MLS Real Estate Terms Glossary
Abstract of judgment,
law The summary of a court judgment that
creates a lien against a property when filed with the county
Accelerated cost recovery
system A tax calculation that provides greater
depreciation in the early years of ownership of real estate
or personal property.
A provision that gives a lender the right to collect the
balance of a loan if a borrower misses a payment.
A bookkeeping method that depreciates property faster in
the early years of ownership.
The seller's written approval of a buyer's offer.
Any means by which a person can enter property.
The degree to which a building or site allows access to
people with disabilities.
The gradual addition to the shore or bank of a waterway
by deposits of sand or silt.
A written declaration affirming that a person acted voluntarily.
measurement of land equal to 43,560 square feet.
The volume of material needed to cover an acre of land one
Active solar system
A system that utilizes electric pumps or fans to transfer
solar energy for storage or direct use.
The number of years a structure has been standing.
An addition or change to a contract.
Additional principal payment
Extra money included in the monthly payment to help reduce
the principal and shorten the term of the loan.
The interest a borrower pays on the principal for the duration
of the loan.
(ARM) A loan with an interest rate that
is periodically adjusted to reflect changes in a specified
Adjusted cost basis
The cost of any improvements the seller makes to the property.
Deducting the cost from the original sales price provides
the profit or loss of a home when it is sold.
The amount of time between interest rate adjustments in
an adjustable-rate mortgage.
A person given authority to manage and distribute the estate
of someone who died without leaving a will.
A legal document that an administrator of an estate uses
to transfer property.
The acquisition of title to property through possession
without the owner's consent for a certain period of time.
The access and use of property without the owner's consent.
Soil that is composed of materials deposited by the wind.
A person who makes a sworn statement.
A substitution for an oath granted to people based on religious
An interior style that features a steeply peaked roofline
and a ceiling that is open to the top rafters.
The relationship of trust that exists between sellers and
buyers and their agents. The agency is formed through a
The process by which a lender uses a title company or other
firm as an agent to complete a loan.
A person licensed by the state to conduct real estate transactions.
A compromise boundary to which property owners agree in
order to resolve a dispute.
Agreement of sale
A document the buyer initiates and the seller approves that
details the price and terms of the transaction.
A recessed section of a room, such as a breakfast nook.
A provision that requires the borrower to pay the balance
of the loan in a lump sum after the property is sold or
Mineral salt found in soil.
Soil that contains a higher concentration of mineral salt
than natural acid.
A lane behind a row of buildings or between two rows of
Budgets offered by builders of new homes for the purchase
of carpeting and fixtures.
Any home loan that does not conform to a standard fixed-rate
Wooden windows with aluminum covering the exterior.
A metal covering that provides an alternative to paint for
owners of wood homes.
Parks, swimming pools, health-club facilities, party rooms,
bike paths, community centers and other enticements offered
by builders of planned developments.
American Society of Home
Inspectors The American Society of Home
Inspectors is a professional association of independent
home inspectors. Phone: (800) 743-2744.
Americans with Disabilities
Act A law passed in 1990 that outlaws discrimination
against a person with a disability in housing, public accommodations,
employment, government services, transportation and telecommunications.
The process of paying the principal and interest on a loan
through regularly scheduled installments.
Mathematical tables that lenders use to calculate a borrower's
The strength of an electrical current.
A large steel bolt anchored in concrete and attached to
a building to prevent the structure from moving.
Any kind of plant that must be planted every year.
Annual mortgagor statement
A yearly statement to borrowers that details the remaining
principal and amounts paid for taxes and interest.
Annual Percentage Rate
(APR) The cost of the loan expressed as
a yearly rate on the balance of the loan.
The payment of a fixed sum to an investor at regular intervals.
A communication that informs a party that the obligations
of the original contract will not be fulfilled.
A document that details a potential borrower's income, debt
and other obligations to determine credit worthiness.
The fee that a lender charges to process a loan application.
An opinion of the value of a property at a given point in
The fee that an appraiser charges to estimate the market
value of the property.
A detailed written report on the value of a property based
on recent sales of comparable sites in the area.
An opinion of the current market value of a property.
An increase in the value of a home or other property..
A method of resolving a dispute in which a third party renders
An area shaded by trees, shrubs or vines on a latticework
curved structure that supports weight over an area, such
as a doorway.
A licensed professional who designs homes, buildings and
The fee an architect charges for services. In general, architects
charge for their services by the hour, by the square foot,
or by a percentage of the project budget.
A French measurement of land equal to .84625 acres.
A fire-resistant mineral used for insulation and home products
that has been found to pose a health hazard.
The purchase or sale of a property in its existing condition.
A seller's initial price for a property.
A tax assessor's determination of the value of a home in
order to calculate a tax base.
The estimated value of a piece of real estate or a levy
placed on property in addition to taxes.
A list of taxable property compiled by the assessor.
Items of value which include cash, real estate, securities
A person who transfers rights and interests of a property.
A mortgage that can be transferred to another borrower.
A provision that allows a buyer to take responsibility for
the mortgage from a seller.
A fee the lender charges to process new records for a buyer
who assumes an existing loan.
The price of a home determined by totaling the sales prices
of all houses sold in an area and dividing that number by
the number of homes.
An easement over private property near an airport that limits
the height of structures and trees.
Single-sash windows that tilt outward and up.
Soil used to solidify the foundation of a structure.
Back title letter
A letter that a title insurance company gives to an attorney
who then examines the title for insurance purposes.
Arrangements that an owner makes to oversee the sale of
one property and the purchase of another at the same time.
A secondary bid for a property that the seller will accept
if the first offer fails.
A valve in a sewer line that prevents sewage from flowing
back into a house.
A statement that shows the assets, liabilities and net worth
of an individual.
A type of framing used in two-story homes in which studs
extend from the ground to the ceiling of the second floor.
A mortgage in which monthly installments are not large enough
to repay the loan by the end of the term. As a result, the
final payment due is the lump sum of the remaining principal.
The final lump sum payment due at the end of a balloon mortgage.
Railing held up by a set of posts on a porch or stairway.
A proceeding in which an insolvent debtor can obtain relief
from payment of certain obligations. Bankruptcies remain
on a credit record for seven years and can severely limit
a person's ability to borrow.
The sale of a piece of property for less than market value.
Any board or molding found at the bottom of an interior
Baseboard electric heat
Heating units installed in the floor that can be controlled
by a central thermostat.
The area of a home below ground level.
A basis point is one one-hundredth of one percentage point.
For example, the difference between a loan at 8.25 percent
and a mortgage at 8.37 percent is 12 basis points.
opening between two columns or walls that forms a space.
A window that projects outward in a curve.
A wall that supports its own weight in addition to other
parts of a structure.
The lender who makes a loan, also called a mortgagee. The
person borrowing money is the mortgagor.
Total income before taxes are deducted.
Personal property given to a person through a will.
An improvement that increases a property's value as opposed
to repairs that maintain the value.
Offers from multiple buyers for a piece of property. Agents
also sometimes compete to list a house for sale.
A contract in which the parties involved give mutual promises.
Also called "reciprocal" contracts.
Bill of sale A document
that transfers ownership of personal property.
A report issued by a title insurance company that details
the condition of a home's title. and provides guidelines
for a title insurance policy.
A mortgage that requires payments every two weeks and helps
repay the loan over a shorter term.
Blanket insurance policy
A policy that covers more than one person or piece of property.
A mortgage that covers more than one property owned by the
A neighborhood that has deteriorated.
Nails driven into a wall and concealed with putty.
A house maintained close to its original condition. Also
called mint condition.
Blue sky laws
Regulations on the sale of securities to prevent consumers
from investing in fraudulent or high-risk companies without
being informed of the risks.
Siding is composed of 8- to 12-inch wide wooden boards nailed
vertically to create a barn-like exterior.
Measurement of lumber that is the equivalent of 144 cubic
Board of Equalization
A state board charged with ensuring that local property
taxes are assessed in a uniform manner.
Form language used in deeds, mortgages and other documents.
Details can be added by individual parties.
A legal term that refers to actions or persons that are
honest and in good faith.
agreement that insures one party against loss by acts or
defaults of another party.
The value of a property as a capital asset based on its
cost plus any additions, minus depreciation.
An analysis of soil in which holes are bored into the ground
and samples are removed.
A section of a city that has authority over local matters.
Sand, gravel or other material used for grading.
The hole at a site that has been excavated.
A street lined with trees or constructed with a landscaped
The dividing line between two adjacent properties.
A construction method in two-story homes in which the frame
is reinforced with posts and braces.
Breach of contract
The failure to perform provisions of a contract without
a legal excuse.
Breach of covenant
The failure to obey a legal agreement.
Breach of warranty
A seller's inability to pass clear title to a buyer.
The point in which the owner's rental income matches expenses
The height at which the diameter of a tree is measured:
four feet, six inches above the ground.
