ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

1031 EXCHANGE

Abstract (Of Title)

Summary of public records relating to the title to a particular piece of land. An attorney or title insurance company searcher reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

ABSTRACTION METHOD
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

ACCELERATION CLAUSE

A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. Usually when the borrower defaults on the loan.

ACCESSORY BUILDING
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

ACCRETION
The natural growth of a piece of land resulting from forces of nature

ACRE
43,560 square feet. A measurement of area.

ACTUAL AGE
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE

ADJUSTMENT DATE
The date the interest rate changes on an adjustable rate mortgage.

AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements

 ADDENDUM
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.

ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based on a particular index, normally the prime-lending rate.  Interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. You may also see ARMs referred to as AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).

ADJUSTED BASIS
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

ADJUSTED SALES PRICE
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

Adjustment Period

Length of time for which the interest rate is fixed on an ARM. After that period it will be adjusted. Typically once (T-Bill) or twice a year (LIBOR), depending on the index.

AESTHETIC VALUE
The additional value a property enjoys based on subjective criteria such as look or appeal.

AFFIRMATION
A declaration that a certain set of facts is truthful.

AFFORDABILITY ANALYSIS
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT
A person who has been appointed to act on behalf of another for a particular transaction.

 Agreement of Sale

A.K.A.  Purchase Agreement or Sales Agreement. Contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.

Alienation Clause/Due on Sale Clause

Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred.

AMENITY
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.

AMERICAN SOCIETY OF APPRAISERS
An organization of appraisal professionals and others interested in the appraisal profession.

AMORTIZATION
The repayment of a loan through regular periodic payment.  A payment plan, which enables the borrower to reduce his debt gradually through monthly payments of principal.

AMORTIZATION SCHEDULE
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

AMPERAGE
A measure of electric current describing the magnitude.

ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.  Measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other loan charges (points, PMI, etc).   Since all lenders follow the same (complex and sometimes error prone) rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.  Only a zero point, zero closing cost loan would have an APR equal to the actual Note rate.  The APR is almost always greater than the Note Rate.

ANNUITY
A sum of money paid at regular intervals, often annually.

APPLICATION
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.

APPRAISAL
A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.  Expert's estimate of the quality or value of real estate as of a given date.

APPRAISAL FOUNDATION
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAISAL INSTITUTE
A worldwide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAISAL REPORT
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.

APPRAISED VALUE
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER
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.

APPRECIATION
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.

ASSESSED VALUE
The value of a property according to jurisdictional tax assessment.  Figure in dollars determined for tax purposes by an assessor, which reflects a property’s worth and which, unless, exempt, is used to compute a tax dollar obligation by multiplying it by a tax rate.  This is often confused with the term appraisal.

ASSESSMENT
The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATIO
The comparative relationship of a property's assessed value to its market value.

ASSESSOR
The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET
Any item of value that a person owns.

ASSIGNMENT
Transfer of ownership of a mortgage - usually when the loan is sold to another company.

Assumability

When a home is sold, the seller may be able to transfer the mortgage to the new buyer.  Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. Assumability can help you attract buyers if you sell your home.  It is common for FHA a VA Loans.

ASSUMABLE MORTGAGE
A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTION
When a buyer takes over, or "assumes" the sellers mortgage.

Attached Home

A home that has one or more common walls adjoining another home. Condominiums, town homes and row houses are attached homes.

ATTACHED HOUSING
Any number of houses or other dwellings that are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

B

BACKFILL
The slope of the ground around a house.

BALL COCK VALVE
The valve inside a toilet tank that controls the filling of the tank.

BALLOON MORTGAGE
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.  Short-term fixed-rate loan, which involves smaller payments for a certain period of time and one large payment for the entire amount of the outstanding principal. Usually they have terms of 5 and 7 years.

BALLOON PAYMENT
The final large payment at the end of a balloon mortgage term.

BANKRUPTCY
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.

BEAM
A structural supporting member.

BILL OF SALE
A physical receipt indicating the sale of property.

BIWEEKLY MORTGAGE
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.  A mortgage, which requires a payment for half the monthly amount every two weeks. As a result the loan amortizes much faster than a loan with normal monthly payments. The result is as if one extra monthly payment were made each year.  With this, 30 year fixed rate loan will be paid off in approximately 22.7 years.  You may achieve the same affect by making extra monthly principal payments.

Blanket Mortgage

A mortgage covering at least two pieces of real estate as collateral.

BLIGHTED AREA
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

BONA FIDE
Any genuine offer, made without intent to defraud or deceive.

BRIDGE FINANCING
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.  Interim loan to finance a buyer’s new residence if the buyer is unable to sell his/her current residence first.

BRIDGING
Structural members used between beams to strengthen the structure.

BROKER
An individual who facilitates the purchase of property by bringing together a buyer and a seller.  Real estate broker

BTU
British Thermal Unit: A unit of measurement used to describe heating or cooling capacity.

BUFFER ZONE
A segment of land between two disparate municipal zones, which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

BUILDING CODE
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.

BUILDING LINE OR SETBACK
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.  Buffer distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

BUILT-INS
Specific items of personal property, which are, installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

BUNGALOW
A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.

BUY DOWN
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The borrower may pay the extra money, 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.  The seller pays an amount to the lender so that the lender can give you a lower rate and lower payments, usually for an early period in an ARM. The seller may increase the sales price to cover the cost of the buy down.  Buy downs can occur in all types of mortgages, not just ARMs.

BX CABLE
Electrical cable shrouded in a galvanized steel outer cover.

C

CALL OPTION
A clause in a mortgage, which allows the lender to demand payment of the outstanding balance at a specific time.

CAP
Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.

Limit on how much the interest rate or the monthly payment can change, either at each adjustment or during the life of the mortgage. All ARMs have interest rate caps to protect you from enormous increases in monthly payments.

A lifetime cap limits the interest rate increase over the life of the loan. Lifetime caps can vary by lender, but most ARMs have caps of 5% or 6%. 

A periodic or adjustment cap limits how much your interest rate can rise at one time. Generally, a 6-month ARM will have a cap of 1% while a 1-year ARM will have a 2% cap.

Periodic and lifetime caps are quoted as two numbers as in 2/6 which would mean that periodic cap is 2% and the lifetime cap is 6%. Examples:

1. The initial interest rate is 5.5%, the index is 8%, and the margin is 2.875%,
then the new interest rate = 8% + 2.875% = 10.875%.
If the lifetime cap is 5% then
the actual new interest rate will be 5.5% + 5% = 9.5%.

2. The initial interest rate is 6%, the index is 7%, and the margin is 3%,
then the new interest rate = 7% + 3% = 10%.
But, If the periodic cap is 1% then
the actual new interest rate will be 6% + 1% = 7%.

