stipulation in a mortgage agreement that allows the lender to demand immediate payment of the entire loan balance if any scheduled payment is missed
unlike a traditional fixed-rate loan, an adjustable-rate mortgage begins at a set interest rate and, following a defined term, periodically changes based on prevailing market rates. Falling interest rates benefit homeowners; rising rates benefit lenders. Most changes in ARM interest rates are linked to indexes such as the London Interbank Offered Rate (LIBOR). Often the mortgage contains a cap above which the interest rate cannot reset. ARMS are attractive to borrowers because they typically offer lower initial monthly payments
pay a debt in monthly or other periodic installments until the total amount, along with the interest, if any, is paid
loan payments are split between interest and principal. During the life of the loan, the portion applied to interest declines and to principal increases. The loan is paid off, or amortized, when the principal balance is zero
the total cost of credit, including one-time fees, is known as the annual percentage rate of a loan. It can be considered the effective, or true, annual interest rate for a borrower and is used to standardize how rates are expressed and to compare loan options. Lenders are required to disclose the APR before the loan is finalized
written assessment of a property’s fair market value. A professional appraiser, who may work independently or with a lender, bases the appraisal primarily on an analysis of comparable sales of similar real estate in the neighborhood
the increase in property value or worth caused by changes in the real estate market, inflation or other factors; the opposite of depreciation
whatever is annexed to land or used with it that will pass to the buyer with conveyance of title, such as a garage or fence
said of property offered for sale in its present condition with no guarantees as to quality and no promise of repair or fix-up by the seller; property is purchased in exactly the condition in which it is found
a value placed on a property by an agency of the government for taxation and other purposes
tax or charge levied on real estate by a taxing authority to pay for local improvements such as sidewalks, streets and sewers
a loan that can be taken over by the buyer. This is an alternative to the traditional method of a buyer obtaining a mortgage directly from a lender
the proprietary analytical process from which the Cyberhomes™ real estate valuation estimates are derived. The Cyberhomes AVM combines sales history, comparable real estate data, any available proprietary appraisal information and certain economic factors to determine market conditions and their impact on home values. The value is reported as a price range rather than a dollar figure. Appraisers and lending institutions increasingly use AVMs to calculate probable selling value of residential real estate. A Cyberhomes™ valuation estimate produced by the AVM is not the same as an appraisal report of the market value of the subject real estate prepared by a licensed professional appraiser
unlike a traditional mortgage, a balloon mortgage leaves a balance remaining at the end of the loan term. At that time the borrower must pay the balance — called a balloon payment — refinance or convert to a traditional loan at current interest rates. Balloon mortgages are generally five to seven years in duration and often carry lower interest rates
short purchase contract used in some areas to secure a real estate transaction until a more formal contract can be signed at a later date; usually accompanied by an earnest money deposit
single mortgage that covers more than one real property, i.e. a house plus the vacant lot next door
also known as a swing loan or interim financing, a bridge loan is a short-term loan used until permanent financing is secured. Bridge loans can be used for up to one year and carry relatively high interest rates. A bridge loan might be used, for instance, to purchase new real estate when the homebuyer hasn’t yet sold his or her current dwelling
illegal practice of creating panic selling in a neighborhood for financial gain. Typically exploits racial and religious bias to get homeowners to sell low so the real estate can be resold at a markup
when one party fails to live up to the terms and conditions of a contract, without a valid, legal excuse
experienced real estate agents can become licensed as real estate brokers (also known as “principal” or “qualifying” brokers) so they can manage or own their own brokerage. Brokers usually must pass a state exam on real estate law to qualify
written statement by a builder assuring that a dwelling was completed according to a stipulated set of standards. It protects the buyer from any latent defects
minimum construction standards set by state or local laws for public safety and health. It includes the design, construction, repair and quality of building materials, as well as the use and occupancy of structures
a seller can assist a buyer in qualifying for a mortgage and securing a lower interest rate by making payments to the lender for the first several years of the loan. The buyer benefits by having lower monthly payments initially; the seller will increase the price of the real estate to offset the buy-down costs. Commonly used by builders to sell new homes
describes an excess supply of real estate for sale, in which there are few buyers and many sellers. In such a market, the buyer can typically negotiate more favorable prices and terms
stipulation in a contract that allows a buyer or seller to cancel the contract in the event of a certain specified occurrence
a Latin term for “Let the buyer beware.” Under this legal phrase, the buyer is expected to judge and evaluate property carefully before buying, or purchase at their own risk