A roofed passageway with open sides.
Building material made from clay molded into oblong blocks
and fired in a kiln.
A short-term loan for borrowers who need more time to find
The act of bringing together two or more parties in exchange
for a fee or commission.
A person licensed by the state to deal in real estate.
The ideal condition of a building when it is turned over
to an owner or tenant.
A vintage row house constructed of red sandstone.
A parcel of land that separates two or more properties.
Building and loan association
An organization that raises money to helps its members purchase
real estate or construct a building.
A comprehensive set of laws that controls the construction
or remodeling of a home or other structure.
A city or county employee who enforces the building code
and ensures that work is correctly performed.
A halt on home construction to slow the rate of development.
A thick, water-resistant paper that serves as insulation.
A permit issued by a local government agency that allows
the construction of home or renovation of a house.
Extra house features or better finishing materials that
a builder offers.
Building line or setback
Guidelines that limit how close an owner can build to the
street or an adjacent property.
Regulations that limit the manner in which property can
Appliances or other items that are framed into a home or
A retaining wall designed to hold back water from the ocean
or another body of water.
Bundle of rights
The various interests or rights an owner has in a property.
A small one-story house or cottage.
A roof formed by two gables that dip in the middle to resemble
a butterfly's wings.
A home loan in which the lender receives a premium as an
inducement to reduce the interest rate during the early
years of the mortgage.
A real estate broker who exclusively represents the buyer's
interests in a transaction and whose commission is paid
by the buyer rather than the seller.
A slow real estate market in which buyers have the advantage.
An emotion felt by first-time homebuyers after signing a
sales contract or closing the purchase of a house.
The rules and regulations that a homeowners association
or corporation adopts to govern activities.
A clause in a loan agreement that allows a lender to ask
for the balance at any time.
Cylindrical chambers with bulbs recessed into the ceiling.
A clause that details the conditions under which each party
may terminate the agreement.
A projecting structure supported on one end, such as a balcony.
limit on the amount the interest rate or monthly payment
can increase in an adjustable-rate mortgage.
Cape Cod style
A wood-frame or shingled house with a steep roof and several
windows projecting from the second floor.
Money used to create income, such as funds invested in rental
The cost of making improvements on a property.
Profits an investor makes from the sale of real estate or
Capital gains tax
A tax placed on the profits from the sale of real estate
Any improvement that extends the life or increases the value
of a piece of property.
A mathematical formula that investors use to compute the
value of a property based on net income.
The percentage rate of return estimated from the net income
of a piece of property.
A group of real estate agents who tour a house that has
been recently listed for sale.
A roof that covers a driveway or other parking area.
A window hinged on its sides to allow it to swing open vertically.
The amount of cash a rental property investor receives after
deducting operating expenses and loan payments from gross
A check the bank draws on itself rather than on a depositor's
The refinancing of a mortgage in which the money received
from the new loan is greater than the amount due on the
old loan. The borrower can use the extra funds in any manner.
A high open ceiling formed by finishing exposed roof rafters.
An acrylic or silicon sealant used to fill cracks, crevices
and holes in a home.
A courtyard or atrium.
A formal notice, that asks a court to suspend action until
the party which filed the challenge can be heard.
A legal principle derived from Latin than means "let the
The standard height of a ceiling is eight feet.
Central air conditioning
A device that generates cold air through an outside unit
that is connected to ductwork inside the house.
Central business district
The area of a city where most large businesses are located.
Certificate of Deposit
(CD) A document which shows that the bearer
has a specified amount of money on deposit with a bank,
stock-brokerage firm or other financial institution.
Certificate of deposit
index An index based on the interest rates
on six-month CDs. It used to determine the interest rate
for some adjustable-rate mortgages.
Certificate of eligibility
A document issued by the Veterans Administration that verifies
the eligibility of a veteran for a loan program.
Certificate of occupancy
A document which states that a home or other building has
met all building codes and is suitable for habitation.
Certificate of sale
A document issued at a judicial sale, which entitles the
buyer to receive a deed after court confirmation of the
purchase of the property.
Certificate of title
A written opinion on the status of a piece of property based
on an examination of the public record.
Chain of title
The official record that details the ownership history of
a piece of property.
Decorative trim installed on a wall about 32 inches above
the floor, which protects against scuffs from furniture.
A modification of the construction contract to authorize
a change in the work, an adjustment in the amount of the
contract or a change in the contract time. The owner, architect
and contractor must sign the change.
The adjustment schedule on an adjustable-rate mortgage.
Personal property such as furniture, clothing or a car.
A lien on personal property used as collateral for a loan.
The back wall or lining of a fireplace or furnace chimney.
The passage inside a chimney that channels smoke and heat
to the outside.
A short pipe at the top of a chimney that increases ventilation
to the fireplace and reduces smoke.
A block made of ash and cement that is used in construction.
Cinders used below a basement or around a foundation to
An electric fuse that activates or deactivates a circuit.
A tank used to store rainwater.
Classified property tax
A tax that varies in rate depending on the use of the property.
A property that does not have liens, defects or other legal
The final procedure in which documents are signed and recorded,
and the property is transferred.
Expenses incidental to the sale of real estate, including
loan, title and appraisal fees.
A document which details the final financial settlement
between a buyer and seller and the costs paid by each party.
Cloud on title
An invalid encumbrance on real property.
A method of squeezing more homes into less space.
A change to a will that adds or subtracts provisions or
clarifies portions of the document.
Individual housing units that are clustered around a common
building where residents share cooking and other activities.
The cornerstone of a building that differs in shape or color
from the rest of the wall.
Coverage that involves the use of two or more insurers..
The structural element that connects roof rafters.
Additional security that a borrower supplies to obtain a
The series of steps a lender takes to bring a delinquent
mortgage up to date.
The action of two or more people to break the law.
Unincorporated communities along the U.S.-Mexico border.
A slender upright structure that consists of a base, a round
or square shaft and a capital.
The support base for a load-bearing column. The footing
is usually made of reinforced concrete.
A person who signs a promissory note with the borrower and
assumes responsibility for the loan.
An outer door with interchangeable screen and glass panels.
A window with interchangeable screen and glass panels.
A financial institution that provides a broad range of services,
from checking and savings accounts to business loans and
An area that is zoned for businesses.
The mixing of money held in trust with other funds.
The negotiable percentage of the sales price of a home that
is paid to the agents of the buyer and seller.
A promise by a lender to make a loan with specific terms
for a specified period.
The fee a lender charges for promising to make a loan.
An area inside a housing development that is owned by all
Fees paid by the owners of a condominium project or planned-unit
development to maintain, repair, improve or operate common
A project composed of individually owned units that share
usage and financial responsibility for common areas.
A body of laws based on custom, usage and rulings by courts
in various jurisdictions.
Property accumulated through the joint efforts of husband
and wife. It is a classification of property peculiar to
Act A federal law that encourages financial
institutions to loan money in the neighborhoods where minority
The distance and time it takes a person to reach the workplace.
Properties used as comparisons to determine the value of
a certain property.
Comparative market analysis
An estimate of the value of a property based on an analysis
of sales of properties with similar characteristics.
A term for a buyer who is legally fit to enter into a sales
The interest paid on the principal balance in a mortgage
and on the accrued and unpaid interest of the loan.
The process of pouring concrete into forms on the ground,
allowing the forms to harden and then raising the material
to a vertical position to form walls.
The process the government uses to take private property
for public use without the consent of the owner.
A promise by a lender to make a loan if the borrower meets
Individual units in a building or development in which owners
hold title to the interior space while common areas such
as parking lots, community rooms and recreational areas
are owned by all the residents.
The change in title from a single owner of an entire project
or building to multiple owners of individual units.
A metal pipe that houses electrical wiring.
A binding written agreement between two parties to have
a judgment entered and recorded.
A court-appointed guardian.
Anything that is legal, has value and induces a person to
enter into a contract.
The funding that an owner arranges for the construction
of a project.
Drawings and specifications from an architect that provide
detailed requirements for the construction of a project.
Short-term loans a lender makes for the construction of
homes and buildings. The lender disburses the funds in stages.
Construction to permanent
loan The conversion of a construction loan
to a longer-term traditional mortgage after construction
has been completed.
Consumer Credit Counseling
Service (CCCS) A nationwide, nonprofit organization
that helps consumers get out of debt and improve their credit
profile. National headquarters: 8701 Georgia Avenue., Suite
507, Silver Springs, MD 20910. Phone: (800) 388-2227.
A design that features streamlined shapes, large unadorned
windows and industrial materials.
Pieces of property that are adjoined.
A condition specified in a purchase contract, such as a
satisfactory home inspection.
A property listing with a special condition attached.
A fee that must be paid if a certain event occurs.
An agreement between two or more parties that creates or
modifies an existing relationship.
Contract for deed
A contract in which the seller agrees to defer all or part
of the purchase price for a specified period of time.