ARMs, which have an initial fixed period -- 30/3/1, 30/5/1, 30/7/1 and 30/10/1 -- can have also first adjustment cap. It limits the interest rate you will pay the first time your rate is adjusted. These ARMs are quoted as three numbers as in 5/2/5 that would mean that the first adjustment cap is 5%, adjustment cap thereafter is 2%, and the lifetime cap is 5%.

Two-Step loans -- 5/25 and 7/23 -- have only one adjustment after the first five or seven years of its term. They are quoted with a single first adjustment cap.

CAPE COD COLONIAL
A single-story house style made popular in New England. Often characterized by a steep roof with gables.

CAPITAL
Accumulated goods and money which is most often used to generate additional income.

CAPITAL EXPENDITURE
An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

Capital Gains

Profit earned from the sale of real estate. The new tax code may not tax the first $500,000 of profits from the sale of a home (married filing jointly, $250,000 single) if you have occupied the home for at least 2 years.  Consult your tax advisor.

CASH-OUT REFINANCE
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.  A refinance on a property that you own where the loan amount will result in extra money left after paying off the existing 1st mortgage plus any purchase money 2nd mortgages and closing costs.  Usually $2,000 can be received back at closing loan before is it considered a cash out refinance.    A borrower is "cashing out" their equity in this type of loan and there could be additional fees at higher LTV’s.

CAULKING
A pliable material used to seal cracks or openings such as around windows.

CAVEAT EMPTOR
Literally translated: ‘‘let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CERTIFICATE OF DEPOSIT
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

CERTIFICATE OF DEPOSIT INDEX
An index based on the interest rate of six months CD's. Used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY
A document issued by the Veterans Administration that certifies eligibility for a VA loan.  A document issued by the U.S. Department of Veterans Affairs. It is required when applying for VA loans.

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.  Document, which is issued by local governments, that states a property meets the local building standards for occupancy.  Required for new construction and sometimes also for the sale of an existing property.

CERTIFICATE OF REASONABLE VALUE (CRV)
Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount, which can be secured by a VA mortgage.  An appraisal by a VA approved appraiser, which estimates the property's current market value.

CERTIFICATE OF TITLE
A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

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.

CERTIFIED RESIDENTIAL APPRAISER
A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

CHAIN OF TITLE
The complete history of ownership of a piece of property.

CHATTEL
Any personal property, which is not attached to, or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

CIRCUIT BREAKERS
Electrical devices, which automatically open electrical circuits if they are overloaded.

CLEAR TITLE
Ownership of property that is not encumbered by any counter-claim or lien.  A title/deed that free of clouds and disputed interests.

CLOSING
A torturous process designed to induce cramping in a homebuyer'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).

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 numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day. This is a typical list:

·                      BUYER'S EXPENSES                      

·                      Recording Deed and Mortgage                                           

·                      Escrow Fees                                         

·                      Attorney's Fee (optional)                                                                                   

·                      Title Insurance                      

·                      Appraisal            

·                      Endorsements to Title  

·                      1% PA Transder Tax      

·                      Pre-Paid Property tax, sewer, water, trash, adjustments  

·                      Points and other loan fees  

·                      Homeowners/Hazard Insurance Policy for 1st year

·                      SELLER'S EXPENSES   

·                      Attorney's Fee  (optional) 

·                      Real Estate Commission  

·                      1% PA Transfer Tax   

·                      Satisfaction of liens  

·                      Express mail for lien payoff(s)  

The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.

CLOSING STATEMENT
The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.  The day on which the formalities of a real estate sale are concluded. The deed is generally prepared for the closing by an attorney and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are paid. The final closing merely confirms the original agreement reached in the agreement of sale.

Cloud (On Title)

An outstanding claim or encumbrance, which adversely affects the marketability of title.

CO-BORROWER
A second person sharing obligation on the loan and title on the property.

COLLATERAL
An asset, which is placed at risk to secure the repayment of a loan.

COLLECTION
The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.

CO-MAKER
A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

COMMON LAW
As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

COMMISSION
A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.  Fee paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price--6 to 7 percent on houses, 10 percent on land.

Commitment

A written agreement between a lender and a borrower to loan money on specific terms or conditions.

COMMON AREA ASSESSMENTS
Fees, which are charged to the tenets or owners of properties to cover the costs of maintaining areas, shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.

COMMON AREAS
Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property near by. Commonly found in condominium, PUD or office spaces.

COMMUNITY 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.

COMPARABLES
An abbreviated term used by appraisers to describe properties, which are similar in size, condition, location and amenities to a subject property whose value, is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

COMPOUND INTEREST
Interest paid on the principal amount, as well as any accumulated interest.

CONCESSIONS
Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDEMNATION
The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

CONDENSATION
The transition of water vapor to liquid. Typically forms in areas of high humidity.

CONDOMINIUM
all owners share a development where individual units are owned, but common areas and amenities equally.  Individual ownership of a dwelling unit and an individual interest in the common areas and facilities, which serve the multi-unit project.

CONDOMINIUM CONVERSION
Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

CONDUIT
The pipe through which electric wiring is run.

CONSTRUCTION LOAN
A loan made to a builder or homeowner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.  A short-term loan to pay for the construction of buildings or homes. These loans usually provide periodic disbursements to the builder as each stage of the building is completed. Generally followed by long term financing called a "take out" loan issued upon completion of construction.

CONTIGUOUS
Connected to or touching along an unbroken boundary.

CONTINGENCY
Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer the requires a complete home inspection before it becomes official.  A condition put on an offer to buy a home; such as the perspective buyer making an offer contingent on his or her sale of a present home, or being approved for a mortgage.

CONTRACT
A legally binding agreement, oral or written, between two parties.

CONVENTIONAL MORTGAGE
A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).  Any mortgage loan not insured by HUD or guaranteed by the Veterans' Administration. It is subject to conditions established by the lending institution, Fannie Mae, Freddie Mac, and State statutes

Conversion Option

Some ARMs come with options to convert them to a fixed rate mortgage during a given time period without having to go through a refinancing, which could cost up to 5 percent or 6 percent of the loan amount. For example popular conversion options for 1 year treasury-indexed ARMs include:

1.       Option to convert on the third, fourth, or fifth adjustment date, i.e. during the 

      37th, 49th and 61st months of the loan.

2.       Option to convert during the first five years on the adjustment date, i.e. during

      the 13th, 25th, 37th, 49th and 61st months of the loan.

The interest rate or points may be somewhat higher for a convertible ARM. Also, a convertible ARM may require a small fee at the time of conversion.

CONVERTIBLE ARM
A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.

Conveyance

The transfer of title to the property from one party to another.

COOPERATIVE (CO-OP)
A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.  An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation, which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.

CORPORATE RELOCATION
A situation where a person's employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee's primary residence.

COST OF FUNDS INDEX (COFI)
An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT
A stipulation in any mortgages that, if not met, can be cause for the lender to foreclose.

CREDIT
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.

CREDIT HISTORY
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

CREDITOR
A person to whom money is owed.

