Glossary


A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z


A

ADDENDUMS – An attached document to the original contract which may consists of additions or corrections.

AGREEMENT OF SALE – A contract signed by both Sellers and Buyers agreeing to the written terms and conditions spelled out in the Sales Contract.

AMORTIZATION SCHEDULE – A table that shows a lists of how much paid on the loan goes toward the principal, the interest, and how much is remaining to be paid. This list decreases the balance until it reaches zero and the loan is then paid off.

APPLICATION: To apply for a mortgage loan based on the borrower’s income, assets, debts, etc.

APPRAISAL –   A licensed professional that is a disinterested party that gives a written report of the value of the property based on recent comparable sales of similar homes in the area.

ASSESSED VALUE– The public tax assessor places a value on the property.

ASSET: An individuals owned items of value that could be converted into cash which is considered “liquid assets.”

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B

BANKRUPTCY: Where the federal bankruptcy courts determines to relieve the borrowers of most types of debts. Where the borrowers indebtedness greatly exceeds their assets.

BINDER – Insurance Agency’s give a written statement of homeowners insurance paid and will go into effect upon closing of the property.

BRIDGE LOAN: For individuals who has not yet sold their previous property, but must close on a purchase property. The bridge loan becomes the source of their funds for the down payment for the purchasing of the property. Sellers would often rather accept offers from buyers who have already sold their property.

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C

CAPITAL GAINS – A term used for income tax purposes where the profit less the purchase price and the deductible expense on the sale of real estate.

CERTIFICATE OF TITLE – A statement confirming who has the rights and responsibilities of ownership in a property. Title Insurance protects against claims that may emerge against the title.

CHAIN OF TITLE –   A report of the transferring of title to a parcel of property as far back as records are available.

CLEAR TITLE – A title that is free of all liens and judgements as to ownership of the property.

CLOSING – Where the parties meet to sign the final documents and pass the title from the seller to buyer and the seller is paid. A settlement statement shows all costs incurred by both parties.

CLOSING COSTS – The price which buyers and sellers would incur to complete a transaction in the transferring title to the new owner. These costs are in addition to price of the property.

CLOSING DATE – The date where the title to the property changes hands.

CLOUD (ON TITLE) – An unsettled claim or encumbrance which adversely affects the title to real esate. These cannot be removed except by deed, release, or court action.

CONDEMNATION – A statement by governing powers that a structure is unfit for use.

CONTINGENCY –   A condition that must be met in order for a contract to be legally binding. For example, a contract may be contingent upon a home inspection or adequate financing.

CONTRACT – A written or oral agreement between two or more parties to do or not to do certain things.

COUNTER OFFER – Where the receiver of an offer makes changes and response to the original offer.

CREDIT SCORE – The official credit history of any individulal to determine the size of the loan.

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D

DEBT – The total amount owed to another.

DEED – The legal document transferring title to real estate from one owner to another. This document includes the description of the property.

DEFAULT – Failure to make the mortgage payment as agreed within the terms and at the designated time set forth in the mortgage.

DELINGUENCY – Outstanding past-due mortgage payments. Upon 30 days late, most lenders report the late payment to credit bureaus.

DEPOSIT – “Earnest money” which is presented with the purchase offer. This is held in an escrow account.

DEPRECIATION – A decline in real estate due to physical deterioration, changes in the neighborhood or any other reason.

DOWN PAYMENT – The dollar amount of the difference between the purchase price and the mortgage amount.

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E

EARNEST MONEY – (DEPOSIT) – The deposit money given by the potential buyer upon signing the Sales Agreement to show that he or she is serious about buying the property.

EASEMENT RIGHTS – A legal locument granting right-of-way to a person or company authorizing access to or over the owner’s land.

EMINENT DOMAIN – The right of local or state government to take private property for public use. Compensation is based on its fair market value.

ENCROACHMENT – An obstruction, building (or part of) that intrudes illegally onto the neighboring property.

EQUITY – ESCROW ACCOUNT – The homeowners interest in the property which is the difference between what is owed on the property and the fair market value. The equity increases as the mortgage is paid down.

EXECUTOR – An individual named in a “Will” to administer an Estate. If there is no “Will” then the courts appoint an “Administrator”. “Executrix” is the feminine form.

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F

FEE SIMPLE – The greatest possible interest an individual can have in real estate.

FIXTURE – Items affixed to the building or land that cannot be moved without damage to the property, such as plumbing, electrical fixtures, trees, shelving, etc.

FLOOD INSURANCE – Separate insurance issued to compensate for property damage resulting from flooding that is located in federally designated flood area. This is required by the lender in order to obtain a mortgage.

FORECLOSURE – The legal process that begins when a borrower comes in default in making payments to a lender. This property is then sold at a public auction with the proceeds of the sale being applied to the mortgage debt.

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G

GRANTEE – The party in the deed that is the buyer to whom the interest in the real property is conveyed.

GRANTOR – The party in the deed that is the seller that is giving the interest to another individual.

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H

HOME INSPECTION – A complete inspection performed by a licensed professional that evaluates the structural and mechanical condition of a property.

HOMEOWNERS INSURANCE – An insurance policy selected by the borrower to cover the property mortgage that combines personal liability and hazard insurance coverage for a dwelling and its contents.