Contract to purchase
A contract the buyer initiates which details the purchase
price and conditions of the transaction and is accepted
by the seller. Also known as an agreement of sale.
The individual who contracts for the construction of a home
A voluntary obligation such as a mortgage or trust deed.
Any restrictions imposed on the amount or type of new development
in an area.
A long-term loan a lender makes for the purchase of a home.
mortgage A mortgage which starts as an adjustable-rate
loan, but allows the borrower to convert the loan to a fixed-rate
mortgage during a specified period of time.
The transfer of title of property.
A tax imposed on the transfer of real property.
A real estate broker who finds a buyer for a property that
another broker has listed.
A business trust that holds the title to a cooperative residential
building and grants occupancy rights to shareholders in
Any loans related to a cooperative residential project.
A project in which a corporation holds title and sells shares
representing individual units to buyers who then receive
a proprietary lease as their title.
A horizontal molding that projects from the top of a structure
An arrangement by which employers pay to transfer and move
A second party who signs a promissory note and takes responsibility
for the debt.
A response to an offer.
A reinforcement placed in the corner where two walls intersect.
The effect on the value of a property because it is situated
on a corner or near a corner.
Necessary or desired repairs to remedy problems uncovered
by a home or specialized inspection.
A construction contract that determines the builder's profit
based on a percentage of the cost of labor and materials.
A small, one-story house.
A legal assurance or promise in a deed or other document,
or implied by the law.
and restrictions (CC&Rs) Rules and regulations
for a development, such as acceptable landscaping or improvements
that can be made to individual units.
An architectural style that evolved as part of the Arts
and Craft movement near the turn of the century.
The space between the ground and the first floor of a home,
usually no higher than four feet.
Innovative home-financing arrangements that help sell a
The money a lender extends to a buyer for a commitment to
repay the loan within a certain time frame.
A record of an individual's current and past debt payments.
An individual or institution to whom a debt is owed.
Credit life insurance
Insurance that pays off a mortgage in the event of the borrower's
The degree of credit worthiness assigned to a person based
on credit history and financial status.
A credit bureau report that shows a loan applicant's history
of payments made on previous debts. Several companies issue
credit reports, but the three largest are Trans Union Corp.,
Equifax and Experian (formerly TRW ).
Large companies that gather financial and credit information
from various sources about individuals who have applied
Nonprofit cooperative organizations that provide banking
and financial services, including mortgages, home improvement
loans and home equity loans, to their members.
The strengthening of a structure by bracing cross members
Cul de sac
A street or alley that is closed at one end.
A dome-like structure that sits on top of a roof.
A deficiency in a property that is easy or inexpensive to
fix, such as chipping paint.
The first impression of a house as seen from the street.
An exterior wall that encloses a yard or other area but
does not provide any structural support to a home.
A builder who constructs a home or building based on plans
created by the owner.
A structure designed by an architect hired by the owner.
A movable plate in a fireplace that allows smoke and fumes
to travel up the chimney's flue.
Days on the market
The period of time a property is listed for sale until it
is sold or taken off the market
Locks that require a key to open from the outside and a
turn button from the inside.
amount one person owes to another.
roofless, floored area that adjoins a house.
legal document that transfers ownership of a piece of property.
Deed of trust
A document that gives a lender the right to foreclose on
a piece of property if the borrower defaults on the loan.
Deep-seal floor drain
A drain used to dispose of water from the basement floor
to a sewer line.
The failure to fulfill a duty or promise or discharge an
obligation, such as making monthly mortgage payments.
Any repair or maintenance of a piece of property that has
been postponed, resulting in a decline in property value.
A mortgage that involves a borrower who is behind on payments.
If the borrower cannot bring the payments up to date within
a specified number of days, the lender may begin foreclosure
An analysis of soil to determine if the surface can support
the foundation of a house.
Small rectangular blocks that project from a building, usually
under cornices or along rooflines.
Money given by the buyer with an offer to purchase property.
Also called earnest money.
The decline in value of a piece of property.
A project in which the owner contracts directly with an
individual or company to perform design and construction.
Unlike architects, designers are limited to drawing blueprints.
Images that are incorporated into house listings to give
potential buyers a view of the property.
Plans which show the layout of a house but are less detailed
than full blueprints.
An insurance policy which covers an individual's ability
to produce income.
A statement to a potential buyer listing information relevant
to a piece of property, such as the presence of radon or
Fees that a borrower pays at the time the lender makes the
loan. A point equals 1 percent of the total loan amount.
Property that is in poor physical or financial condition.
Document needs list
A list of documents a lender requires when a potential submits
a loan application.. The required documents range from paycheck
stubs to credit card statements.
A hemispherical ceiling that projects upward without support.
A person's primary or permanent home.
A window set upright in a sloping roof.
A window that consists of two sashes that slide up and down.
Joints that lock two pieces of wood together with meshed
The amount of money a buyer agrees to give the seller when
a sales agreement is signed. Complete financing is later
secured with a lender.
A vertical gutter that empties water from the roof to the
A system of gutters and drainpipes that carry water away
from the foundation of a house.
payment made to subcontractors or suppliers from a construction
A flat ceiling built lower than the original ceiling.
A fungal decay that causes wood to become brittle and crumble.
A construction material composed of gypsum or plaster wrapped
in paper and produced in large sheets that can be nailed
to wall studs.
A relationship in which a real estate agent or broker represents
both parties in a transaction.
kind of pipe or channel that carries water, wiring or conditioned
air through a house.
Standard language in a mortgage which states that the loan
must be paid when a house is sold.
A structure that consists of two separate family units.
Dutch colonial style
A design that features barn-like gambrel roof, a ground-level
front porch, and dormers.
The condition in which buyers can occupy the property before
the sale is completed.
Money a buyer gives with an offer to purchase a property.
Also called a deposit.
A policy that provides coverage against damage to a home
from an earthquake.
A right given to a third party to use a portion of the property
for certain purposes, such as power lines or water mains.
The projecting overhang at the lower edge of a roof.
The age of a structure estimated by its condition rather
than its actual age.
Effective gross income
Additional income that a lender considers when assessing
the loan application of a potential borrower.
Electric service panel
A panel that transfers power from the utility line into
a house to be distributed through fuses or circuit breakers.
The exterior view of a home design that shows the position
of the house relative to the grade of the land.
extension or wing of a house that is at right angles to
the main structure.
The government's right to condemn private land for public
use, such as the routing of a public highway.
Programs which help employees purchase homes through special
plans developed with lenders.
Potential buyers who have raised their families and want
to move into a smaller home.
Fences or other structures that extend into the property
of another owner.
A claim or lien on a property which complicates the title
The conversion from a construction loan to permanent financing
a condominium buyer secures after all units in a project
have been completed.
A person who signs over ownership of property to another
English Tudor style
An architectural design that features stone or brick exterior
walls and exposed beams.
Environmental impact statement
A government-mandated evaluation of all aspects and effects
a development will have on the environment of a proposed
home construction A method of construction
that utilizes recycled materials.
Equal Credit Opportunity
Act. A federal law that prohibits a lender
or other creditor from refusing to grant credit based on
the applicant's sex, marital status, race, religion, national
origin or age. The law also prohibits a creditor from refusing
to grant credit because the applicant receives public assistance.
Equifax Credit Information Services, Inc., is one of the
"Big Three" credit-reporting bureaus that operate nationwide.
Address: P.O. Box 740249, Atlanta, GA 30374.
A determination of the value of a property after existing
liens are deducted.
Errors and omissions insurance
A policy that pays for any mistakes a builder or architect
makes in a project.
A neutral third party holds the documents and money involved
in a real estate transaction and ensures that all conditions
of a sale are met.. Escrow also refers to a special account
that a lender establishes to hold monthly installments from
the borrower to cover property taxes and insurance.
An account that a lender or mortgage servicer establishes
to hold funds for the payment of expenses such as homeowners
insurance and property taxes. Also known as an impound account.
A neutral third party who ensures that all conditions of
a real estate transaction are met.
A lender's periodic examination of an escrow account to
determine if the lender is withholding enough funds from
a borrower's monthly mortgage payment to pay for expenses
such as property taxes and insurance.
Escrow closes when all conditions of a real estate transaction
are met and the title of the property is transferred to
Firms that act as neutral third parties to ensure that all
conditions that the buyer, seller and lender establish in
a real estate transaction are met.
Funds that a mortgage servicer withdraws from a borrower's
escrow account to pay property taxes and insurance.
The total assets of a person, including real property, at
the time of death.
A legal procedure to remove a tenant for reasons including
failure to pay rent.
Examination of title
An inspection by a title company of public records and other
documents to determine the chain of ownership of a property.
The process of clearing trees, removing topsoil and grading
land before the foundation is laid.
A contract that gives an agent the exclusive right to market
a property for a specific period of time.
A person appointed to carry out the instructions in a will.