CREDIT REPORT
A detailed report of an individual’s credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.  A report documenting the history of how you paid back the companies you have borrowed money from, or how you have met other financial obligations.

CREDIT REPOSITORY
Large companies that gather and store financial and credit information about individuals who apply for credit.

CUL-DE-SAC
A dead-end street. One with only one entrance/exit.

D

DATE OF APPRAISAL
The specific point in time as of which an appraiser designates the value of a home. Often stipulated as the date of inspection.

DEBT
An obligation to repay some amount owed. This may or may not be monetary.

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.

DEED
A document indicating the ownership of a property.  A formal written instrument by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the purchaser at closing day. There are two parties to a deed: the grantor and the grantee. (See also Deed of Trust, General Warranty Deed. Quitclaim Deed, and Special Warranty Deed)

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.  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). In such a transaction, the borrower transfers the legal title for the property to the trustee who holds the property in trust as security for the payment of the debt to the lender or beneficiary. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, he defaults in the payment of the debt, the trustee may sell the property at a public sale, under the terms of the deed of trust. In most jurisdictions where the deed of trust is in force, the borrower is subject to having his property sold without benefit of legal proceedings. A few States have begun in recent years to treat the deed of trust like a mortgage.

DEED OF RECONVEYANCE
A document that transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.

DEED OF RELEASE
A document that dismisses a lien or other claim on a property.

DEED OF SURRENDER
A document used to surrender any claim a person has to a property.

DEFAULT
The condition in which a borrower has failed to meet the obligations of a loan or mortgage.  Failure to make mortgage payments as agreed to in a commitment based on the terms and at the designated time set forth in the mortgage or deed of trust. It is the mortgagor's responsibility to remember the due date and send the payment prior to the due date, not after. Generally, thirty days after the due date if payment is not received, the mortgage is in default. In the event of default, the mortgage may give the lender the right to accelerate payments, take possession and receive rents, and start foreclosure. Defaults may also come about by the failure to observe other conditions in the mortgage or deed of trust.

Deferred interest

When the monthly payments do not cover all of the interest cost, the unpaid interest is deferred by adding it to the loan balance.

Deficiency Judgment

Personal claim against the debtor when the sale of foreclosed property does not yield sufficient proceeds to pay off the mortgages.

DELINQUENCY
The state in which a borrow has failed to meet payment obligations on time.

DEPOSIT
Cash given along with an offer to purchase property, also called EARNEST MONEY.

DEPRECIATION
The natural decline in property value due to market forces or depletion of resources.  Decline in value of a house due to wear and tear, adverse changes in the neighborhood, or any other reason.

DETACHED SINGLE-FAMILY HOME
A single building improvement intended to serve as a home for one family.

DISCOUNT POINTS
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.  In an ARM with an initial rate discount, the lender gives up a number of percentage points in interest to give you a lower rate and lower payments for part of the mortgage term (usually for one year or less). After the discount period, the ARM rate will probably go up depending on the index rate. A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.

DISTRESSED PROPERTY
A mortgaged property, which has been foreclosed on.

DOWNSPOUT
The pipe that water moves through to reach the ground from the rain gutter.

 DUE-ON-SALE CLAUSE PROVISION
A clause in a mortgage giving the lender the right to demand payment of the full balance when the borrower sells the property.  A clause in the Deed of Trust or Mortgage that states that the entire loan is due upon the sale of the property.

DUPLEX
A single-building improvement, which is divided and provides two units which serve as homes to two families.

DWELLING
A house or other building, which serves as a home.

DOWN PAYMENT
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.  The amount of money to be paid by the purchaser to the seller upon the signing of the agreement of sale. The agreement of sale will refer to the down payment amount and will acknowledge receipt of the down payment. Down payment is the difference between the sales price and maximum mortgage amount. The down payment may not be refundable if the purchaser fails to buy the property without good cause. If the purchaser wants the down payment to be refundable, he should insert a clause in the agreement of sale specifying the conditions under which the deposit will be refunded, if the agreement does not already contain such clause. If the seller cannot deliver good title, the agreement of sale usually requires the seller to return the down payment and to pay interest and expenses incurred by the purchaser.

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 deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the downpayment. If the sale does not go through, the earnest money will be forfeited or lost unless the binder or offer to purchase expressly provides that it is refundable.

EASEMENT
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 right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example.

EAVE
The part of the roof that extends beyond the exterior wall.

ECONOMIC DEPRECIATION
The decline in property value caused by external forces, such as neighborhood blight or adverse development.

ECONOMIC LIFE
The amount of time that any income-producing property is able to provide benefits to its owner.

EFFECTIVE AGE
The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive wear and tear can cause a property's effective age to be greater than its actual age.

EMINENT DOMAIN
The legal process whereby a government can take ownership of a piece of property in order to convert it to public use. Often, the property owner is paid fair-market value for the property.

ENCROACHMENT
A building or other improvement on one property that invades another property or restricts its usage.  An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line.

ENCUMBRANCE
A claim against a property. Examples are mortgages, liens and easements.  A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.

ENERGY EFFICIENCY RATIO
An efficiency rating system for air conditioning units that corresponds to the number of BTU's output per watt of electricity used.

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.  Prohibits discrimination in any aspect of a credit transaction on the basis of race, religion, age, color, and national origin, receipt of public assistance funds, sex, or marital status.

EQUITY
The difference between the fair market value of a property and that amount an owner owes on any mortgages or loans secured by the property.  The value of a homeowner's unencumbered interest in real estate. Equity is computed by subtracting from the property's fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property. A homeowner's equity increases as he pays off his mortgage or as the property appreciates in value. When the mortgage and all other debts against the property are paid in full the homeowner has 100% equity in his property.

EQUITY BUILDUP
The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

ERRORS AND OMISSIONS INSURANCE
An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.

ESCROW
An amount retained by a third party in a trust to meet a future obligation. Often used in the payment of annual taxes or insurance for real property.  Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual. In FHA mortgage transactions an escrow account usually refers to the funds a mortgagor pays the lender at the time of the periodic mortgage payments. The money is held in a trust fund, provided by the lender for the buyer. Such funds should be adequate to cover yearly-anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, and special assessments. See also Escrow Account.

ESCROW ACCOUNT
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.

ESCROW ANALYSIS
An analysis performed by the lender usually once each year to see that the amount of money going into the escrow account each month is correct for the forecasted expenses.

ESCROW DISBURSEMENTS
The payout of funds from an escrow account to pay property expenses such as taxes and insurance.

ESTATE
The total of all property and assets owned by an individual.

EXAMINATION OF TITLE
The report on the title of a property from the public records or an abstract of the title.

EXCLUSIVE LISTING
An agreement between the owner of a property and a real estate agent giving the agent exclusive right to sell the property.

EXECUTOR
The person named in a will to administer the estate.

F

FACADE
The front exposure of any building. Often used to describe an artificial or false front that is not consistent with the construction of the rest of the building.