stands for covenants, conditions and restrictions. They are the rules and terms by which a property owner in a condominium agrees to abide
during a closing, buyer and seller execute their purchase contract; property ownership is transferred to the buyer. Closing is the final step in a real estate transaction and usually occurs several weeks or a month after a purchase offer is accepted. The buyer provides payment; the seller signs over the deed to the buyer and receives payment for the proceeds of the sale; the new deed is registered by the title company or lawyer. In some parts of the United States, closing is known as settlement
expenses over and above the price of the real estate that must be paid by buyers and sellers before title is transferred. Also known as settlement costs
written account of all expenses, adjustments and disbursements received by the buyer and seller when completing a real estate transaction
defect in the title that impairs the owner’s ability to market the property. This might be a lien, claim, judgment or encumbrance
something of value given or pledged to a lender as security for the repayment of a loan
mixing of a clients’ funds, or escrow, with an agent’s personal funds in an account; considered to be grounds for the suspension or revocation of the broker’s real estate license
the sales commission from a real estate transaction, usually a percentage of the sales price, divided in some fashion among the buyer’s agent, the seller’s agent and the broker. The percentage of the sales price typically applied as commission varies by region and can be negotiated by the consumer. Usually paid at the closing
parts of a condominium, cooperative or private home association shared by all residents, so that each unit owner holds an undivided interest in, for example, the hallways, parking facilities or swimming pool
properties similar to a specific piece of real estate that are used to help estimate the value of that real estate. Also referred to as “comps”
an estimate of the value of real estate using indicators taken from sales of comparable properties, such as price per square foot, combined with expert market commentary and information on the importance of marketing a home properly. A CMA is not the same as an appraisal report of the market value of the subject property prepared by a licensed professional appraiser
type of housing where buyers own their units outright, plus an undivided share, or joint ownership, in the common elements of the building or community
something of value, usually money, given to induce another to enter into a contract
type of loan where money is doled out as construction takes place; borrower must obtain a permanent long-term mortgage from another source to repay the construction loan. Also called an interim loan
a provision in a contract that keeps it from becoming binding until a certain event happens. A satisfactory inspection report might be a contingency
a legally enforceable agreement between two or more parties. To be valid, a real estate contract must be dated, in writing, include a consideration, have a description of the property, the place and date of delivery of the deed, and spell out all terms and conditions that were mutually agreed upon. It also must be executed (signed) by the buyer and seller
one who contracts to do something for another. For example, in construction, a specialist who enters into a formal construction contract to build a real estate structure or handle renovations, improvements and additions to an existing structure
land and building owned or leased by a corporation, which in turn leases space to its shareholders, who are also part owners of the building and have a proprietary lease. In lieu of rent, they each pay a proportionate monthly or quarterly fixed rate to cover operating costs, mortgage payments, taxes, etc.
an offer made in response to an earlier, unacceptable one; it terminates the original offer
document resembling a mortgage that conveys legal title to a neutral third party as security for a debt. Also called a trust deed or deed in trust.
provisions placed in deeds to control how future landowners may or may not use the property. Also called deed covenants.
breach of a contract’s terms or failure to meet a legal obligation. Nonpayment of a mortgage beyond a certain number of payments is considered a default
judgment issued against a borrower when the sale of foreclosed property does not bring in enough to pay the balance owed on the mortgage
gradual decline on paper in market value of real estate, especially because of age, obsolescence, wear and tear, or economic conditions.
full-service broker who charges less than the prevailing commission rates in his or her community.
added loan fee charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest loans.
money that accompanies an offer to purchase as evidence of good faith. It is almost always a personal check, certified check, or money order rather than cash
limited right to cross or use for some specified purpose the property of another. It may be permanent or temporary. Water, sewage, and utility suppliers frequently hold an easement across private property.
the right or power of government to acquire private property for public use without the consent of the owner, provided fair compensation is provided.
a building or other improvement that extends beyond its boundary and intrudes upon the property of another
any impediment to a clear title. It can be a claim, lien, zoning restriction, or other legal right or interest in land that diminishes its value. The report of the title search usually shows all encumbrances.
value an owner has in a piece of property less the debt against it. For example, if the market value of a house is $150,000 and the owner has paid off $10,000 of a $75,000 mortgage, the owner has $85,000 equity
reversion of property to the state when the owner dies without leaving a will and has no heirs to whom the property may pass.