If there is no will, a probate court will appoint an executor.
Ventilating devices that remove water vapor, undesired smells
Experian, formerly known as TRW Information Systems & Services,
is one of the "Big Three" credit-reporting bureaus.. Address:
505 City Parkway West, Orange, CA 92868.
The part of a building facing the street or a courtyard.
Fair Credit Billing Act
A federal law that governs credit and charge card billing
errors. If a credit or charge card company violates any
provision, consumers can sue to recover damages.
Fair Credit Reporting
Act. A federal law passed in 1971 that regulates
the activity of credit bureaus. It is designed to prevent
inaccurate or obsolete information from staying in a consumer's
credit file and requires credit bureaus to have reasonable
procedures for gathering, maintaining and disseminating
credit information. The act also requires credit bureaus
to show a consumer their credit file if the consumer presents
proper identification, although the bureau reserves the
right to charge a fee for doing so.
Fair Debt Collection Practices
Act. A federal law passed in 1977 which
outlaws debtor harassment and other types of collection
practices. The act regulates collection agencies, original
creditors who set up a separate office to collect debts,
and lawyers hired by the creditor to help collect overdue
bills. An original creditor--the company or individual that
originally granted the credit--is not covered by the act,
but may be covered by similar measures approved by state
Fair Housing Act
Landmark federal law passed in 1965 and amended in 1988
that makes it illegal to deny rent or refuse to sell to
anyone based on race, color, religion, sex or national origin.
The 1988 amendment expanded the protections to include family
status and disability.
The official name of the Federal National Mortgage Association,
it is a congressionally chartered, shareholder-owned company
that buys mortgages from lenders and resells them as securities
on the secondary mortgage market.
Farmer's Home Administration
A U.S. Department of Agriculture agency that provides credit
to farmers and rural residents.
A board that connects the ends of the roof rafters and provides
a surface to support gutters.
Federal Home Loan Mortgage
Corporation, law The Federal Home Loan Mortgage
Corporation, commonly known as Freddie Mac. The company
buys mortgages from lending institutions, pools them with
other loans and then sells shares to investors.
Federal Housing Administration
(FHA) This government agency operates a
variety of home-loan programs. Its most popular is the Sec.
203(b), program, which provides low-rate mortgages to buyers
who make a down payment as small as 3 percent.
Federal National Mortgage
Association Now officially dubbed Fannie
Mae, this federally chartered agency buys mortgages from
lending institutions, pools them with other loans and sells
shares to investors.
Federal Reserve Board
A group of economists and other experts who set the nation's
monetary policy. Its chief tool to control inflation is
the power to control interest rates.
Federal Trade Commission
The government agency responsible for regulating a variety
of companies and industries, from credit bureaus and collection
agencies to timeshare operators and certain types of creditors.
National headquarters: Sixth and Pennsylvania Avenue NW,
Washington, D.C. 20580. Phone: (202) 326-2222.
This type of ownership is the maximum interest a person
can have in a piece of real estate. It entitles the owner
to use the property in any manner they see fit, in accordance
with state and local laws.
Fee simple defeasible
The owner of the property holds a fee simple title contingent
upon certain conditions.
The all-American home architecture style that evolved after
the Revolutionary War. Details include bigger windows and
a front doorway surrounded by glass and topped with an arched
A friendly, honest, professional Realtor who is dedicated
on giving great service.
Mortgages that are insured by the Federal Housing Administration.
The FHA's 203(b) loan program provides low-rate mortgages
to buyers who make a down payment as small as 3 percent.
The agency also operates loan plans for investors and purchasers
of rural property.
An ancient Chinese belief that the physical characteristics
of a house and the positioning of the home will affect the
fortunes of the owner.
The relationship of trust that buyers and sellers expect
from a real estate agent. The term also applies to legal
and business relationships.
Modifications made on the construction site that do not
Soil brought in to solidify a finished foundation.
An area where the ground has been raised by adding dirt,
gravel or other fill material.
A fee in any amount that is paid to someone.
A finish that prepares a lot for landscaping.
A buffer composed of fire-resistant material.
A promise made by a lender when it agrees to loan money
for the purchase of property.
The primary mortgage on a property that has priority over
all other voluntary liens.
The monthly payment on a home loan.
A home loan with an interest rate that will remain at a
specific rate for the term of the loan. About 75 percent
of all home mortgages have fixed rates.
The specific weeks in a year an owner of a timeshare arrangement
has access to accommodations.
A house that needs refurbishment or remodeling It usually
sells at a below-market price.
Personal property permanently attached to a house, such
as drapery rods, toilets, built-in bookcases or a furnace.
Metal strips placed around chimneys, skylights, vents, windows,
doors, beneath shingles and along seams in the roof to prevent
A set fee charged by a broker instead of a commission.
A roof with a level surface.
Floor area ratio
The calculation of the floor area of all homes or buildings
in a project. It is used in the planning and development
of a site.
Float floor drain
A drain that diverts water from the basement to a collection
area. Water is then removed with a sump pump.
Walls built to withstand movement in the basement floor.
Hazard coverage that is required in designated flood areas.
Flat, flood-prone areas located along waterways.
Enclosed porches built on the side or back of a home.
Concrete foundations that support a structure.
A course of action a lender may pursue to delay foreclosure
or legal action against a delinquent borrower.
The legal process reserved by a lender to terminate the
borrower's interest in a property after a loan has been
defaulted. When the process is completed, the lender may
sell the property and keep the proceeds to satisfy its mortgage
and any legal costs. Any excess proceeds may be used to
satisfy other liens or be returned to the borrower.
The relinquishing of property rights by a delinquent borrower.
For Sale By Owner
(FSBO) An owner of a Property who chooses to sell without
the help of a Lic. Real Estate Professional.
The support structure of a house.
The entrance hall to a home or building.
The construction of the skeletal framework of a house.
The common name for the Federal Home Loan Mortgage Corporation,
a congressionally chartered institution that buys mortgages
from lenders and resells them as securities on the secondary
Owners of these types of lots may hire any builder to construct
Two adjoining doors inlaid with glass that open from the
The portion of property that borders a roadway or body of
Sale By Owner) An owner of a Property who chooses
to sell without the help of a Lic. Real Estate Professional.
FSBO MLS listing A
listing designed for Investors & Sellers, who have the experience
time to sell FSBO. The FSBO
MLS listings provides FSBO's the opportunity benefit from
MLS exposure by advertising
directly to Buyers Agents. By eliminating the Seller's Agent,
they save on the Selling
Agents portion of the commission.
Fully amortized adjustable-rate
mortgage A mortgage that amortizes, or pays
down, the balance of a loan.
An enclosed heating device powered by coal, oil, propane
or natural gas.
device that allows power to be channeled into a home.
A triangular wall enclosed by the sloping ends of a ridged
roof or a triangular decorative feature.
A ridged roof that forms a triangle at each end.
A provision in contracts signed by new buyers that prohibits
the owners from publicizing complaints about the builder.
A roof with two slopes, often seen on barns.
The person who hires all of the subcontractors and suppliers
for a project.
A government's long-range land-use plan.
Popular throughout the 18th century, this type of architecture
is distinguished by a symmetrical facade, prominent front
entrance and quoins-decorative blocks of masonry or wood
set in the corners of the house.
A structure constructed of lightweight bars forming a grid
cash gift a buyer receives from a relative or other source.
Lenders usually require a "gift letter" stating that the
money will not have to be repaid.
An intricate, almost lacy, wood trim.
Crossbeams that support floor joists.
An estimate from an institutional lender that shows the
costs a borrower will incur, including loan-processing charges
and inspection fees.
Government National Mortgage
Association Commonly known as Ginnie Mae,
this agency buys home loans from lenders, pools them with
other loans and sells shares to investors. Ginnie Mae differs
from its cousins, Fannie Mae and Freddie Mac, in that it
only purchases loans backed by the federal government.
A specified amount of time to make a loan payment after
its due date without penalty.
The elevation of land above level ground.
(GPM) A mortgage that requires a borrower
to make larger monthly payments over the term of the loan.
The payment is unusually low for the first few years but
gradually rises until year three or five, then remains fixed.
The flat or sloping surface upon which a house is built.
Slang term for a separate unit in a house or above the garage,
which in the past may have been occupied by an elderly relative.
A person conveyed an interest in a piece of property.
The person who conveys an interest in a piece of property
to another person.
Greek Revival style
A style introduced in the U.S. at the end of the 18th century.
Its most prominent feature is a pillar-anchored pediment
forming a portico in the front of the house.
Any stretch of park, open space or other natural setting
in a community.
The total income of a household before taxes or expenses
Ground fault circuit interrupter
Devices that detect leakage of electrical current to the
ground and prevent accidental shock.
The amount of money paid for the use of a piece of property
when it is a leasehold estate.
A single-family residence used as a living space for unrelated,
developmentally disabled or mentally disabled people.