FAIR CREDIT REPORTING ACT
A federal law regulating the way credit agencies discloses consumer credit reports and the remedies available to consumers for disputing and correcting mistakes on their credit history.

Fair Housing Act

Prohibits discrimination in housing sales or loans on the basis of race, religion, color, national origin, sex, familial status, or handicap. Your Rights under the Fair Housing Act.

FAIR MARKET VALUE
The price at which two unrelated parties, under no duress, are willing to transact business.

FANNIE MAE
A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nation's largest source of financing for home mortgages. A stockholder-owned federally chartered corporation. Fannie Mae purchases residential home loans from mortgage lending institutions, packages the mortgages into securities and sells the securities to investors. They are the largest source of residential mortgage funds in the USA.

FASCIA
The boards that enclose the eaves.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nation's financial system by insuring deposits and promoting safe and sound banking practices.

Freddie Mac - Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac)

A stockholder-owned corporation chartered by Congress to create a continuous flow of funds to mortgage lenders in support of homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages from lenders and packages them into securities that are sold to investors.

FEDERAL HOUSING ADMINISTRATION (FHA)
A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930's to facilitate the purchase of homes by low-income, first-time home buyers. It currently provides federally-subsidized mortgage insurance for private lenders.  A part of the U.S. Department of Housing and Urban Development (HUD). FHA assists 1st-time home buyers and low to moderate income borrowers who may not be able to meet down payment requirements for conventional loans by providing mortgage insurance to private lenders. It also insures loans for home improvements and buying manufactured/mobile homes. These programs operate through FHA approved lending institutions and their correspondents, such as Allegiance mortgage..

FHA Loan

A loan insured by the Federal Housing Administration open to all qualified home purchasers. Interest rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans. FHA loans cannot exceed the statutory limit.

FEE APPRAISER
A certified, professional appraiser who forms an opinion of the fair market value of property and receives a set fee in exchange.

FEE SIMPLE
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.

FHA MORTGAGE
A mortgage that is insured by the Federal Housing Administration (FHA).

FINAL VALUE ESTIMATE
The opinion of value of a piece of property resulting from an appraisal following the USPAP guidelines.

FIRST MORTGAGE
The primary loan or mortgage secured by a piece of property.  A mortgage that has priority as a lien over all other mortgages.

FIXED-RATE MORTGAGE (FRM)
A mortgage which has a fixed rate of interest over the life of the loan.

FIXTURE
Any piece of personal property which becomes permanently affixed to a piece of real property.

FLASHING
The metal used around the base of roof mounted equipment, or at the junction of angles used to prevent leaking.

FLOOD INSURANCE
Supplemental insurance which covers a home owner for any loss due to water damage from a flood. Often required by lenders for homes located in FEMA-designated flood zones. Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

 FLOOR PLAN
The representation of a building which shows the basic outline of the structure, as well as detailed information about the positioning of rooms, hallways, doors, stairs and other features. Often includes detailed information about other fixtures and amenities.

FLUE
The furnace exhaust pipe, usually going through the roof.

FLUSH VALVE
The valve between the toilet bowl and the tank.

FOOTING
The partially buried support for a vertical structural member such as a post.

FORECLOSURE
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.

A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, by taking and selling the mortgaged property, and depriving the mortgagor of possession.

FORFEITURE
The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

FOUNDATION
The solid structural element upon which a structure is built.

FRONTAGE
The segment of a property that runs along a point of access, such as a street or water front.

FSBO

For sale by owner.

FUNCTIONAL OBSOLESCENCE
A decrease in the value of property due to a feature or lack thereof which renders the property undesirable. Functional obsolescence can also occur when the surrounding area changes, rendering the property unusable for its originally intended purpose.

G

GABLE ROOF
A steeply angled, triangular roof.

GALVANIZED PIPE
Iron pipe with a galvanized (zinc) coating.

GAMBREL ROOF
A ''barn-like'' roof, where the upper portion of the roof is less-steeply angled than the lower part.

GENERAL LIEN
A broad-based claim against several properties owned by a defaulting party.

General Warranty Deed

A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.  Buyers have used this as an alternate to purchasing title insurance.

GEORGIAN
A classic, English-style hose characterized by simple rectangular shape and multiple stories.

GFI
Ground Fault Interrupter. A type of circuit breaker required in areas where water is present.

GINNIE MAE - Government  Nation Mortgage Association (GNMA, Ginnie Mae)
A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income homebuyers.  A government owned corporation within the HUD that helps to finance government-assisted housing programs. Ginnie Mae guarantees securities backed by pools of mortgages. The mortgages are insured by FHA, or guaranteed by VA, or by the Rural Housing Service (RHS). Ginnie Mae securities are bought and sold through financial institutions that trade government securities.

GIRDER
A main supporting beam.

GOVERNMENT MORTGAGE
Any mortgage insured by a government agency, such as the FHA or VA.

GRADE
The slope of land around a building. Also ground level.

Graduated Payment Mortgage 

A type of a mortgage that has lower payments for up to 5 years initially and then payments increase each year until the loan is fully amortized.  Can result in negative amortization.

HOME EQUITY CONVERSION MORTGAGE (HECM)
Also known as a reverse annuity mortgage. It allows home owners (usually older) to convert equity in the home into cash. Normally paid by the lender in monthly payments. HECM's typically don't have to be repaid until the borrower is no longer occupying the home.

HOME EQUITY LINE OF CREDIT
A type of mortgage loan that allows the borrower to draw cash against the equity in his home.

HOME INSPECTION
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.

HOME INSPECTOR
A person who performs professional home inspections. Usually, with an extensive knowledge of house construction methods, common house problems, how to identify those problems and how to correct them.

HOMEOWNER'S ASSOCIATION
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.

HOMEOWNER'S INSURANCE
A policy which covers a home owner for any loss of property due to accident, intrusion or hazard.

HOMEOWNER'S WARRANTY
An insurance policy covering the repair of systems and appliances within the home for the coverage period.

HUD

U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by lenders and sets minimum standards for such homes.

 

HUD MEDIAN INCOME
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).

HUD-1 STATEMENT
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

Impound/Escrows

That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

IMPROVED LAND
Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

IMPROVEMENTS
Any item added to vacant land with the intent of increasing its value or usability.

IMPROVEMENT RATIO
The comparative value of a improved piece of land to its natural, unaltered state.

INCOME APPROACH
The process of estimating the value of property by considering the present value of a stream of income generated by the property.

INCOME PROPERTY
A piece of property whose highest and best use is the generation of income through rents or other sources.

INDEPENDENT APPRAISAL
An estimation of value created by a professional, certified appraiser with no vested interest in the value of the property.

