[ A ]
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.
43,560 square feet. A measurement of area.
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.
A person who has been appointed to act on behalf of another for a particular transaction.
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.
The repayment of a loan through regular periodic payment.
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.
ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.
A sum of money paid at regular intervals, often annually.
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.
A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.
APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.
The value of a property according to jurisdictional tax assessment.
[ B ]
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.
The final large payment at the end of a balloon mortgage term.
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.
A mortgage where you make "half payments" every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.
An individual who facilitates the purchase of property by bringing together a buyer and a seller.
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.
[ C ]
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.
CERTIFICATE OF ELIGIBILITY
A document issued by the Veterans Administration that certifies eligibility for a VA loan.
CERTIFICATE OF OCCUPANCY
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.
CERTIFIED GENERAL APPRAISER
Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.
CHAIN OF TITLE
The complete history of ownership of a piece of property.
A torturous process designed to induce cramping in a home buyer's hands by requiring signature on countless pieces of documentation that nobody has ever read. Or, the process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).
All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.
The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.
A second person sharing obligation on the loan and title on the property.
In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.
A legally binding agreement, oral or written, between two parties.
A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).
A form of ownership where each resident of a multi-unit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.
A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.
[ D ]
DEBT EQUITY RATIO
The ratio of the amount a mortgagor still owes on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.
A document indicating the ownership of a property.
DEED-IN-LIEU (OF FORECLOSURE)
A document given by a borrower to a lender, transferring title of the property. Often used to avoid credit-damaging foreclosure procedures.
DEED OF TRUST
A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.
The condition in which a borrower has failed to meet the obligations of a loan or mortgage.
The state in which a borrow has failed to meet payment obligations on time.
DETACHED SINGLE-FAMILY HOME
A single building improvement intended to serve as a home for one family.
Points paid in addition to the loan origination fee to get a lower interest rate. One point is equal to one percent of the loan amount.
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.
[ E ]
EARNEST MONEY DEPOSIT
A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.
The right of a non-owner of property to exert control over a portion or all of the property. For example, power companies often own an easement over residential properties for access to their power lines.
A building or other improvement on one property which invades another property or restricts its usage.
EQUAL CREDIT OPPORTUNITY ACT (ECOA)
U.S. federal law requiring that lenders afford people equal chance of getting credit without discrimination based on race, religion, age, sex etc
An account setup by a mortgage servicing company to hold funds with which to pay expenses such as homeowners insurance and property taxes. An extra amount is paid with regular principal and interest payments that go into the escrow account each month.
[ F ]
FAIR CREDIT REPORTING ACT
A federal law regulating the way credit agencies disclose consumer credit reports and the remedies available to consumers for disputing and correcting mistakes on their credit history.
A complete, unencumbered ownership right in a piece of property.
FEE SIMPLE ESTATE
A form or ownership, or holding title to real estate. It is the most complete form of title, having an unconditional and unlimited interest of perpetual duration.
A mortgage that is insured by the Federal Housing Administration (FHA).
The primary loan or mortgage secured by a piece of property.
FIXED-RATE MORTGAGE (FRM)
A mortgage which has a fixed rate of interest over the life of the loan.
The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.
[ H ]
Insurance covering damage to a property caused by hazards such as fire, wind and accident.
HOME EQUITY LINE OF CREDIT
A type of mortgage loan that allows the borrower to draw cash against the equity in his home.
A complete examination of a building to determine its structural integrity and uncover any defects in materials or workmanship which may adversely affect the property or decrease its value.
An organization of home owners in a particular neighborhood or development formed to facilitate the maintenance of common areas and to enforce any building restrictions or covenants.
A standardized, itemized list, published by the U.S. Department of Housing and Urban Development (HUD), of all anticipated CLOSING COSTS connected with a particular property purchase.
[ I ]
A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.
Any piece of property that is expected to generate a financial return. This may come as the result of periodic rents or through appreciation of the property value over time.
[ J ]
A situation where two or more parties own a piece of property together. Each of the owners has an equal share, and may not dispose of or alter that share without the consent of the other owners.
