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Abstract
of title
A history of ownership of a property and any documents that affect
the title during
that ownership.
Adjustable
Rate Mortgage (ARM)
A mortgage with an interest rate
that changes over time in line with movements in the index.
ARMS are also referred to as AMLs (adjustable mortgage loans)
or VRMs (variable rate mortgages.)
Agreement
of Sale
The contract that exists when a
seller agrees to sell real estate and a buyer agrees to buy real
estate, under written conditions and terms signed by both parties.
Appraisal
An opinion by a licensed real
estate appraiser about the fair market value of a home.
Assessed
Value
A public tax assessor’s
valuation of property for taxation purposes.
Assumption
of Mortgage
A buyer’s agreement to assume
the liability under an existing note that is secured by a mortgage
or deed of trust. The
lender must approve the buyer in order to release the original
borrower (usually the seller) from liability.
Broker
(top)
A person who has a real estate broker’s license, who not only
makes real estate transactions for others, but also operates a real
estate business and employs sales professionals and other brokers.
Buyer
pool
The entire market of prospective
homebuyers in a specific area or looking for a type of home.
Cash
Reserves
The amount of the buyer’s liquid
cash remaining after making the down payment and paying all closing
costs.
CC&Rs
Covenants, conditions and restrictions.
A document that controls the use, requirements and
restrictions of a property.
Chattel
Personal property
Closing
Statement
A statement of financial
settlement between the buyer and seller defining the cost each must
pay.
Clear
or marketable title
A title that doesn’t have any
liens or claims against it that would keep if from being
transferred, put the buyer in a position to sue for property rights
or be obligated for claims.
Commission
A real estate broker’s fee for services performed.
Commitment
Period
The period during which a loan
approval is valid.
Condominium
(top)
A form of real estate ownership where the owner receives title to a
particular unit and has a proportionate interest in certain common
areas. The unit itself
is generally a separately owned space whose interior surface (walls,
floors, and ceilings) serve as its boundaries.
Contingency
A condition that must be satisfied before a contract is binding.
For instance, a sales agreement may be contingent upon the
buyer obtaining financing.
CRB
(Certified Residential Broker)
To be certified, a broker must be a member of the National
Association of Realtors, and have five years experience as a
licensed broker and have completed required Residential Division
courses.
Debt
Ratios
The comparison of a buyer’s
housing costs to his or her gross or net effective income, and the
comparison of a buyer’s total long-term debt to his or her gross
or net effective income. The
first ratio is housing ratio; the second is total
debt ratio.
Deed
The legal document that is used to transfer the title from one owner
to another.
Earnest
Money
Money deposited by a potential
buyer to show his or her seriousness about buying.
Equity
The amount of ownership that one has in a home. Equity is the sale price minus selling costs and the
remaining mortgage principal.
Escrow
A procedure in which a third party acts as a stake holder for both
the buyer and the seller, carrying our both parties’ instructions
and assuming responsibility for handling all of the paperwork and
distribution funds.
Exclusive
right-to-sell contract
(top)
A listing contract whereby the
real estate broker has sole right to sell and receives a commission,
regardless of who produces the buyer.
Fair
Market Value
Commonly defined as ”The price a
willing buyer will pay…and the seller will accept.”
Fee
Simple
An estate in which the owner has
unrestricted power to dispose of the property as he wishes,
including leaving by will or inheritance.
It is the greatest interest a person can have in real estate.
FHA
Loan
A loan insured by the Federal
Housing Administration of the Department of Housing and Urban
Development.
Fixed
Rate Mortgage
A conventional loan with a single
interest rate for the life of the loan.
General
warranty deed
The type of deed considered to
provide the most protection to an owner, since the seller guarantees
that he or she is the true owner of the property and that no claim
will be brought against the property.
Gift
Letter
A letter from a relative stating
that an amount will be gifted to the buyer, and that said amount is
not to be repaid.
Home
Inspection Report
A qualified inspector’s report
on a property’s overall condition. The report usually includes an evaluation of both the
structure and mechanical systems.
Home
Warranty Plan
Protection against failure of
mechanical systems within the property.
Usually includes plumbing, electrical, heating systems and
installed appliances.
Joint
Tenancy
(top)
An equal undivided ownership of
property by two or more persons.
Upon the death of any owner, the survivors take the
decedent’s interest in the property.
Lien
A legal hold or claim on property
as security for a debt or charge.
Listing
Broker
A licensed real estate salesperson
hired by the seller to represent the seller in a real estate
transaction for duration of the listing contract.
Listing
contract
A contract with the broker or firm
you hire to represent you in the sale that you specify.
In exchange for producing a ready, willing and able buyer for
you, the sales professional is paid a commission.
Loan
Commitment
A written promise to make a loan
for a specified amount on specified terms.
Loan-To-Value-Ratio
The relationship between the amount of the mortgage and the
appraised value of the property, expressed as a percentage of the
appraised value.
Lock-in
The fixing of an interest rate or points at a certain level, usually
during the loan application process.
It is usually done for a certain period of time, such as 60
days, and may require a fee or premium in the form of a higher
interest rate.
Mortgage
Security given by the buyer to the lender, in the form of a lien
against real property, for money borrowed.
Mortgage
Insurance Premium (MIP)
The mortgage insurance required on
FHA loans for the life of said loans; MIP can either be paid in cash
at closing or financed in its entirely in the loan.
The premium varies depending on the method of payment.
Mortgage
Life Insurance
(top)
A type of term life insurance
often bought by home buyers. The
coverage decreases as the mortgage balance declines.
If the borrower dies while the policy is in force, the
mortgage debt is automatically covered by insurance proceeds.
Multiple
Listing Service (MLS)
A networking system, frequently on
computer, in which a number of real estate firms share information
about their clients’ houses that are for sale.
Offer
to purchase
A document that lists the price,
conditions and terms under which the buyer is willing to purchase
the property.
PITI
Principal, Interest, Taxes, and Insurance.
Planned
Unit Development (PUD)
A zoning designation for property
developed at the same or slightly greater overall density than
conventional development, sometimes with improvements clustered
between open, common areas. Use
may be residential, commercial or industrial.
Point
One percent of the amount of the mortgage loan. Lender assesses loan discount points closing to increase the
yield on the mortgage to a position competitive with other types of
investments.
Private
Mortgage Insurance (PMI)
Insurance written by a private
company protecting the lender against loss if the borrower defaults
on the mortgage.
Prorate
To proportionately distribute allowances or obligations of funds
between seller and buyer.
Purchase
Agreement
A written document in which the
purchaser agrees to buy certain real estate and the seller agrees to
sell under stated terms and conditions.
Also called a sales contract, earnest money contract, or
agreement for sale.
Realtor
(top)
A real estate broker or associate active in a local real estate
board affiliated with the National Association of Realtors.
Sales
Contract
An offer of purchase that has been
signed by both buyer and seller.
A firm contract that outlines all details of the property
transaction.
Survey
A licensed surveyor’s map or plat of particular tract of land,
often performed at the request of a lender to prove a structure is
actually situated according to its legal description.
Title
The right to ownership in real estate, which is transferred by a
deed.
Title
Insurance
Insurance, usually paid through a
single premium at closing, that insures the owner against loss
because of a claim against the title that was not found in the title
search.
Title
Search
An examination of a property's title records, performed by the title
company, to ensure that the buyer is purchasing property from the
rightful owner and that there are no claims or liens against the
property.
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