Index

A published measure of economic conditions usually relative to other financial instruments such as Treasury notes or Treasury bills. The lender uses a particular index to calculate the interest rate on an adjustable rate mortgage (ARM) by adding a fixed margin to the index. The most common indexes are:

·         Constant Maturity Treasury (CMT)

·         Treasury Bill (T-Bill)

·         12-Month Treasury Average (MTA)

·         11th District Cost of Funds Index (COFI)

·         London Inter Bank Offering Rates (LIBOR)

·         Certificates of Deposit (CD) Indexes

·         Prime Rate

INSPECTION
The examination of a piece of property, its buildings or other amenities.

INSURABLE TITLE
The title to property which has been sufficiently reviewed by a title insurance company, such that they are willing to insure it as free and clear.

Interest

A charge paid for borrowing money.

INTEREST RATE
A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

INVESTMENT PROPERTY
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

JAMB
The side of a door frame.

JOINT TENANCY
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.  Joint tenancy is one of the methods available for two or more people to hold title to real estate or personal property. It includes a right of survivorship, meaning that on the death of one joint tenant, his/her interests transfer to the remaining joint tenants.

JOISTS
Horizontal beams laid on edge to support flooring or a ceiling.

JUDGMENT
An official court decision. If the judgment requires payment from one party to another, the court may put a lien against the payees property as collateral.

JUDICIAL FORECLOSURE
A type of foreclosure conducted as a civil suit in a court of law.

JUMBO LOAN
A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.  A loan that exceeds the  conforming loan limits established by Fannie Mae or Freddie Mac.  It has interest rates a little higher than conforming loans.Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.

 

 L

LALLY COLUMN
A concrete filled steel pipe used to support beams.

 LATE CHARGE
An extra charge, or penalty added to a regular mortgage payment when the payment is made late by an amount of time specified in the original loan document.

LATENT DEFECTS
Any defect in a piece of property which is not readily apparent, but which has an impact of the value. Structural damage or termite infestation would be examples of latent defects.

LEASE
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.

LEASEHOLD ESTATE
A type of property ''ownership'' where the buyer actually has a long-term lease on the property.

LEASE OPTION
A lease agreement that gives the tenant an option to buy the property. Usually, a portion of the regular monthly rent payment will be applied towards the down payment.

LEGAL DESCRIPTION
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.

 LENDER
The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.  

Lender Paid Mortgage Insurance (LPMI)

An alternative to PMI.  The lender will increase the interest rate instead of charging PMI on loans with LTV's greater than 80%.  LIABILITIES
A person's outstanding debt obligations.

LIABILITY INSURANCE
Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.

 

 

LIEN
Any claim against a piece of property resulting from a debt or other obligation.  A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor. See also Special Lien

 LIFE CAP
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.

LIKE-KIND PROPERTY
Any property which is substantially similar to another property.

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

LIQUID ASSET
Any asset which can be quickly converted into cash at little or no cost, or cash itself.

LOAN
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.  The relationship between the amount of the mortgage loan and the value of the real property expressed as a percentage. For purchase loans the value of the property is the appraised value or the purchase price, whichever is less. For refinance loans the value is the appraised value on seasoned properties (owned more than one year).

A LTV of 90% means that you are borrowing 90% of the property value. If a LTV exceeds 80%,  Private Mortgage Insurance (PMI) -- that insures the lender in the event a borrower defaults -- is generally required.

Downpayment is the difference between the purchase price and the mortgage amount.

LOCK-IN
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.

LOCK-IN PERIOD
The amount of time the lender has guaranteed an interest rate to a borrower.  A lender's promise to hold a certain interest rate and points for you, for a given number of days, while your loan application is processed. If not locked, the interest rates quoted to you may stay the same, decrease, or increase from the day you apply for your mortgage. Lock-ins on rates remove the risk of rising rates.

However, a locked-in rate could also prevent you from taking advantage of rate decreases. If you think that rates will remain level or even go down, you may choose to bet on interest rates decreasing by electing to float until you go to closing.  It is a gamble.

Lock-ins of 30-60 days are common. If your lock-in period expires before you go to closing, you might lose the interest rate and the number of points you had locked-in. You may ask lender for a longer lock-in period. But bear in mind that lenders may charge you a fee for extending the lock-in period. Request information from the lender regarding lock procedures.

LOAN OFFICER
A person that "sells" loans, representing the lender to the borrower, and the borrower to the lender.

LOAN ORIGINATION
How a lender refers to the process of writing new loans.

LOAN SERVICING
The processing of payments, mailing of monthly statements, management and

 

M

MAJOR DEFICIENCY
A deficiency that strongly impacts the usability and habitability of a house. Or a deficiency that may be very expensive to repair.

MANUFACTURED HOUSING
Once known as ''mobile homes,'' manufactured housing is any building which has been constructed off site, then moved onto a piece of real property.

MARGIN
The difference between the interest rate and the index on an adjustable rate mortgage. The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.  It is typically between 2.5  to 3% on a conforming loan. Sub-prime loans may have margins of 5% to 6%.

MARGINAL LAND
Land whose value has been diminished due to some internal defect or external condition. In most cases, the cost to correct the flaw or condition is as much or more than the expected return from the property.

Marketable Title

A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.

MASTER ASSOCIATION
An umbrella organization that is made up of multiple, smaller home owner's associations. Often found in very large developments or condominium projects.

MATURITY
The date on which the principal balance of a financial instrument becomes due and payable.

MERGED CREDIT REPORT
A credit report derived from data obtained from multiple credit agencies.

METES AND BOUNDS
A traditional way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its origin.

METROPOLITAN AREA
The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.

MINERAL RIGHTS
The legal right to exploit and enjoy the benefits of any minerals located below the surface of a parcel of land.

MISREPRESENTATION
A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.

MORTGAGE
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral. A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, PUD association fees, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.

MORTGAGE BANKER
A financial institution that provides primary and secondary mortgages to home buyers.  A company who is a direct lender but does not retain loans they have made.  They use a line of credit to fund loans and immediately sell the mortgage, at closing or within a matter of days, to another lender at which time the borrower will receive a "Goodbye Letter" announcing who they will be sending payments to.  Mortgage Bankers do not service loans. 

MORTGAGE BROKER
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. Also person (not an employee of a lender) who brings a borrower and a lender together to obtain a federally-related mortgage loan. A mortgage broker has access to a variety of lenders and offers the most choice in loan programs.   1999 saw Mortgage Brokers with a 70% market share of all originations.

 MORTGAGEE
The entity that lends money in a real estate transaction.

Mortgage Commitment

A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house by a certain date.

MORTGAGE INSURANCE
A policy that fulfills that obligations of a mortgage when the policy holder defaults or is no longer able to make payments.

MORTGAGE INSURANCE PREMIUM (MIP)
An fee that is often included in mortgage payments that pays for mortgage insurance coverage.  The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of 1/2% paid by the mortgagor on a monthly basis.

MORTGAGE LIFE INSURANCE
A policy that fulfills the obligations of a mortgage when the policy holder dies.

