the borrower is required to make payments in the event that the interest rate is not locked.

Raw Land

A parcel of land which remains to be in its natural state without any improvements such as clearing, digging, filling, et cetera.

Real Estate

Also known as realty; a parcel of land inclusive of the air above it, the ground below it, as well as any applicable infrastructures which are erect upon the subject property.

Real Estate Agent

A licensed professional who is responsible for facilitating the processes involved in the buying and selling of any real estate property.

Real Estate Settlement Procedures Act (RESPA)

A federal law which protects consumers by requiring lenders to provide borrowers with advanced notice regarding any applicable closing costs.

Real Property

A parcel of land which is inclusive of any permanent features such as infrastructures, natural elements, minerals, interests, benefits, and rights.

Realtor

A professional real estate agent, broker, or associate who is an active member of the National Association of Realtors board.

Recorder

A public official who is responsible for keeping any existing records of transactions which may affect real property in any given area.

Recording

The act in which complete details of a properly executed legal documents involved in a real estate transaction is noted in a registrar’s office in order to make it part of public records.

Refinance Transaction

A process wherein one loan is paid off using the proceeds from a new loan which uses the same real estate property as collateral in order to acquire lower interest rates or to convert any applicable equity into cash.

Relocation Service

A company which makes agreements with other companies to arrange the relocation of certain employees from one area to another which generally includes the handling of sales transaction on the employee’s home and assistance in the purchase of a new one.

Remaining Balance

The amount which has yet to be paid in a mortgage loan which is inclusive of principal, interest, and any other costs which may be incurred over the duration of the loan.

Remaining Term

The total amount of time which is left on the amortization schedule of a mortgage loan.

Remodel

The act of making changes or upgrades which are to implemented on an infrastructure which is conducted through redecorating, refurbishing, or any additional construction.

Rent Loss Insurance

A specific type of insurance that is acquired in order to protect landlords against the loss of rent or rental value in the event of fire or other situations which may render the lease premises unavailable for use.

Repayment Plan

An arrangement made between a lender and borrower for the purpose of making sure that any delinquent payments are made in order to avoid potential foreclosure.

Replacement Reserve Fund

An account which is set aside for the purpose of replacement of any common property within developments which are known to bear a short life expectancy.

Residential Property

A real estate property whose highest and best use is as a home.

Revolving Debt

A line of credit which can be acquired by corporations as well as individuals who are willing to pay a commitment fee in order to be given the privilege to use funds when they are needed with the requirement of making their monthly due installments on the borrowed amount on top of any applicable interest.

Right of First Refusal

The opportunity which is given to an individual or group to make a purchase prior to the point in time when offers are made available to other individuals of groups.

Right of Ingress

A right which is granted to individuals or groups which allow them to enter or leave a subject property premise.

Right of Survivorship

The right which is given to two or more individuals which grant them ownership of a decedent’s interest.

Rural

Any area which is located outside of an established urban or metropolitan district.

S

Sale Leaseback

A method wherein a seller deed a real estate property to a buyer for a consideration after which the buyer simultaneously leases the real estate property back to the seller.

Sale Price

The actual amount of money which is to be paid for any real estate property which is not inclusive of any financing concessions.

Sales Comparison Approach

A practice which involves deriving an estimate value  of any subject property by making a comparison of the subject property against properties similar to the subject property which have recently been sold.

Scarcity

A basic economic principle which arises as a result of the fact that consumers have unlimited wants while available resources are limited. Such a principle requires for effective allocation of resources in accordance with price and any other applicable economic factors.

Secondary Market

The environment wherein the buying and selling of existing mortgages takes place.

Second Mortgage

A type of mortgage which is made on a real estate property which has previously been pledged as a collateral for an original mortgage in order for it to carry the subordinate right to those of the original mortgage in the event of default.

Secured Loan

A type of loan which has a collateral back-up.

Security

The real estate property which serves as collateral in a mortgage loan.

Seller Carry-Back

An agreement wherein a property owner provides financing along with assumable mortgage.

Semi-Detached Housing

Two separate residential properties that share a common wall between them.