A type of foreclosure conducted as a civil suit in a court of law.
A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.
[ L ]
A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.
A type of property ''ownership'' where the buyer actually has a long-term lease on the property.
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.
The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.
A person's outstanding debt obligations.
Any claim against a piece of property resulting from a debt or other obligation.
LINE OF CREDIT
An extension of credit for a certain amount for a specific amount of time. To be used by the borrower at his discretion.
Any asset which can be quickly converted into cash at little or no cost, or cash itself.
Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.
A person that "sells" loans, representing the lender to the borrower, and the borrower to the lender.
How a lender refers to the process of writing new loans.
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.
LOAN-TO-VALUE RATIO (LTV)
The comparison of the amount owed on a mortgaged property to its fair market value.
An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.
[ M ]
The difference between the interest rate and the index on an
adjustable rate mortgage.
MERGED CREDIT REPORT
A credit report derived from data obtained from multiple credit agencies.
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.
A financial institution that provides primary and secondary mortgages to home buyers.
A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.
The entity that lends money in a real estate transaction.
Any collection of buildings that are designed and built to support the habitation of more than four families.
[ N ]
When the balance of a loan increases instead of decreases. Usually due to a borrower making a minimum payment on an Adjustable Rate Mortgage during a period when the rate fluctuates to a high enough point that the minimum payment does not cover all of the interest.
A loan with no "points". The interest rate on such a loan will be higher than a loan with points paid. Also sometimes refers to a refinance loan where closing costs are included in the loan.
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
The interest rate stated on a mortgage note.
[ O ]
A physical presence within and control of a property.
The percentage of properties in a given area that are occupied.
ORIGINAL PRINCIPAL BALANCE
The total amount of principal owed on a mortgage loan at the time of closing.
Refers to the total number of points paid by a borrower at closing.
A transaction where the property owner provides all or part of the financing.
The state of property wherein the owner occupies at least some portion of the property.
[ P ]
Owned items which are not permanently affixed to the land.
PLANNED UNIT DEVELOPMENT (PUD)
A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.
A percentage of a mortgage amount (one point = 1 percent).
The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers.
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.
A fee that may be charged to a borrower who pays off a loan before it is due.
Less formal that pre-approval, pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage loan.
The amount owed on a mortgage which does not include interest or other fees.
The outstanding balance of principal on a mortgage. Does not included interest due.
Any item which is owned or possessed.
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
[ Q ]
Two ratios used in determining credit worthiness for a mortgage loan. One is the ratio of a borrower's monthly housing costs to monthly income. The other is a ratio of all monthly debt to monthly income.
[ R ]
A piece of land and any improvements or fixtures located on that land.
REAL ESTATE AGENT
A licensed professional who facilitates the buying and selling of real estate.
A new loan to pay off an existing loan. Typically to gain a lower interest rate or convert equity into cash.
A plan to repay delinquent payments, agreed upon between a lender and borrower, in an effort to avoid foreclosure.
[ S ]
A loan secured by the equity in a home, when a primary mortgage already exists.
A loan that is backed by collateral. In the case of a mortgage loan, the collateral is the house.
The property used as collateral for a loan.
A financial institution which collects mortgage payments from borrowers and applies the appropriate portions to principal, interest and any escrow accounts.
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.
A term which indicates a property which is being appraised.
[ T ]
TENANCY IN COMMON
A form of holding title, whereby there are two or more people on title to a property, ownership does not pass on to the others upon the death of one individual.
A specific document which serves as proof of ownership.
An organization which researches and certifies ownership of real estate before it is bought or sold. Title companies also act at the facilitator ensures all parties are paid during the real estate transaction.
A policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. This also covers a lender should a question of ownership arise.
The process whereby the TITLE COMPANY researches a properties title history and ensures that no outstanding claims exist.
TRANSFER OF OWNERSHIP
Any means by which the ownership of a property changes hands.
[ V ]
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).
[ W ]
An affidavit given to stipulate the condition of a property. The person giving the warranty assumes liability if the condition turns out to be untrue.