Mortgage Note

A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

Mortgage (Open-End)

Line of Credit.  A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure.

Mortgagee

The lender in a mortgage agreement.

MORTGAGOR
The entity that borrows money in a real estate transaction.  The borrower in a mortgage agreement.

 MULTI-FAMILY PROPERTIES
Any collection of buildings that are designed and built to support the habitation of more than four families.

Multiple Listing Service (MLS)

A service offered to participating real estate brokers that lists available homes for sale. The listings are published and distributed among the member brokers to assist in sales efforts.

N

NATIONAL ASSOCIATION OF MASTER APPRAISERS (NAMA)
A non profit professional association organized in 1982, dedicated to the advancement of professionalism in real estate appraisal.

NATIONAL SOCIETY OF REAL ESTATE APPRAISERS
An organization founded in 1956 which promotes standards of professionalism in its members.

NATURAL VACANCY RATE
The percentage of vacant properties in a given area that is the result of natural turnover and market forces.

NEGATIVE AMORTIZATION
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.  Negative amortization typically only occurs when an ARM has a payment cap that results in monthly payments not high enough to cover the interest due.   Negative amortization occurs when the monthly payments do not cover all of the interest cost. The interest cost that isn't covered is added to the unpaid principal balance. This means that even after making many payments, you could owe more than you did at the beginning of the loan. 

NEIGHBORHOOD LIFE-CYCLE
The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts can effect the life cycle.

NEIGHBORHOOD
A subsection of a municipality that has been designated by a developer, economic forces or physical formations.

NET LEASABLE AREA
The space in a development, outside of the common areas, that can be rented to tenants.

NEW ENGLAND COLONIAL
An architectural style dating from early American history typified by a two-story building with clapboard siding.

 NO-COST LOAN
Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.

NO-POINT LOAN
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.

NON-CONFORMING LOAN

Loans that do not comply with Fannie Mae or Freddie Mac guidelines. These guidelines establish the maximum loan amount, down payment, borrower credit and income requirements, and suitable properties. Loans that does conform to these guidelines may be sold to Fannie Mae or Freddie Mac.  

NON-CONFORMING USE
The use of land for purposes contrary to the applicable municipal zoning specifications. Often occurs when zoning changes after a property is in use.

NONLIQUID ASSET
Any asset which can not be quickly converted into cash at little or no cost.

NOTE
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

NOTE RATE
The interest rate stated on a mortgage note.

NOTICE OF DEFAULT
Formal written notice from a lender to a borrower that default has occurred.

O

OBSOLESCENCE
The process of an assets value diminishing due to the development of more desirable alternatives or because of the degradation of its capabilities.

OCCUPANCY
A physical presence within and control of a property.

OCCUPANCY RATE
The percentage of properties in a given area that are occupied.

OCTOPUS RECEPTACLE
An outlet with too many devices plugged into it, using a power strip or other device to multiply the outlets.

OFF-SITE IMPROVEMENTS
Buildings, structures or other amenities which are not located on a piece of property, but are necessary to maximize the use of the property or in some way contribute to the value of the property.

OFF-STREET PARKING
Designated parking spaces associated with a particular building or other structure which are not located on public streets.

OLD TERMITE ACTIVITY
Where no termites are currently active, but indications of past activity can be seen.

ON-SITE IMPROVEMENTS
Buildings, structures or other amenities that are erected on a piece of property and contribute to its value.

Open End Mortgage

OPEN SPLICE
An uncovered electrical connection.

ORIGINAL EQUITY
The amount of cash a home buyer initially invests in the home.

ORIGINAL PRINCIPAL BALANCE
The total amount of principal owed on a mortgage loan at the time of closing.

ORIGINATION FEE
Refers to the total number of points paid by a borrower at closing.

OWNER FINANCING
A transaction where the property owner provides all or part of the financing.  A property purchase transaction in which the property sellers provide all or part of the financing by means of holding a second mortgage.  Minimum duration for this "seller second" is 5 years with most lenders.

OWNER OCCUPIED
The state of property wherein the owner occupies at least some portion of the property.

P

Parcel

A separately assessed for tax purposes lot or piece of real property.

PARGING
The cement coat applied to block foundations.

PARTIAL INTEREST
A shared ownership in a piece of property. May be divided among two or more parties.

PARTIAL PAYMENT
A payment of less than the regular monthly amount. Usually, a lender will not accept partial payments.

PERIODIC PAYMENT CAP
The limit on how much regular monthly payments on an Adjustable Rate Mortgage can change during one adjustment period.

PERIODIC RATE CAP
The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period.

PERSONAL PROPERTY
Owned items which are not permanently affixed to the land.

PERSONAL RESIDENCE
The primary domicile of a person or family.

PITI

Principal, Interest, Taxes and Insurance. These components are usually all included in the monthly mortgage payment unless escrows are waived.

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 project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

PLAT
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.  A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

POINT
A percentage of a mortgage amount (one point = 1 percent).  Sometimes called "discount points".   A point is one percent of the amount of the mortgage loan amount. (eg: For a $50,000 loan, one point is $500). Points are interest paid in advance and allow a borrower to buy a lower mortgage rate, which results in a lower payment. For borrowers who are not able to cover the cost of points in addition to the other costs of buying a home, or for those who do not plan to stay in the house for long, 0 points are preferred.  Buyers are prohibited from paying points on HUD or VA guaranteed loans (sellers can pay, however). On a conventional mortgage, points may be paid by either buyer or seller or split between them.

Power of Attorney

A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

PRE-APPROVAL
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.

PREFABRICATED
Any building or portion thereof which is manufactured and assembled off site, then erected on a property.

PREPAYMENT
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.   Payment of mortgage loan, or part of it, before due date. Mortgage agreements sometimes restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. Lenders who impose prepayment penalties will charge borrowers a fee if they wish to repay part or all of their loan in advance of the regular schedule. The Federal Housing Administration does not permit such restrictions in FHA insured mortgages.  Prepayment penalties are typically only found on bad credit mortgage loans.

PREPAYMENT PENALTY
A fee that may be charged to a borrower who pays off a loan before it is due.

PRE-QUALIFICATION
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.

PRIME RATE
The interest rate that banks and other lending institutions charge other banks or preferred customers.

PRINCIPAL
The amount owed on a mortgage which does not include interest or other fees.  

The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.

PRINCIPAL BALANCE
The outstanding balance of principal on a mortgage. Does not included interest due.

PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI)
The most common constituents of a monthly mortgage payment.

PRIVATE MORTGAGE INSURANCE (PMI)
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.  An insurance policy the borrower buys to protect the lender from non-payment of the loan.  This is required for loans where the borrower puts less than 20% down.  With a new law that took effect in 1999, PMI will automatically be removed when the loan is paid down to 78% LTV, subject to the borrowers good credit history. 

Processing, Underwriting, Courier and Document Fees

Charges for the lender's services associated with making the loan.