Servicer

An organization which is responsible for the collection of principal and interest payments from borrowers which are then managed in the respective borrower’s escrow account.

Servicing

The act of collecting mortgage payments from borrowers along with any other processes which are considered to be included in a servicer’s responsibilities.

Single-Family Property

A real estate property which has specifically been designed and constructed with the intention of providing suitable habitation for one family.

Subdivision

A type of housing development which involves the division of land into individual parcels of land which are either placed on the market for sale or for rent.

Subject Property

The real estate property which is the focus of an appraisal.

Subordinate Financing

A type of mortgage or other lien which has a priority lower than any original mortgage which is held by secured lenders.

Survey

An outline map which is drawn to showcase exact legal boundaries of a real estate property along with any improvements, easements, encroachments, rights of way, and any other applicable physical features.

Sweat Equity

The personally administered improvements made by homeowners to their home property which adds to the value of that property as opposed to improvements derived from outside services.

T

Tax-Exempt Property

Any real estate property that is not subject to tax such as those owned by government and charitable institutions.

Tax Transfer

A fee which is levied on the process of transferring legal documents which is paid by the seller of the real estate property.

Tenancy

The rights given to an individual or group to occupy a property.

Tenancy in Common

A specific ownership of real estate property which applies to two or more parties.

Third Party Organization

A situation wherein a lender decides to use a third party for the origination and packaging of loans for sale to the secondary market.

Title

A sum total of legal rights to the possession and ownership real estate property.

Title Company

An organization which is responsible for the research and certification of ownership for real estate properties prior to any purchase or sale.

Title Insurance

A specific policy that covers the loss of an interest in real estate property due to any legal defects.

Title Search

The process wherein public records are examined for the purpose of determining and verifying any real estate property’s legal ownership along with any existing claims on the real estate property.

Transfer of Ownership

The process wherein ownership rights are handed over to another individual or group.

Trustee

The individual who is responsible for holding and managing assets for the benefit of another.

Truth in Lending

A federal law which requires for the full disclosure of lenders to borrowers of all terms and conditions regarding any mortgage loan.

U

Under Improved Land

A parcel of land which has been altered from its natural state by the development of roads and other infrastructures, but not to the extent of the land’s full potential.

Unencumbered Property

Any real estate property which is free from any mortgages, liens, or debts.

Uniform Standards of Professional Appraisal Practice (USPAP)

The quality control standards which are applied in real estate for the purpose of the proper establishment of requirements for professional appraisal practice and maintain a high level of public trust with regards to appraisal practices.

Useful Life

The period of time in which any real estate property improvements are able to provide net value for its owner.

V

Vacancy Rate

A numerical value which is calculated based on the percentage of all available units found within a rental property which remain vacant during a specific period of time.

VA Mortgage

A specific type of mortgage which is guaranteed by the Department of Veteran Affairs.

Variance

An exception to zoning restrictions which is given by the locality which permits the use of the land outside of the requirements of the zoning for that specific area.

Vested

The right to utilize funds such as an individual retirement funds in quantities which may vary, depending on the percentage at which the individual is vested.

Veterans Affairs (VA)

A government agency which ensures that residential mortgages are made available to eligible veterans of the military service.

W

Walk-Through Inspection

The process wherein a final physical inspection of real estate property is conducted prior to closing an escrow account or the actual stage wherein the tenant is to take possession of the property to determine whether the property is in the condition stated in the contract.

Warranty

A specific type of insurance policy which is made available to home buyers who are looking into resale homes. It is designed to protect them against any potential failure of any major systems which are found within the home.

Wear and Tear

The normal damage which tends to be inflicted on properties due to daily use.

Weather Stripping

A type of material which is installed around doors and windows in order to prevent any draft.

Weep Hole

A small hole found within a wall which allows for draining to prevent or reduce any pressure from the weight of potential water buildup.

Z

Zero Lot Line

A residential real estate property in which the structure extend towards the edge of the actual property line. Such real estate properties are built in order to maximize space.

Zone

The numbered grouping scheme in which neighborhoods are arranged and organized into sections in order to make property searching an easier task. Certain zones tend to have certain zoning regulations for permitted land usage within that specific area.