A fixed rate mortgage that increases payments over a specific
period of time. The extra funds are applied to the principal.
A loan guaranteed by a third party, such as a government
Horizontal channels installed at the edge of a roof to carry
rainwater or melted snow away from the house
Also called a powder room, a half-bath contains a toilet
and a sink but no bathtub or shower stall.
This provision of homeowners insurance covers damage by
fire, wind or other disaster. It is required by all lenders
before a loan is approved.
Crossbeams above windows and doors.
An electric cooling and heating system.
The equivalent of 2.471 acres.
The concentration of housing units in a specific area or
on a specific property.
Any building higher than six stories.
A pitched roof with sloping sides.
The physical rehabilitation of a historic home or building,
and the movement of the same name begun in the 1960s in
the U.S. to preserve and protect landmarks and urban neighborhoods.
A home or building listed in the National Register of Historic
Places and certified as historic by the U.S. Secretary of
Home equity conversion
mortgage Loans made to older owners who
want to convert equity into money. Because borrowers are
qualified on the basis of the value of their home, e, the
loan is not the same as a home equity loan. Also known as
Home equity loan
A loan that allows owners to borrow against the equity in
An examination of a home's construction, condition and internal
systems by an inspector or contractor prior to purchase.
A group that governs a modern subdivision or planned community.
An association collects monthly fees from all owners to
pay for maintenance of common areas, handle legal and safety
issues, and enforce the covenants, conditions and restrictions
set by the developer.
This insurance includes hazard coverage for any damages
that may affect the value of a house, in addition to personal
liability and theft coverage.
Special insurance policies that cover certain home repairs
for a specified amount of time.
The power of a local government to adopt its own land-use
A document that to protects some of a home's equity from
A type of insurance that covers repairs to certain parts
of a house and some fixtures.
A window that contains a single sash that tilts inward.
A threaded faucet connection for devices such as a washing
The illegal practice of denying an individual or group the
right to buy or rent a home based on race, color, religion,
national origin, sex, disability or family status.
Housing expense ratio
The percentage of gross monthly income devoted to housing
A polyethylene barrier wrapped around a house to save energy.
HUD-1 Uniform Settlement
Statement A closing statement or settlement
sheet that outlines all closing costs on a real estate transaction
Fees collected from developers of new homes to pay for schools,
parks and other facilities.
Implied warranty of habitability
Court cases which determined that all new homes are assumed
to be fit for human habitation and meet all building codes.
A portion of the monthly mortgage payment that is placed
in an account and used to pay for hazard insurance, property
taxes and private mortgage insurance.
Property that is not occupied by the owner but is used to
A defect in a property that cannot be fixed, such as an
adjacent hazardous waste site, or that would cost too much
to repair relative to the value of the property.
Financial tables used by lenders to calculate interest rates
on adjustable mortgages and on Treasury bills.
Account Tax-deferred savings accounts that
allow people to accrue retirement funds.
In-file credit report
Computer-generated reports drawn from credit repositories
that are generally regarded as objective histories.
Any significant new construction in an established area.
Home construction in established areas.
This event occurs when there is more money available than
there are goods and services to be purchased. Mortgage rates,
which are determined by the marketplace and the actions
of the Federal Reserve Board and Wall Street, are sensitive
to inflation fears.
The roads, schools, parks, utilities, bridges and communications
systems in a community.
Initial interest rate
The original interest rate on an adjustable mortgage.
An examination of a home's exterior, foundation, framing,
plumbing, electrical system, heating, air conditioning,
fireplace, kitchen, bathroom, roofing and interior.
A purchase agreement in which the buyer does not receive
title to the property until all installments are paid.
Materials including cellulose, glass fiber, rock wool, polystyrene,
urethane foam and vermiculite that slow heat loss.
Title to property that a company agrees to insure against
defects and disputes.
Owners and buyers can purchase various types of insurance:
hazard, private mortgage and earthquake. The policies guarantee
compensation for specific losses.
A temporary insurance arrangement usually put in force until
a permanent policy can be obtained.
The fee borrowers pay to obtain a loan. It is calculated
based on a percentage of the total loan.
Interest accrual rate
The rate at which interest accrues on a mortgage.
The pays only the interest that accrues on the loan balance
each month. Because each payment goes toward interest, the
outstanding balance of the loan does not decline with each
The sum, expressed as a percentage, charged for a loan.
Interest payments on most home loans are tax- deductible.
Interest rate buy-down
plans For cash-short buyers, some sellers
are willing to advance funds from the sale of the home to
buy down the interest rate and reduce the buyer's monthly
Interest rate caps
A limit on the amount that can be charged to the monthly
payment of an adjustable-rate mortgage during an adjustment
Interest rate ceiling
The highest interest a lender can charge for an adjustable-rate
Real estate that generates income, such as an apartment
building or a rental house.
A window that consists of vertical rows of horizontal glass
slats that operate together by a crank mechanism that connects
all the slats.
The responsibility of two or more people to fulfill the
terms of a home loan or debt.
Ownership by two or more people that gives equal shares
of a piece of property. Rights pass to the surviving owner
A floor or ceiling support member supported by foundation
walls, piers or beams. Subflooring is connected to floor
The decision of a court or law. If a court decides that
a person must repay a debt, a lien may be placed against
that person's property.
A procedure to handle foreclosure proceedings as civil matters.
Loans that exceed limits set by Fannie Mae and Freddie Mac.
The current limit is $214,600.
A loan that subordinate to the primary loan.
A structure that contains prefabricated components and is
put together by a contractor.
A wall-like structure that supports roof rafters.
An old-fashioned wiring system that has been replaced by
fuses and circuit breakers.
A home's surroundings can range from a shrub-studded emerald
lawn to a native-plant xeriscape. It is a major component
of curb appeal.
A professional who holds a degree in landscape architecture,
which involves training in horticulture, landscape design
A landscape designer has training in horticulture and landscape
planning, but does not necessarily hold a degree.
A professional who carries out the plans of a landscape
architect or a landscape designer.
A fee a lender imposes on a borrower when the borrower does
not make a payment on time.
A payment a lender receives after the due date has passed.
An invisible problem in a piece of property such as bad
wiring, termite damage or lead paint.
metallic chemical element present in older dwellings, primarily
in the form of lead-based paint and lead plumbing. Exposure
to lead has been found to be a health risk.
A binding agreement that contains the terms and conditions
of a renter's occupancy.
An arrangement in which the borrower does not own a specific
piece of property but possesses a long-term lease.
A lease that contains the right to purchase the property
for a specific price within a certain time frame.
A bank, savings institution or mortgage company that offers
Blemishes on a piece of property, such as a zoning violation
or fraudulent title claim.
A specific way of identifying and locating a piece of real
estate that is acceptable to a court.
Letter of intent
A formal statement that the buyer intends to purchase the
property for a certain price on a certain date.
The use of a small amount of cash--a 5 percent or 10 percent
down payment--to buy a piece of property.
A borrower's debts and financial obligations.
A policy that protects owners against any claims of negligence,
personal injury or property damage.
claim laid by one person or company on the property of another
as security for money owed.
A limit on the amount that a loan rate can move during the
term of the mortgage. For example, the rate on an adjustable-rate
mortgage that begins at 5 percent and has a lifetime cap
of 6 percentage points cannot rise above 11 percent, even
if rates on fixed-rate mortgages soar to 20 percent.
Life-cycle cost analysis
An analysis of a building project's expected operating,
maintenance and replacement costs, calculated by an architect.
Real estate syndicates and other investment groups use this
type of ownership.. A general partner makes the group's
investment decisions, oversees the investment and is principally
liable for any losses.
A horizontal piece over a door or window that carries the
weight of the structure above it.
Cash and all other assets that can be converted to cash
relatively quickly. Liquid assets can include money in savings
and checking accounts, money-market accounts, and most certificates
When a real estate deal goes awry, one party often is entitled
to liquidated damages, a sum of money set out in the purchase
contract in that event.
A piece of property placed on the market by a listing agent.
The known number of houses for sale within a given market.
An arrangement in which two unrelated people purchase a
An officially designated dwelling in which the occupant
conducts a home-based business or enterprise.
A wall that supports not only its own weight, but the weight
of other parts of a home. Also called a bearing wall.
The first step toward submitting a home loan requires the
borrower to itemize basic financial information.
Loan application fee
A fee charged by lenders to for making a loan application.
A promise by a lender or other financial institution to
make or insure a loan for a specified amount and on specific
An official representative of a lending institution who
is empowered to act on behalf of the lender within certain
Loan origination fee
Most lenders charge borrowers an origination fee--or points--for
processing a loan. A point is 1 percent of the total loan
Loan processing fee
A fee charged by some lenders for gathering information
to enable the lender to process the loan.