most commonly refers to a deposit held in trust pending the successful completion of a transaction, e.g. a home purchase, as well as money held by a mortgage company to pay for a homeowner’s property tax and insurance. Any cash or other asset held by a neutral third party is considered escrow.
special bank account into which escrow monies are deposited and from which they are disbursed. Lawyers and real estate brokers maintain escrow accounts to hold money in trust for others.
listing where the owner reserves the right to sell his property himself, but also agrees to list with no other broker during the listing period besides the appointed real estate broker
the highest price that a willing buyer would pay, and the lowest price a willing seller would accept.
common name for the Federal National Mortgage Association, which buys and sells loans in the secondary mortgage market.
ownership of real property that is to be used and/or sold at the owner’s discretion.
acronym for Federal Housing Authority, an agency created within the Department of Housing and Urban Development that insures mortgages on residential real estate, with downpayment requirements usually lower than prevailing ones.
person acting in a position of trust, responsibility and confidence for another, such as a real estate broker for his client.
mortgage on a property that is superior to any other. It is the first to be paid in the event of foreclosure.
any personal property that has been permanently attached to real property and therefore included in the transfer of real estate. The kitchen sink is a fixture.
legal action instigated by a lender to end all ownership rights when mortgage payments have not been kept up (known as defaulting). The owner’s right to the property is terminated, and ownership of the property transfers to the institution, which then usually sells it at public auction and applies the proceeds to the mortgage debt.
process whereby private or government-sponsored development of certain aging neighborhoods results in the displacement of low- or moderate-income families by the more affluent and leads to an increase in property values.
specified period of time to meet a commitment after it becomes due, without penalty or default. For example, most lenders allow a two-week grace period after the due date of the mortgage payment before a late fee is imposed.
mortgage loan for which the initial payments are low but increase over the life of the loan.
use of land that is most logical and productive. Refers to the greatest income it can bring the owner, as well as factors such aesthetics and benefits to the surrounding community
buildings of historical or architectural significance, perhaps landmarks, that are designated by federal, state or local historical commissions
packaged insurance policy for homeowners and tenants that cover property damage and public liability, such as fire, theft and personal liability
state and federal laws that protect against the forced sale of a person’s home by creditors. Also, upon the death of one spouse, provides the other with a home for life
local regulations that set minimum conditions under which dwellings are considered fit for human habitation. It guards against unsanitary or unsafe conditions and overcrowding
any form of land development or man-made addition, such as the erection of a building or fence, to enhance the value of private property; also an improvement to publicly owned structures, such as a sewer or road
the act of physically examining and testing a piece of property to ascertain certain information
periodic payment, usually monthly, of interest and principal on a mortgage or other loan
these websites allow homebuyers to search for information on available real estate in a market. Usually the information is more limited than what the searcher could find through the Multiple Listing Service (MLS). Rules about what information can and cannot be displayed by the IDX are set by the local MLS organization
property owned by two or more persons with equal and undivided interest and ownership and the right of survivorship. If one owner dies, the property automatically passes to the others
court decree stating that one person is indebted to another. Also specifies the amount of the debt
contract that conveys the right to use property for a period of time in return for a consideration, usually rent, paid to the property owner
opportunity to purchase a piece of property by renting for a specified period, with the provision that the lessee may choose to buy after or during the leasing period at a predetermined sale price
refers to the institution making the loan or to the individual representing the lending institution
a privilege or right granted to a person by a state to operate as a real estate broker or salesperson
a person licensed by the state to engage in real estate brokerage, either as a broker or as a salesperson
a debt on a property which encumbers it until the obligation is paid; a mortgage, back taxes or other claim
contract used for hiring a real estate agent to sell real estate. Also a piece of property that is for sale
paid by the borrower to get a loan; it covers expenses incurred by the lender, such as the cost of the appraisal, credit report, title search, etc.
task of collecting monthly payments, handling insurance and tax impounds, delinquencies, early payoffs and mortgage releases.