PROPERTY
Any item which is owned or possessed.

Pro-rations

The allocation of expenses, such as taxes between buyer and seller at closing based on the number of days the property is owned during the month of closing.  The seller has prepaid taxes for a year, and is reimbursed for that part of the year he will not own the house.

PURCHASE AGREEMENT
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

Q

QUADRAPLEX
Any building designed to accommodate four families.

QUALIFYING RATIOS
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.  Lenders use certain guidelines to determine a potential borrower's credit-worthiness. The two guidelines used are the housing and debt ratios. They are expressed as two numbers like 28/38 where 28 would be the housing ratio and 36 would be the debt ratio. It means that:

1. Your housing expenses (PITI) should not exceed 28 percent of your gross monthly income and
2. Housing expenses plus long- term debt should not exceed 38 percent of your gross monthly income.

The housing expenses include monthly mortgage principal, interest payments, property taxes and homeowner’s insurance. There may be other expenses, such as condominium fees, homeowners fees, special assessments, etc., that are included. Long-term debt is defined as monthly expenses extending more than 10 months into the future. The qualifying ratios may vary but 40% is common (40/40 ratio).

Please note that qualifying ratios are only a rough guidelines and underwriters consider many variables in their analysis. Many times, borrowers fall outside the guidelines, but have strong compensating factors that reflect low credit risk. Some compensating factors are history of savings, long-term job stability, a substantial down payment or excellent credit history will influence the decision to approve or deny a particular loan with ratios up to 30/50% common.

QUITCLAIM DEED
A legal document which transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear.  A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land typically for no sales price. A quitclaim deed is often given after a divorce to remove one person from the deed or for family transactions.  By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. See Deed

R

RAFTER
A structural element of the roof, sloping from the peak to the outer walls.

RANCH HOUSE
An architectural style typified by a single-story, low-roof construction. Popular in the western U.S.

RATE LOCK
A guarantee from a lender of a specific interest rate for a period of time.

RATE AND TERM REFINANCE

A refinance of a property whereby the loan amount covers only the existing 1st mortgage, plus any 2nd mortgage that was used to purchase the home, plus closing costs, with up to $2,000 cash back at closing.  Any other refinance would be a cash out refinance.

RAW LAND
Any land which has not been developed.

REAL ESTATE
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.

Real Estate Broker

A middle person or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.

 REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
A federal law requiring lenders to give full disclosure of closing costs to borrowers.  A consumer protection law designed to help consumers be more informed with the home buying process. It requires that borrowers receive disclosures at various times. RESPA also prohibits referral fees and similar acts that increase the cost of settlement services. 

REAL PROPERTY
Land, improvements and appurtenances, and the interest and benefits thereof.

REALTOR
A real estate agent or broker who is a member of the National Association of Realtors.

RECEPTACLE
An electrical outlet to plug into.

RECORDER
A local government employee whose role it is to keep records of all real estate transactions within the jurisdiction.  The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

RECORDING
The filing of a real estate transaction with the appropriate government agent (normally the RECORDER). A real estate transaction is considered final when it is recorded.

Refinancing

The process of the same mortgagor paying off one loan with the proceeds from another loan.

REFINANCE TRANSACTION
A new loan to pay off an existing loan. Typically to gain a lower interest rate or convert equity into cash.

REGISTER
Where air from a furnace or air conditioning system enters the room.

RELOCATION SERVICE
Any company or agency that assists corporate employees in relocating from one place to another. Services may include hiring and coordinating real estate agents, moving companies, utilizes and the like.

REMAINING BALANCE
The amount of principal, interest and other costs that has not yet been repaid.

REMAINING TERM
The amount of time remaining on the original amortization schedule.

REMODEL
An activity designed to improve the value or desirability of a property through rebuilding, refurbishing, redecorating or adding on to it.

REPAYMENT PLAN
A plan to repay delinquent payments, agreed upon between a lender and borrower, in an effort to avoid foreclosure.

REPLACEMENT RESERVE FUND
An account, or fund, setup for the replacement of short life items , such as carpeting, in the common areas of a cooperative property.

Rescission

The cancellation of a contract. When you use your home as collateral for a refinance or second mortgage, you generally have the right to cancel the credit transaction within three business days. 

Reserves

The amount of money left in a borrower's possession after settlement.  Typically the guidelines call for 2 months  PITI to be left over in reserves.  401K and retirement plans count towards reserves.  The borrower needs to show they have funds in an account in the event of an emergency (furnace breaks).  These funds can remain in vested in a 401k or stocks and still be counted to qualify.

Restrictive Covenants

Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title. Restrictive covenants may limit the density of buildings per acre, regulate size, style or price range of buildings to be erected.

RESIDENTIAL PROPERTY
A piece of property whose highest and best use is the maintenance of a residence.

Reverse Mortgage

A special type of home loan that lets elderly homeowners convert the equity in their home into regular payments of cash.

REVOLVING DEBT
A type of credit that allows the borrower/customer to make charges against a predetermined line of credit. The customer then pays monthly installments on the amount borrowed, plus interest.

RIDGE BOARD
The structural member of a roof where the rafters join at the top.

RIGHT OF FIRST REFUSAL
An agreement giving a person the first opportunity to buy or lease a property before the owner offers it for sale to others.

Right of Survivorship

In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

ROOF PITCH
The degree of slope in a roof.

RURAL
An area outside of an established urban area or metropolitan district.

 S

SALE PRICE
The actual price a property sells for, exclusive of any special financing concessions.

SALES COMPARISON APPROACH
An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.

SCARCITY
An economic principal that dictates the price of a good or service through the interaction of supply and demand. When an item is scarce, its price tends to rise, given a constant demand. Real Estate is a classic example of scarcity.

Second Home (or Vacation Home)

This home is not rented and is occupied occasionally by the owners.  It is typically in a resort area not in close proximity to the borrowers primary residence.

 SECOND MORTGAGE
A loan secured by the equity in a home, when a primary mortgage already exists. A mortgage in addition to the first mortgage. Home equity loans, credit lines, home improvement loans are second mortgage loans. Second mortgages are subordinate to the first one. Second mortgage loans are non-conforming loans, so they usually carry a higher interest rate, and they often are for a shorter time.

Secondary (subordinate) financing

Borrowing additional money toward the down payment. If it is acceptable, usually subject to a maximum combined LTV.Secondary financing is used as an alternative to obtaining Private Mortgage Insurance and to avoid Jumbo loan rates.

SECONDARY MORTGAGE MARKET
An economic marketplace where mortgage bankers buy and sell existing mortgages.

SECURED LOAN
A loan that is backed by collateral. In the case of a mortgage loan, the collateral is the house.

SECURITY
The property used as collateral for a loan.

SEMIDETACHED HOUSING
Two residences which share a common wall.

SERVICER
A financial institution which collects mortgage payments from borrowers and applies the appropriate portions to principal, interest and any escrow accounts.