The amount of a time set by the lender for a buyer to pay
a mortgage. Most conventional loans have 30-year or 15-year
Loan -to-value ratio
A technical measure used by lenders to assess the relationship
of the loan amount to the value of the property
When interest rates are volatile, many borrowers want to
"lock in" an interest rate and many lenders will oblige,
setting a limit on the amount of time the lock-in is in
living space not partitioned into rooms or a small space
built above a larger room.
Homes constructed of rough-hewn timbers and a standard housing
form in the early European settlement of the U.S.
An offer made to a seller that is substantially below market
value. The longer a property stays on the market, the more
likely there are to be such offers.
A low concentration of housing units in a specific area.
A mortgage that requires only minimal verification of income
A home loan that requires the borrower to make only a small
down payment before obtaining the financing needed to purchase
Main water shut-off valve
The primary valve that halts the flow of water from the
water meter into a home.
A roof with four sides that slope upward from the roof edge
to the square peak.
Prefabricated homes that can range from simple trailers
to larger dwellings.
The facing of stone, marble or other material around a fireplace.
The monthly assessment members of a homeowners' association
pay for the repair and maintenance of common areas.
Lots in which buyers choose between one of several builders.
The lender's "retail markup" on the mortgage. For example,
if the index rate for an adjustable-rate mortgage is 5 percent
but the lender has a 2.5 percentage-point margin, the rate
the borrower will pay is 7.5 percent.
Factors affecting the sale and purchase of homes at a particular
point in time.
The price that a piece of property sells for at a particular
point in time.
The brick or stone work on a building.
A suburban plan that includes homes and commercial, work,
educational and community facilities.
A loan amount within 5 percent of the highest loan-to-value
ratio allowed for a property.
A home's plumbing, wiring, heating and cooling systems.
Subcontractors or suppliers sometimes will file an encumbrance,
or mechanic's lien, against a property to seek payment.
A dispute-resolution process in which a neutral party works
to resolve contract differences.
The price of the house that falls in the middle of the total
number of homes for sale in that area.
Merged credit report
A report that draws information from the Big Three credit-reporting
companies: Equifax, Experian and TransUnion Corp.
Metes and bounds
A time-honored land surveying method of describing land
in terms of shape and boundary dimensions.
Mint condition, or blue-ribbon condition, refers to a house
that looks as close to new as possible.
A neighborhood that contains houses of widely varying prices.
A project that combines several different functions, such
as residential space above a commercial establishment or
an entire development combining commercial, residential
and public accommodations.
stands for “Multiple Listing Service".
A change in any of the terms of the loan agreement.
Decorative trim elements applied to walls, ceilings, and
window and door openings.
Money market account
Accounts that work like money market funds and allow individual
investors to participate in certain managed investments
and withdraw funds under most conditions.
Money market funds
A mutual fund that pools the resources of individuals to
invest in certain managed investments.
A legal document specifying a certain amount of money to
purchase a home at a certain interest rate, and using the
property as collateral.
A bank or other financial institution that lends money to
the borrower. The borrower is considered the mortgagor.
The person who borrows money to purchase a house. The lender
is called the mortgagee.
clause A clause which allows a lender to
demand that the entire balance of the loan be repaid in
a lump sum under certain circumstances. The acceleration
clause is usually triggered if the home is sold, title to
the property is changed, the loan is refinanced or the borrower
defaults on a scheduled payment.
A company that provides home loans using its own money.
The loans are usually sold to investors such as insurance
companies and Fannie Mae.
A company that matches lenders with prospective borrowers
who meet the lender's criteria. The mortgage broker does
not make the loan, but receives payment from the lender
Required by lenders in some loans to protect them from a
possible default . All conventional loans with less than
a 20 percent down payments require private mortgage insurance,
The tax write-off that the Internal Revenue Service allows
most owners to claim for the annual interest payments they
make on their real estate loans.
Mortgage life insurance
A special type of insurance that will pay off a mortgage
if the borrower dies before the debt is retired.
Any buyer with a strong incentive to make a purchase.
Any seller with a strong incentive to make a deal.
A house that is ready for a new occupant.
A buyer who has purchased a home before and is looking for
a bigger or more expensive home.
A vertical dividing bar between window lights or panels.
A property that contains individual units for several households
but carries only one mortgage.
A mortgage on a multifamily dwelling with more than four
families, typically an apartment building.
Multiple Listing Service
(MLS) The National Association of Realtor's (NAR)
Database of Real Estate transaction information. The MLS
combines the listings for all Properties listed by Realtors
in one Database. The MLS has information on all Active,
Pending, Closed, Cancelled & Expired listings. It also contains
all Property Tax, & Owner information.
Multiple purchase offers occur in hot markets or hot neighborhoods.
Municipal housing inspector
Inspectors employed by cities or counties to check all construction
sites and verify that contractors are meeting building codes.
Nails in load-bearing parts of new homes that pop out slightly
because of settling of the structure.
A seller's asking price that is based on factors such as
the required funds to pay off the mortgage, the cost of
remodeling or the purchase of another house.
The situation occurs when a borrower's monthly payment is
not large enough to cover both the principal and interest
of a loan. As a result, the outstanding balance of the loan
actually grows larger with each payment rather than smaller.
Most fixed-rate loans are not subject to negative amortization,
but many adjustable-rate mortgages are susceptible.
A driveway that drops from street level to the garage.
Planning of a community that favors the return of new-home
development with such traditional features as grid-street
patterns, prominent front porches, backyard garages, multi-use
buildings and housing clustered near commercial service
Net cash flow
Investment property that generates income after expenses
such as principal, interest, taxes and insurance are subtracted.
The worth of a person or company based on the difference
between total assets and liabilities.
A community design philosophy that favors the return of
new-home development with such traditional features as prominent
front porches, backyard garages, multi-use buildings and
housing clustered near commercial service areas.
A small recessed area in a wall, traditionally arched at
NIMBY (Not In My Back
Yard) The response sometimes given by neighborhoods
and communities to proposed changes or development.
No cash-out refinance
The amount of the new mortgage covers the remaining balance
of the first loan, closing costs, any liens and cash no
more than 1 percent of the principal on the new loan.
A lot in which the buyer's home will be constructed by a
A loan application that does not require verification of
income but typically is granted in cases of large down payments.
A loan provision that prohibits the transfer of a mortgage
to another borrower without lender approval.
An asset such as a house that is not easily turned into
costs Costs that are one-time only fees
for such items as an appraisal, loan points, credit report,
title insurance and a home inspection.
legal document that requires a borrower to repay a mortgage
at a certain interest rate over a specified period of time.
The interest rate specified in a mortgage note.
Notice of default
A lender's initial action when a mortgage payment is late
and attempts to reconcile the issue out of court have failed.
Online real estate listings
Properties listed for sale on the Internet.
A marketing tool in which a listing agent opens a house
A property given to a number of brokers to market at the
Undeveloped land or common areas in a planned community
reserved for parks, walking paths or other natural uses.
A situation in which a buyer puts down money for the right
to purchase a piece of real estate within a set time period
but does not have an obligation to buy.
Contractual arrangements that are not in writing and are
usually not legally binding.
Original principal balance
The amount of principal owed on a loan before a borrower
makes any payments.
A fee charged by most lenders--also called points--for processing
a loan. A point is 1 percent of the total loan amount.
A protruding structural feature.
A transaction in which the seller of a property agrees to
finance all or part of the purchase.
An officially described piece of land.
An interior wall.
There are several partnership options for unmarried individuals
to buy a piece of property, such as live-in partnerships
(in which both buyers share the residence) or a shared-equity
partnership (in which one buyer lives in the home and the
other is an investor in the property).
A tax term that refers to any loss from a passive activity,
such as the ownership but not the operation of a piece of
rental real estate.
Passive solar system
A system that supplies solar heat without the use of electric
fans or pumps.
A visible deficiency in a piece of property, such as a cracked
basement slab or a sagging porch.
A legal limit on the amount a monthly payment can increase
on an adjustable-rate mortgage.
A test used to determine the ability of soil to accommodate
a septic system.
Interest charged or accrued daily.
A section or division of a wall, ceiling or a flat piece
of building material that forms the part of the surface
of a wall, door or cabinet.
Strips of wood or wood material applied as a finish to a
The strip of grass between the sidewalk and the street in
front of a house.
Any kind of structure dividing one room or space from another.
An interior courtyard or a paved backyard area.
Any plant that produces leaves, flowers and seeds from year
to year, such as irises or peonies.
An arbor with an open roof of rafters supported by posts
Any moveable property in a house such as furniture or appliances.
A common pest-control inspection is a termite inspection,
which is required in some states, such as California.
rectangular masonry support column.
PITI (Principal, Interest,
Taxes, Insurance) When a buyer applies for
a loan, the lender will calculate the principal, interest,
taxes and insurance. The figure is designed to represent
the borrower's actual monthly mortgage-related expenses.
The concept began in the 19th century and describes any
town or neighborhood built with certain guidelines and goals.
