Glossary of Real Estate Terms...

Adjustable Rate Mortgage: any real estate loan in which the interest rate varies over time according to a prescribed formula or set of conditions, usually changes in economic conditions (also known as a variable rate mortgage)

Agency: a relationship where one person acts (with authority) on behalf of another

Amortization: the gradual payoff of a debt through regular and scheduled payments of principal and interest over a stated period of time until paid off

Amortization Schedule: schedule showing principal and interest payments throughout the life of the loan

Appraisal: an opinion of statement (written or oral) of the value of property

Appraisal Fee: charged by an appraiser to give an opinion or statement of the value of real property

Assessed Value: value of property for taxation purposes as determined by the tax assessor

Assumption of Loan, Mortgage or Deed of Trust: an agreement wherein the Buyer assumes or takes responsibility (becomes liable) for payment of an existing note secured by a mortgage or deed of trust

Assumption Transfer Fee: Charged by existing mortgage company to process existing loan

Attorney Document Preparation Fee: charged by attorney for preparing legal documents for the transaction

Balloon Payment: any payment that is greater than twice the amount of the normal and periodic payment. Generally used to refer to the final payment of a note with an advanced due date

Broker: a person who brings parties together and assists in negotiating contracts betIen them for a commission or fee.

Chain of Title: the chronological list of recorded documents affecting title to a specific parcel of real property

Clear Title: a title that is free from any encumbrances, obstruction or limitation that would "cloud the title"

Closing: closing of "escrow", the final act of a transaction wherein papers are signed, moneys are exchanged and title is transferred

Closing Costs: the expenses incurred in a real estate transaction including costs of title examination, title insurance, attorneys fees, document fees etc.

Cloud of Title: an outstanding claim of title that has yet to proven invalid

Commitment: a title insurer’s contractual obligation to insure title to real property

Contingency: an item in a contract dependent upon a specific condition for its fulfillment

Counter-Offer: a new offer as to price, terms and/or conditions made in reply to and supersedes a prior offer

Deed: a written document that transfers the interest in real property from one person to another

Deed of Trust: a security document used to transfer "bare legal" title from the borroIr (trustier) to the trustee ( a neutral party) to be held in trust for the benefit of the lender until the borroIr completes performance of an obligation(pays off note)

Deed Restrictions: limitations on the use of real estate written into a deed

Discount Points: points a lender charges to reduce interest rate, may be paid by either Buyer or seller on conventional loans; one point is equal to 1 percent of the loan value

Down Payment: the portion of the purchase price that the buyer pays in cash and does not finance

Earnest Money: something of value given as part of the purchase price to show "good faith" and to secure an agreement

Easement: a limited right or interest in the land of another entitling the holder to some use, privilege or benefit

Eminent Domain: the legal right and procedures for a municipality to take title and possession of private property for public use

Equity: the difference betIen the value of the property and the amount oId on the property

Escrow: a transaction wherein an impartial third party (escrow agent) acts as agent to both parties (seller\buyer-lender\borroIr) acting only under instructions in delivering papers, drawing and/or recording documents and disbursing funds

Escrow Fee: charged by title company to service transaction and to escrow money and documents

Fee Simple: absolute ownership without limitations, conditions or restrictions burdening particular heirs

Fiduciary: one who holds a position of trust and confidence to act primarily for the benefit of another in matters of responsibility

Filng Fee: fee charged for note filed with the county to process a lien

Fixed-Rate-Mortgage: a mortgage in which the interest rate does not change during the course of the loan

Flood Insurance: required by lender if property is situated in the 100-year flood plain

Funding Fee: may be charged by a lender to initiate a loan

Homestead: the primary residence of a declarant who has filed a Declaration of homestead, which offers protection against a forced sale (within specific guidelines)

Inspections: examinations of property for various reasons such as termite inspections, mechanical systems inspections, etc.

Installment Loan: a loan that requires periodic payments until both principal and interest are completely paid

Interest: the premium paid for the use of money (based on an annual rate)

Lien: a charge, hold or claim of another for the purpose of securing a debt or obligation

Listing: a written contract betIen an owner and an agent authorizing the agent to sell, lease or rent the owner’s property in exchange for compensation

Loan to Value (LTV): the ratio of the amount borroId to the property’s appraised value or selling price

Market Value: the price for a property that a willing buyer and a willing seller would agree upon when neither is under abnormal pressure

Mechanic’s Lien: a statutory lien to secure payment for persons contributing labor and/or materials towards improvements upon real property when the compensation was not paid in a timely manner

Mortgage: a two-party security instrument pledging land as security for the performance of an obligation

Mortgage Insurance Premium(MIP): charged on an FHA loan, insurance that is paid for by the borroIr, for the life of the loan, to insure lender against default by borroIr

Owners Title Policy: a policy insuring the title of the owner of the property

P.I.T.I.: abbreviation for principal, interest, taxes and insurance in regard to a loan

Principal: one who has permitted or directed another to act for his or her benefit and subject to his or her direction or control. Also; the amount of a loan to be repaid exclusive of interest

Private mortgage Insurance (PMI): charged on a conventional loan, insurance that is paid by the borroIr to insure the lender against default

Professional Service Fees: an amount paid to real estate broker as compensation for Realtor services

Real Estate Settlement Procedures Act (RESPA): a federal law that requires lenders to give borroIrs advance notice of closing costs

Realtor: a real estate licensee who is a member of the National Association of REALTORS and who has agreed to abide by the ethics and standards of the organization

Record: to give public notice of a document by placing the document on file with the county recorder

Setback Line: a line established by a zoning regulation prohibiting any building beyond a prescribed distance from the edge of the property

Specific Performance: a sale of real property that fulfills the terms agreed upon

Subdivision: the division of a single parcel of land into four or more separate parcels

Survey: the measurement of land and the establishment of its’ areas and boundaries

Tax Lien: a statutory lien, in favor of the state or municipality, upon the land of a person charged with unpaid personal or real property taxes.

Tax Proration: Seller pays buyer taxes from January 1 to closing

Time is of the Essence: a standard clause in real property contracts that indicates that punctual compliance is required

Title: the basic rights of enjoyment and possession or interest in property; also used to describe a document that furnishes proof of ownership

Title Insurance: indemnification for loss occasioned by defects in the title to real property or to an interest in real property

Warranty Deed: a deed in which express covenants of good title and the right of possession are detailed and guaranteed