Glossary


Glossary

Adjustable-Rate Mortgage (ARM): A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
American Land Title Association (ALTA) Policy: A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.
Amortized Loan: A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.
Appraisal: An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
Appreciation: An increase in the worth of value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
Broker: A real estate broker is a person licensed to carry out real estate transactions and receive a fee for these activities.
Building Code: An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
Building Permit: Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances.
Closing: The occasion when a sale is finalized and the ownership of the property is transferred.
Closing Costs: Expenses, other than the price of the property, incurred by buyers and sellers in transferring ownership of a property.
Closing Statement/HUD Statement: A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Comparables: Properties used in an appraisal report that are substantially equivalent to the subject property.
Competitive Market Analysis (CMA): A comparison of the prices of recently sold homes that are similar to a seller’s home in terms of location, style and amenities.
Contingency: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes legally binding.
Conventional Loan: A loan that requires no insurance or guarantee.
Counteroffer: A new offer made in response to an offer received. It has the effect of rejecting the original offer which cannot be accepted thereafter unless revived by the offeror.
Deed: A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
Deed Restrictions: Clauses in a deed limiting the future uses of the property.
Earnest Money:Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
Easement:A right to use the land of another for a specific purpose, such as for a right-of-way or utilities.
Encroachment:A building, or some portion of it, that extends beyond the land of the owner and illegally intrudes on land of an adjoining owner, street, or alley.
Encumbrance:Anything that may diminish the value or use and enjoyment of a property.
Equity:The interest or value that an owner has in property over and above any indebtedness.
Fair Housing Act:The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.
Home Equity Loan:A loan under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.
Improvement:(1) Any structure, usually privately owned, erected on a site to enhance the value of a property, (2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street, or sewer.
Limited Agency:Representing both parties to a transaction. This is illegal unless both parties agree to it.
Loan-to-Value Ratio: The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
Market Value:The most probable price property would bring in an arm’s-length transaction under normal conditions on the open market.
Mortgage:A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Multiple Listing Service (MLS):A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own.
Nonconforming Use:A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
Occupancy Permit:A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
Prepayment Penalty:A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
Private Mortgage Insurance (PMI): Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure or deficiency.
Prorations: Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at closing.
REALTOR®: Only members of the National Association of REALTORS® use the term REALTOR®.
Restrictive Covenants: A clause in a deed that limits the way the real estate ownership may be used.
Setback:The amount of space local zoning regulations require between a lot line and a building line.
Survey:The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements. Surveys prepared from public records are called location surveys. Surveys prepared on-site by a professional surveyor are called stake surveys.
Title:(1) The right to or ownership of land. (2) The evidence of ownership of land.
Title Insurance: A policy insuring the owner or borrower against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.
Variance:Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception to the zoning ordinances.