Residents own the home and the land, and share the use and
financial responsibility for common areas.
A labor-intensive and more costly wall finish.
A sliding door that retreats into the wall when opened.
Fees charged by lenders at the time a loan is originated.
A point is equal to 1 percent of the total loan amount.
The structure can be a simple covered entrance to a home
or a fully enclosed room on the outside of a residence.
A porch-like roof extending over a driveway.
A lender who makes loans with its own funds and keeps the
loans on the company's books--in other words, inside the
institution's "portfolio"--rather than selling the loan
on the secondary market.
A porch supported by a row of columns.
When a buyer signs the papers and receives the keys to the
house, the buyer officially takes possession.
Power of attorney
A document that authorizes an individual to act on behalf
of someone else.
A letter from a lender that informs a seller about the amount
of money that a potential buyer can obtain.
The costs for taxes, insurance and assessments paid before
the due date.
Interest paid before it is due. For example, at the close
of a real estate transaction borrowers usually pay for the
interest on their loan that falls between the closing period
and the first monthly payment.
Lenders can impose a penalty on a borrower who pays a loan
off before its expected end date.
Many lenders will prequalify a borrower who is shopping
for a loan by completing a preliminary assessment of the
buyer's ability to pay for a home.
Homes that are sold before they are built.
Pressure relief valve
A safety vent that relieves excess pressure in a water heater.
The range of how much a buyer is willing to pay for a home.
The initial coat of paint that is applied before the final
The amount of money that the borrower owes on a mortgage.
Principle of conformity
The idea that a house will more likely appreciate in value
if its size, age, condition and style are similar to, or
conform to, other houses in the neighborhood.
Principle of progression
An appraisal term which states that real estate of lower
value is enhanced by the proximity of higher-end properties.
Principle of regression
An appraisal term which states that the value of higher-end
real estate can be brought down by the proximity of too
many lower-end properties.
A structure erected between two pieces of property.
Private mortgage insurance
(PMI) A special type of loan insurance that
many lenders require borrowers to purchase if the borrower's
down payment is less than 20 percent of the home's purchase
A real estate sale triggered by the death of the owner,
with proceeds to be divided among heirs or creditors.
Homes that are mass-produced by one builder in a project.
A written summation by an architect of a project's design
objectives, constraints and criteria.
A fiscal outline that includes the construction budget and
all costs for land, furniture, equipment, financing, professional
services, contingencies and owner-furnished goods and services.
The official dividing line between properties.
A disclosure issued by the state when a time-share project
is located or sold.
Property taxes are calculated at about 1.5 percent of the
current market value.
Property tax deduction
The U.S. tax code allows homeowners to deduct the amount
they have paid in property taxes.
The value of a piece of property is based on the price a
buyer will pay at a certain time.
Agreed-upon percentages of certain expenses associated with
a piece of property that must be paid by the buyer or the
seller at the time of closing.
Buyers compile a punch list during the final walk-through
detailing items to be fixed before closing.
A document which details the purchase price and conditions
of the transaction.
A mortgage that a borrower obtains to acquire a property.
Lenders compute qualifying ratios to determine how much
a potential buyer can borrow.
Queen Anne style
A Victorian-era style that originated in San Francisco.
A document that releases a party from any interest in a
piece of real estate.
A construction term that refers to the resistance of to
heat loss. The higher the R-value, the slower the rate of
A ground-generated radioactive gas that seeps into some
homes through sump pumps, cracks in the foundation and other
inlets. A leading cause of lung cancer , radon is found
in mostly the northern half of the country.
Rafters form the slope of a pitched roof and are analogous
to floor joists.
An alternative building process in which dirt is compacted
into large structural frames to create walls.
Modern ranch-style homes, popularized in the 1950s, were
championed by such architectural giants as Frank Lloyd Wright.
A loan with a clause that entitles a borrower to a one-time
cut in the interest rate without going through refinancing.
When interest rates are volatile, many borrowers want to
"lock in" an interest rate and many lenders will oblige,
setting a limit on the amount of time the guaranteed interest
rate is in effect.
Land and anything permanently affixed to it, including buildings,
fences and other items attached to the structure.
Real estate agent
A real estate agent has a state license to represent a buyer
or a seller in a real estate transaction in exchange for
a commission. Most agents work for real estate brokers.
Real estate attorney
A lawyers who specializes in real estate transactions.
Real estate broker
A real estate agent who is licensed by the state to represent
a buyer or seller in a real estate transaction in exchange
for a commission. Most brokers also have agents working
for them, and are entitled to a portion of their commissions.
Real estate investment
trusts (REITs) The trusts are publicly traded
companies that own, develop and operate commercial properties.
Real Estate Settlement
Procedures Act (RESPA) A federal law designed
to make sellers and buyers aware of settlement fees and
other transaction-related costs. RESPA also outlaws kickbacks
in the real estate business.
Land and any permanent fixtures on it, including buildings,
trees and minerals.
A designation for an agent or broker who is a member of
the National Association of Real Estate Brokers.
A designation for an agent or broker who is a member of
the National Association of Realtors.
The cancellation of a contract by law or consent by the
When a borrower completely pays off the mortgage, the property
is reconveyed to them from the lender.
A public official responsible for keeping the records of
all real estate transactions.
The filing of a specific document to the appropriate government
A fee charged by real estate agents for conveying the sale
of a piece of property into the public record.
The practice by a bank or insurance company to deny credit
or insurance to people based on ethnic background or neighborhood.
The process of replacing an older loan with a new mortgage
that has better terms.
The federal code issued under the Truth-in-Lending Act which
requires that a borrower be advised in writing of all costs
associated with the credit portion of a financial transaction.
A mortgage that provides for the costs of repairing and
improving a resale home or building.
Benefits provided by employers for new workers and can include
moving costs, reimbursement for temporary housing and transportation,
real estate agent assistance and discounted loans.
A firm that administers all aspects of moving in new employees
to the community.
The amount of unpaid principal on a home loan.
The original loan term minus the number of payments made.
A policy that covers the replacement value of possessions.
Rent loss insurance
A policy that covers any loss of rent or rental value in
the event of fire or other damage that renders the property
When a borrower falls behind in mortgage payments, many
lenders will negotiate a repayment plan rather than go to
Replacement reserve fund
Money that is set aside from homeowners' assessments to
replace common property, such as furniture in a planned
development's community room.
When a house is repossessed, it is taken back by the lender
holding the mortgage.
The future value of a piece of property that can be affected
by many factors, including the surrounding neighborhood,
school scores, and economic and housing market conditions.
All homeowners associations set aside a certain amount of
money for major repairs or improvements.
A mortgage in which new terms are negotiated.
Return on investment
The amount of profit a property generates.
A special type of loan available to equity-rich, older owners.
Repayment is not necessary until the borrower sells the
property or moves into a retirement community.
A horizontal board that serves as the apex of the roof structure.
A vent located along the ridge board of the roof that allows
moisture to escape.
Right of first refusal
An agreement by a property owner to give another person
the right to buy or rent the property before it goes on
the open market.
Right to recission
A provision in the federal Truth-in-Lending Act that allows
borrowers to cancel certain kinds of loans within three
days of signing.
The installation of plumbing, electrical and other mechanical
Rural Housing Service
A U.S. Department of Agriculture program that provides financing
to farmers and certain borrowers to purchase rural property
when other funds are not available.
A transaction in which the buyer leases back the property
to the seller for a specified period of time.
A contract signed by the buyer and seller that details the
terms of a home purchase.
A design that dates to colonial times and takes its name
from the shape of saltboxes.
The drain line in a house that carries away food and human
wastewater to a municipal sewer system or a septic system.
of two windows in a double-hung window.
Renderings of floor plans and the exterior of a house.
Another loan placed upon a piece of property.
Secondary mortgage market
A market of packaged home loans that are resold as securities
to investors. Major players are Fannie Mae and Freddie Mac.
Any loan backed by collateral.
Apiece of property designated as collateral.
A seller broker represents the interest of the seller.
An agreement in which the seller provides financing for
a home purchase.
An agreement in which the seller provides financing for
a home purchase.
A hot real estate market in which sellers have the advantage
and multiple offers are common.
The buyer of a semi-custom home is free to make some design
changes but not to the home's structural plan.
A self-contained sewage treatment system that distributes
wastewater to an underground storage area and relies on
bacterial action to decompose solid waste matter.
A firm that collects mortgage payments and manages borrowers'
The minimum distance a house or buildings must be from the
A document that details who has paid what to whom.
A loan that allows a lender or other party to share in the
borrower's profits when the home is sold.
A transaction in which two buyers purchase a property, one
as a resident co-owner and the other as an investor co-owner.
A shed ceiling pitches upward at one end.
A shed roof pitches up longer on one side than the other.
An alternative style of Victorian homes that evolved in
the late 19th century to simplify the complexity of the
traditional Victorian house.
Thin, wedge-shaped pieces of wood or flat rectangular pieces
of slate, mineral fiber, glass fiber or composition asphalt
installed on a roof to prevent water seepage.
An unobtrusive finish trim between the floor and the baseboard
designed to hide any irregularities in the seam between
the floor and wall or baseboard.
A horizontal piece of wood placed on top of the foundation.
An exterior threaded faucet connection for garden hoses
that provides water outside a home.
A window in a roof that allows natural light to illuminate
A foundation built directly on soil with no basement or
A window that is composed of two windows, or sashes, that
glide open and closed on a metal track.
An external area under the overhang of a roof.
A test of the subsoil to ensure that foundations can be
Spanish Mission style
A design that is derived from the original missions established
by the Spanish in the Southwest.
When a homeowners' association needs or wants extra funds,
it levies a special assessment upon the owners.
Special deposit account
Rehabilitation mortgages require a special deposit account
from which restoration and remodeling funds included in
the loan are disbursed to the appropriate contractors as
work is completed.
The written requirements for materials, equipment, construction
systems and standards.
A home that has been built without a buyer.
A slanted block used to divert runoff water from a downspout
away from the foundation.
A home that is a ranch-style house stacked to fit on a smaller
lot and perhaps to accommodate a garage.
The number of square feet of livable space in a home or
Statistical Area Areas designated by the
U.S. Office of Management and Budget that contain a city
of 50,000 or more.
Standard payment calculation
A calculation that is used to determine the monthly payment
necessary to repay the balance of a home loan in equal installments.
Homes that fall within the lower price range of a typical
A construction method used by commercial and residential
A loan that allows a gradual increase in the interest rate
during the first few years of the loan.
A drain line, which is not connected to the sewer line,
removes all other wastewater from a home.
Sets of windows and screens that are installed on older
The metal part of a lock that is anchored to the doorframe
and holds the door closed.
A transaction in which the buyer gives a new-home builder
a deposit to begin building and the balance when the sale
of the house closes.
A mixture of sand and cement used to cover the exterior
surface or interior walls of a home or building.
The upright pieces of lumber or steel in a wall to which
panels, siding, drywall or other coverings are attached.
When an agent brings a buyer to a property, they in effect
act as a subagent to the listing agent.
Specialty construction companies hired by the general contractor
to perform certain tasks.
The process in which the owner of a large piece of property
divides it into smaller parcels.
The sheathing, usually made of plywood, placed on top of
floor joists and covered by flooring.
A second or third mortgage.
A pump that moves water from a basement sump pit.
A precise measurement of a piece of property by a licensed
The non-cash value put into a piece of property by the owner,
such as do-it-yourself home improvements.
Most companies charge a tap fee for hooking up utilities.
A tax break given by the government. Mortgage interest,
loan points and property taxes can be deducted.
An impediment placed against a property, such as back taxes.
The public sale of a property by the government for nonpayment
A term often applied to real estate investment and refers
to various tax advantages.
A house that requires the entire interior to be rebuilt.
An low, short-term rate offered on a mortgage to entice
Tenancy by the entirety
When a married couple owns a home, it is usually considered
tenancy by the entirety If the property must be sold to
pay the debts of one spouse, both must agree.
Tenants in common
Two or more owners who share interest in a specific property.
A terrace can be several things: an unroofed paved area
right next to a house; a roofed balcony; a veranda; or a
raised bed of earth constructed to enhance a landscape.
The 72-hour clause
When a buyer has a house to sell before they can purchase
another home, most sellers insist on a 72-hour clause. In
the event of a better offer coming in before the contingency
is settled, this clause entitles the seller to give the
buyer 72 hours to remove the contingency or lose the house.
In a third-party origination transaction, the lender has
another institution originate all or part of a mortgage.
Ownership that involves the acquisition of a specific period
of time, or that percentage of interest, in a vacation home
The actual legal document conferring ownership of a piece
of real estate.
Firms that ensure that the title to a piece of property
is clear and provide title insurance.
A policy issued to lenders and buyers to protect any losses
because of a dispute over the ownership of a piece of property.
Possible impediments to the transfer of a title from one
owner to another.
A check of public title records to ascertain that the seller
is the legal owner and that there are no claims or liens
against the property.
A real state industry term that refers to agents and brokers
who sell a high volume of homes.
The top layer of soil that is removed when lots are graded
in preparation for construction.
Total expense ratio
The percentage of monthly debt obligations relative to gross
An attached home that is not a condominium.
Another term for a production home, a mass-produced house
constructed by one builder in a project.
Other real estate or assets a buyer gives to a seller as
part of the down payment.
A reference to buyers who purchase a home that is less expensive
than their current house.
A reference to buyers who purchase a home that is more expensive
home than their current house.
Transfer of ownership
Any legal means by which a piece of real estate changes
An assessment by state or local authorities at the time
a piece of property changes hands.
A small hinged window directly above a door.
Trans-Union Corp. is one of the "Big Three" credit-reporting
bureaus that operate nationwide. Address: 760 Sproul Road,
P.O. Box 390, Springfield, PA 19064-0390. Phone: (312) 408-1400.
A tray ceiling has edges that slant toward the middle from
Securities issued by the Treasury Department that have the
full backing of the U.S. government.
An index used to determine interest rate changes for adjustable
A decorative landscape structure made of thin strips of
wood or plastic.
The finishing of doors, doorways, window frames and floors.
A prefabricated framework of girders, struts and other items
used to support a roof or other load-bearing elements.
Special accounts used by brokers and escrow agents to safeguard
funds for a buyer or seller.
A legally empowered person who holds or controls a piece
of property for another person.
A federal law that protects consumers in a variety of ways.
One of its key provisions allows a consumer to cancel a
home-improvement loan, second mortgage or other loan if
the home was pledged as security (except for a first mortgage
or first trust deed) until midnight of the third business
day after the contract was signed.
The process of removing old mortar from between bricks and
replacing it with new mortar.
An adjustable mortgage with two interest rates, one for
the first five or seven years of the loan, and the other
for the remainder of the loan term.
Two- to four-family property
A piece of property that is owned by one person but provides
housing for up to four households.
A layer of wood between the subfloor and the floor.
The process that lenders go through to evaluate the risks
posed by a particular borrower and to set appropriate conditions
for the loan.
A person who claims the right to a piece of property after
the death of an owner without a will.
An unidentified marital partner who can claim the right
to a piece of property.
An unrecorded deed transfers ownership from one party to
another without being officially recorded.
U.S. Department. of Housing
and Urban Development (HUD) A federal agency
that oversees the Federal Housing Administration and a variety
of housing and community development programs.
Any loan that is not backed by collateral.
Options than the standard carpeting, lighting, finish carpentry
and other amenities offered to all buyers in a new-home
The process in which a property is zoned from a lower to
a higher use.
The unplanned expansion of development over a large area.
A reference to illegally excessive interest charged on any
Variable interest rate
A loan rate that moves up and down based on factors including
changes in the rate paid on bank certificates of deposit
or Treasury bills.
Variable rate mortgage
A loan with an interest rate that hinges on factors such
as the rate paid on bank certificates and Treasury bills.
An interest rate that changes with fluctuations in such
indexes as the U.S. Treasury bill index.
An elongated half-cylinder that arches above the floor.
Verification of deposit
Part of the loan process, in which a lender will ask a borrower's
bank to sign a statement verifying the borrower's account
balances and history.
Verification of employment
Part of the loan process, in which a lender asks the borrower's
employer for confirmation of the borrower's position and
A small entrance hall or room.
(VA) The U.S. Department of Veterans Affairs
operates a variety of programs to help veterans. One of
the key plans it oversees is the VA loan program, which
allows most veterans to purchase a house without a down
An architectural style that dates from the mid-19th century.
Wood windows sheathed in vinyl on the outside.
A lien that a homeowner willingly gives to a lender.
A program that allows most veterans to purchase a house
without a down payment.
Wood paneling, tongue-and-groove boards or similar material
installed between a baseboard and a chair rail.
A voluntary relinquishing of certain rights or claims.
A feature that allows a door to open onto ground level.
A buyer's final inspection of the home to determine if conditions
in the purchase agreement have been satisfied.
A legally binding promise to do something in the future.
Watery areas such as swamps, marshes and floodplains.
An improperly recorded deed.
most basic legal document outlining the disposition of a
person's estate in the event of death.
An individual pane of glass.
A bench built under an interior window.
A curved, corrugated steel insert used to isolate basement
windows from moisture if they're below the soil line.
Window well covers
Curved plastic covers designed to be installed on top of
a window well to cover the opening.
A loan to a buyer for the remaining balance on a seller's
first mortgage and an additional amount requested by the
seller. Payments on both loans are made to the lender who
holds the wraparound loan.
Houses built without space between them and with little
or no yard.
Regulations that control the use of land within a jurisdiction..
A one-time modification of existing zoning law.
Revised:July 27, 2010 .
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