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I

INSPECTIONS – A complete analysis of the home to evaluate the structual and mechanical conditions.

INTEREST – Money paid to the lender for charges to borrow funds.

INVOLUNTARY LIEN – A lien attached to the property without the consent of the owner such as tax liens. (Mortgages are voluntary liens).

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J

JOINT TENANCY – Right of survivorship, upon the death of a joint tenant, his or her interest does not go to their heirs, but to the remaining joint tenants.

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L

LEGAL DESCRIPTION – A written property description of a parcel of land giving pertinent information to locate and identify the property.

LIEN – A monetary claim against a property that must be paid off when the property is sold in order for the new ownership to be legal.

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M

MLS – (MULTIPLE LISTING SERVICE) – Listings of homes for home.

MORTGAGE COMMITMENT – The lenders written approval on the terms and condition of the mortgage being granted.

MORTGAGEE – The lender in a mortgage agreement.

MORTGAGOR – The borrower signing the note for the mortgage.

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N

NOTARY PUBLIC – An individual who attest authentic signatures and administers oaths that is authorized by the federal or local government.

NOTE – A legal locument that borrowers sign at closing acknowledging the terms of payment.

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O

OFFER – A written promise to purchase real estate by the buyer, this becomes a contract once the terms are accepted by both seller and buyer.

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P

PERSONAL PROPERTY – Any property that is not land and is not permanently attached, things that are moveable.

PITI – Principal, interest, taxes, and insurance. The monthly house payment.

POWER OF ATTORNEY – A legal document that authorizes another person to act on one’s behalf. This can be granted for complete authority or can be limited to certain acts and/or certain periods of time.

PRE-APPROVAL – A pre-commitment from the lender to a buyer based on background checks.

PREQUALIFICATION – The lender’s written opinion that the debt ratios and credit report plus other factors show a borrower qualifies for a particular loan amount before signing a contract.

PRINCIPAL – The outstanding loan balance.

PRIVATE MORTGAGE INSURANCE (PMI) – Insurance paid to a private firm to protect the lenders against loss if a borrower defaults. Lenders generally require Insurance for a loan with a loan-to-value (LTV) percentage in excess of 80%.

PROPERTY TAX – Taxes payable to the country where the property is located. If the real estate is the primary residence there is a reduction in taxes, this is called the Homestead exemption.

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Q

QUALIFY – To fulfil the quidelines based on debt, income, and credit worthiness.

QUIT CLAIM DEED – A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

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R

RADON – A natural gas found in the environment.

REAL PROPERTY – Land and appurtenances, including anything of a permanant nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

RECORDING – The noting in the public records office of the details of a property executed legal document to protect against subsequent claimants.

RIGHT OF FIRST REFUSAL – A legal right by an individual giving them first option to purchase real estate.

RIGHT OF SURVIVORSHIP – In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

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S

SECOND MORTGAGE – A loan taken out in position behind the first mortgage.

SEPTIC SYSTEM – A private sewerage system consisting of a tank, distribution box and leaching field. The sewerage flows into the tank, the waste water rises and goes out a pipe to the distribution box. From this point the waste water is diverted into the leaching field consisting of three perforated pipes which allow the waste water to leach into the ground. The sludge remains in the tank and must be pumped regularly.

SETTLEMENT – The real estate closing where the property title is transferred to the buyer.

SETTLEMENT STATEMENT – A document showing all fees, charges and monetary transfers involving all parties involved in the transaction.

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 tproeprty. 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.

SUBDIVISION – A housing development that is established by dividing a tract of land into individual lots for sale or lease.

SURVEY – The precise legal boundaries of a parcel of real esate by a licensed surveyor. This shows the specified detailed location of improvements, easements, rights of way, encroachments, and other physical features of the property.

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T

TENANCY IN COMMON – Type of ownership where two or more individuals have an undivided title to a piece of property, without the right of survivorship. Upon the death of one of the owners, his or her interest passes, not to the co-owner (s) but to whomever they have chosen as their heir.

TENANCY BY THE ENTIRETY – Type of real estate ownership for married couples. The couples have equal undivided interest in the whole. When one spouse dies, the surviving spouse gets title to the property.

TERMS AND CONDITIONS – The negotiable issues outlined in the sales agreement and agreed upon in the offer to purchase.

TITLE – A legal document showing right of ownership of real estate.

TITLE SEARACH – A check of the title records that is completed at the local courthouse to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

TITLE INSURANCE – An Insurance policy that protects lenders or the new owner from any liens or clouds against the title.

TRANSFER TAX – State or local tax that is collected at closing for the transfer of ownership of real property.

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U

UNDERWRITER – Trained individuals in the lending institution who review loan documentation and evaluate the borrowner’s ability and willingness to repay the loan that make the final decision of whether each loan is approved.

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W

WAIVE – To relinquish or abandon.

WALK-THROUGH – The final inspection of the property before closing to see that all terms agreed upon have been completed and that the property is in the condition the buyer expects.

WARRANTY DEED – The deed warranting that the grantor has clear title and also promises he has the right to convey the property to the buyer.

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Z

ZONING – Local government requirements that establish local codes and setting forth regulationns for property and usage in a particular area.