SERVICING
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.  The collection of payments, handling your escrow accounts and management of operational procedures that a lender performs.

Set Back Ordinance

Regulates the distance from the lot line to the point where improvements may be constructed.

Settlement (Closing)

The meeting between the related parties of the mortgage where the mortgage documents are executed.  Here the property ownership is transferred to the buyer on a purchase transaction. 

Shared Appreciation Mortgage

Residential loan in which a borrower receives a below-market interest rate in return for which the lender receives a specified share of the future appreciation in the value of the property.

SHEATHING
The covering on outside walls beneath the siding or exterior finish such as stucco.

SHEETROCK
Also called drywall, the gypsum board commonly used on interior walls.

SILL PLATE
The lumber used around the foundation to support exterior wall framing.

SILL COCK
Garden hose pipe connection.

SINGLE-FAMILY PROPERTY
A property designed and built to support the habitation of one family.

SOFFIT
The underside of a cornice at the eaves.

Special Assessments

A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

Special Lien

A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien. (See lien.)

Special Warranty Deed

A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has, or which might in the future, impair the grantee's title.

STUCCO
A textured plaster exterior (and occasionally interior) wall finish.

STUD
A vertical framing piece in a wall, generally 2x4 lumber in interior walls.

SUBDIVISION
A residential development that is created from a piece of land which has been subdivided into individual lots.

SUBJECT PROPERTY
A term which indicates a property which is being appraised.

Sub-prime loan

A mortgage for someone who does not meet conventional guidelines.  The borrower may have damaged credit, own too many properties, of have a debt-to-income ratio that exceeds the conforming loan guidelines.  These loans are considered to have a higher risk of default and hence carry a higher interest rate than conforming loans.

SUMP
A basin into which water drains and from which the water is pumped out.

SURVEY
A specific map of a piece of property which includes the legal boundaries and any improvements or features of the land. Surveys also depict any rights-of-way, encroachments or easements.  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 for construction loans to assure them that a building is actually sited on the land according to its legal description.

SWEAT EQUITY
The method whereby a home owner develops equity in a property, either during the purchase or throughout its life, by personally constructing improvements rather than paying to have them built. 

T

TAX-EXEMPT PROPERTY

The assessed value of a parcel against which the tax rate is applied to compute the tax due. In case of a partial exemption, the exempt amount is subtracted from the assessed value in order to determine the taxable assessed value.

TAX-EXEMPT PROPERTY
Any property which is not taxed.

Teaser Rate

A low initial interest rate on a mortgage.

TENANCY
The right to occupy a building or unit.

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.

THIRD PARTY ORIGINATION
When a lender uses a third party to originate and package loans for sale to the secondary market (Fannie Mae, Freddie Mac).

TITLE
A specific document which serves as proof of ownership.  The rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.

TITLE COMPANY
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.

TITLE INSURANCE
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.  Protects lenders or homeowners against loss of their interest in property due to legal defects in title.  Insurance benefits will be paid only to the "named insured" in the title policy, so it is important that an owner purchase an "owner's title policy", if he desires the protection of title insurance.

Title Insurance Binder

Written commitment of a title insurance company to insure title to the property under the conditions stated in the binder.

 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, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title. 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.

TRANSFER OF TAX
Taxes payable when title passes from one owner to another.  In PA the buyer and seller each pay 1% state tax on the sales price of the real estate, unless stated otherwise in the sales contract.  In Philadelphia County, the tax rate is 2% for each the buyer and seller.  

TRAP
A bend in water pipe.

TRUSTEE
A fiduciary who holds or controls property for the benefit of another.  A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law. See Deed of Trust.

TRUTH IN LENDING
A federal law requiring full disclosure by lenders to borrowers of all terms, conditions and costs of a mortgage.  Under this act a lender is required to provide you with a disclosure estimating the costs of the loan you have applied for, including your total finance charge and the Annual Percentage Rate (APR) within three business days of your application for a loan.

TUDOR
A style of architecture typified by exposed stone, wood and brick construction. Similar in style to English manor homes.

Two-Step Mortgage

With this type of loan homebuyers get a fixed rate loan at a slightly lower interest rate for a fixed period of time (most often for 5, 7, or 10 years) and then the interest rate is adjusted to fit market conditions at that time. After that adjustment, the mortgage maintains a fixed rate for the remaining years.                                          

U

UNDER IMPROVED LAND
A piece of land which has been improved, but not to the full extent of its potential.

Underwriting

A process of deciding whether to make a loan based on your credit reputation, income, debt, appraised value of the house and other factors.

UNENCUMBERED PROPERTY
Any property which has no outstanding claims or liens against it.

UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP)
Developed in 1986 by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by The Appraisal Foundation, USPAP forms the guidelines followed by every licensed and certified real estate appraiser in the United States. The purpose of these Standards is to establish requirements for professional appraisal practice, which includes appraisal, appraisal review, and appraisal consulting. The intent of these Standards is to promote and maintain a high level of public trust in professional appraisal practice.

USEFUL LIFE
The span of time over which a property can be used or can provide benefits to its owner.

V

VACANCY RATE
The current percentage of vacant properties in a given area, regardless of why they are vacant.

VA MORTGAGE/LOAN
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).  A mortgage for veterans and service persons guaranteed by the Department of Veterans Affairs (VA), requiring very low or no downpayments and with generous requirements for qualification.

VARIANCE
An exception to municipal zoning regulations granted for a specific time period to allow for non-conforming use of the land.

VENT PIPE
A pipe allowing gas to escape.

VESTED
Having the right to use a portion of a fund such as an IRA. Typically vesting occurs over time. If you are 100% vested, you have a right to 100% of the fund.

VETERANS AFFAIRS, DEPARTMENT OF (VA)
The successor to the Veteran's Administration, this government agency is responsible for ensuring the rights and welfare of our nation's veterans and their dependents. Among other duties, the VA insures home loans made to veterans.

VOLTAGE
An expression of electric force, or pressure. One volt being the force needed to move one amp against one ohm resistance.

w

WALK-THROUGH INSPECTION
A process whereby an appraiser examines a property in preparation for estimating its value. Also, the process of inspecting a property for any damage prior to that property being bought or sold.

WARRANTY
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.

WATT
An expression of amount of electrical power. Volt times amps equals watts.

WEAR AND TEAR
A term used to indicate the normal damage inflicted on a property through every-day use.

WEATHER STRIPPING
Material used around windows and doors to prevent drafts.

WEEP HOLE
Drainage hole that allows water to escape.

ZERO LOT LINE
A municipal zoning category wherein a building or other fixture may abut the property line.

ZONING
A specific area within a municipality or other jurisdiction which conforms to certain guidelines regarding the use of property in the zone. Typical zones include single-family, multi-family, industrial, commercial and mixed-use.  A local government authority's specifications for the use of property in certain areas.

 Zoning Ordinances

The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage.