Agent
- A person acting on behalf of another, called the principal.
Appraisal - An expert judgment or estimate of the quality or
value of real estate as of a given date.
Assessed Value - The valuation placed upon property by a public
tax assessor as the basis for taxes.
Bill of Sale - An instrument which transfers title to personal
property (chattels); a "Deed" transfers real property.
CC&R's: Covenants, conditions and restrictions - A document
that controls the use, requirements and restrictions of a property.
Certificate of Reasonable Value (CRV) - A document that establishes
the maximum value and loan amount for a VA guaranteed mortgage.
Certificate of Title - A document signed by a title examiner or
attorney stating that the seller has a good marketable and insurable
title.
Closing Statement (Settlement) - The computation of financial
adjustments between buyer and seller as of the day of closing a sale
to determine the net amount of money which buyer must pay to seller
to complete purchase of the real estate and seller's net proceeds.
Also, "settlement sheets," "HUD-1."
Commission - Payment to a real estate broker for services performed.
Condominium - A form of real estate ownership where the owner
receives title to a particular unit and has a proportionate interest
in certain common areas. The unit itself is generally a separately
owned space whose interior surfaces (walls, floors and ceilings) serve
as its boundaries.
Contingency - A condition that must be satisfied before a contract
is binding. For instance, a sales agreement may be contingent upon
the buyer obtaining financing.
Deed - A formal written instrument by which title to real property
is transferred from one owner to another. Also, "conveyance".
Deed of Trust - Like a mortgage, a security instrument whereby
real property is given as security for a debt. However, in a deed
of trust there are three parties to the instrument; the borrower,
the trustee, and the lender (or beneficiary).
Due-On-Sale Clause - An acceleration clause that requires full
payment of a mortgage or deed of trust when the secured property changes
ownership.
Earnest Money - The portion of the down payment delivered to
the seller or escrow agent by the purchaser with a written offer as
evidence of good faith.
Equity - The interest or value which owner has in real estate
over and above the debts against it. (Sales Price - Mortgage Balance
- Equity).
Escrow - A procedure in which a third party acts as a stakeholder
for both the buyer and the seller, carrying out both parties' instructions
and assumes responsibility for handling all of the paperwork and distribution
of funds.
Federal National Mortgage Association (FNMA) - Popularly known
as Fannie Mae. A privately owned corporation created by Congress to
support the secondary mortgage market. It purchases and sells residential
mortgages insured by FHA or guaranteed by the VA, as well as conventional
home mortgages.
Fee Simple - An estate in which the owner has unrestricted
power to dispose of the property as he wishes, including leaving by
will or inheritance. It is the greatest interest a person can have
in real estate.
Fixture - What was formerly personal property which is now
permanently attached to real property and goes with the property when
it is sold.
Graduated Payment Mortgage - A residential mortgage with monthly
payments that start at a low level and increase at a predetermined
rate.
Hazard Insurance - Protects against damages caused to property
by fire, windstorms, and other common hazards.
Home Inspection Report - A qualified inspector's report on
a property's overall condition. The report usually includes an evaluation
of both the structure and mechanical systems.
Home Warranty Plan - Protection against failure of mechanical
systems within the property. Usually includes plumbing, electrical,
heating systems and installed appliances.
Joint Tenancy - An equal undivided ownership of property by
two or more persons. Upon the death of any owner, the survivors take
the decedent's interest in the property.
Lien - A legal hold or claim on property as security for a
debt or charge.
Listing Contract - Between a home owner (as principal) and
a licensed real estate broker (as agent) by which the broker is employed
to market the real estate within a given time for which service the
owner agrees to pay a commission. Also, "listing agreement".
Loan Commitment - A written promise to make a loan for a specified
amount on specified terms.
Loan-To-Value Ratio - The relationship between the amount of the
mortgage and the appraised value of the property, expressed as a percentage
of the appraised value.
Market Value - The highest price which a buyer, ready, willing
and able but not compelled to buy, would pay, and the lowest price
a seller, ready, willing and able but, not compelled to sell, would
accept. Basis for "listing price', or "asking price".
Mortgage - A lien or claim against real property given by the
buyer to the lender as security for money borrowed.
Mortgage Life Insurance - A type of term life insurance often
bought by mortgagors. The coverage decreases as the mortgage balance
declines. If the borrower dies while the policy is in force, the debt
is automatically covered by insurance proceeds.
Mortgage Note - A written agreement to repay a loan. The agreement
is secured by a mortgage, serves as proof of indebtedness, and states
the manner in which it shall be paid. Also, "deed of trust note."
Negative Amortization - Negative amortization occurs when monthly
payments fail to cover the interest cost. The interest that isn't
covered is added to the unpaid principal balance, which means that
even after several payments you could owe more than you did at the
beginning of the loan. Negative amortization can occur when an ARM
has a payment cap that results in monthly payments that aren't high
enough to cover the interest.
Origination Fee - A fee or charge for work involved in evaluating,
preparing, and submitting a proposed mortgage loan. The fee is limited
to 1 percent of FHA and VA loans.
PITI - Principal, interest, taxes and insurance.
Planned Unit Development (PUD) - A zoning designation for property
developed at the same or slightly greater overall density than conventional
development, sometimes with improvements clustered between open, common
areas. Uses may be residential, commercial or industrial.
Point - An amount equal to 1 percent of the principal amount of
the investment or note. The lender assesses loan discount points at
closing to increase the yield on the mortgage to a position competitive
with other types of investments.
Prepayment Penalty- A fee charged to a mortgagor who pays a
loan before it is due. Not allowed for FHA or VA loans.
Principal - This word has several meanings:
a) To denote the most important.
b) A capital sum lent on interest.
c) One who appoints an agent to act on their behalf.
d) Either party to a contract. Private
Mortgage Insurance (PMI) - Insurance written by a private company
protecting the lender against loss if the borrower defaults on the
mortgage.
Prorate - To allocate between seller and buyer their proportionate
share of an obligation paid or due. For example a prorate on real
property taxes, fire insurance, or condominium fee.
Purchase Agreement
- A written document in which the purchaser agrees to buy certain
real estate and the seller agrees to sell under stated terms and
conditions. Also called a sales contract, earnest money contract,
or agreement for sale.
Realtor - A real estate
broker or associate active in a local real estate board affiliated
with the National Association of Realtors®.
Regulation Z - The
set of rules governing consumer lending issued by the Federal Reserve
Board of Governors in accordance with the Consumer Protection act.
Survey - A map or
plat made by a licensed surveyor showing the results of measuring
the land with its elevations, improvements, boundaries, and its
relationship to surrounding tracts of land. A survey is often required
by the lender to assure a building is actually sited on the land
according to its legal description.
Tenancy in Common
- A type of joint ownership of property by two or more persons with
no right of survivorship.
Title Insurance -
Protects lenders and home owners against loss of their interest
in property due to legal defects in title.
Title Search or Examination
- A check of the title records, generally at the local courthouse,
to make sure the buyer is purchasing a house from the legal owner
and there are no liens, overdue special assessments, or other claims.
Transfer tax - State
tax, local tax (where applicable) and tax stamps (in some areas)
required by law when title passes from one owner to another.
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