the ratio between the amount of a mortgage and the appraised value of a property is the loan-to-value ratio. For instance, a $200,000 mortgage on a $275,000 home equates to an LTV of 73 percent. The higher the percentage, the riskier the loan; the lower the percentage, the more equity a homeowner has in the property. Lenders examine this ratio before approving a loan and may require a borrower to purchase mortgage insurance or charge more for the mortgage if the ratio is above 80 percent
paid by a condominium unit owner to the owners’ association for upkeep of the common areas
generally accepted as the highest price that a ready, willing and able buyer will pay and the lowest price a ready, willing and able seller will accept for a property
good and clear title that is free from reasonable doubt as to who the owner is
long-range, comprehensive guide for the physical growth or development of a community
date on which principal and interest on a mortgage or other loan must be paid in full
individual or company that brings borrowers and lenders together; a loan broker
financial intermediary that offers mortgages to borrowers, and then resells them to various lending institutions, government agencies, or private investors
party or person that borrows money, giving a lien on the property as security for the loan; the borrower
a local or regional service that compiles available real estate for sale by member brokers. Detailed information about properties is provided to brokers, agents and the public, generally online. Local MLS organizations have their own rules and systems for providing listing information
U.S. trade organization for real estate agents that was founded in 1908 and today has about 1.3 million members, including residential and commercial real estate agents, brokers, property managers and appraisers. Realtors are real estate agents who are members of NAR and subscribe to a code of ethics. The association conducts professional development, research and outreach activities.
lease with terms requiring the tenant to pay all the costs incurred in maintaining a property, including taxes, insurance, repairs and other expenses normally required of the owner
listing that gives a broker a nonexclusive right to find a buyer; the owner can still find a buyer himself and avoid a commission
the exclusive right to purchase or lease a property at a predetermined price or rent at some future time
acronym for “principal, interest, taxes, and insurance.” Frequently used to describe a loan payment that combines all four items.
individually owned houses with community ownership of common areas, such as swimming pools and tennis courts
map or survey showing the location and boundaries of individual properties and how they have been subdivided into lots and blocks
fee charged by a lender to get additional revenue over the interest rate. A point is equal to one percent of the loan amount
required by most lenders for conventional loans with a down payment of less than 20 percent. Insurance is paid by the borrower and guarantees the lender will not lose money if the borrower defaults
the Internal Revenue Service allows homeowners to claim as itemized personal deductions money paid for state and local real estate taxes, as well as interest on debt secured by their homes. It also allows for the deduction of loan prepayment penalties, and the deduction of points on new loans
a written promise to repay a debt on demand or at a stated time in the future
the land itself and everything extending below and above it, including all things permanently attached, whether by nature or by man
salespeople who assist buyers and sellers in the purchase and disposition of property are real estate agents. Most states require that prospective agents take a number of classes and pass a real estate licensing exam in order to function in this role
individual who has passed a state broker’s test and represents others in real estate transactions. Anyone having his or her own office must be a broker
entity that allows a very large number of investors to pool their money in the purchase of real estate, but as passive investors. The investors do not buy directly. Instead, they purchase shares in the REIT that owns the real estate investment
properties that revert to a lender, typically a bank, after an unsuccessful foreclosure auction are Real Estate Owned. Banks commonly become owners of foreclosed real estate because properties for sale at auctions often are worth less than the total amount owed to the bank via the mortgage. The minimum bid — the outstanding loan amount — is above market value. Banks try to sell REO properties at lower prices on their own or through an agent
a real estate broker or agent who is a member of the National Association of Realtors, a professional real estate group that subscribes to a Code of Ethics. Not every broker or real estate agent is a Realtor, a word that is a registered trademark and always capitalized
entering or recording documents affecting or conveying interests in real estate in the recorder’s office; until recorded a deed or mortgage generally is not effective against subsequent purchases or mortgage liens
practice of refusing to make loans in certain neighborhoods. Also applies to insurance companies that refuse to offer policies in certain neighborhoods
government-imposed restrictions on the amount of rent a property owner can charge
the cost at today’s prices and using today’s construction methods, of building an improvement having the same usefulness as the one being appraised
document required before title insurance can be issued. It states the name of the owner, a legal description of the property, and the status of taxes, liens and anything else that might affect the marketability of the title
an account for money collected each month by a lender to pay for real estate taxes and property insurance as they come due
clauses placed in a deed to restrict the full use of the property by controlling how future landowners may or may not use the property; also used in leases
a person’s right to have the first opportunity to either lease or purchase real property
these indexes, developed by Karl Case and Robert Shiller, measure the residential housing market in 20 U.S. metropolitan areas. Data on family home resales are the basis for 20 regional indexes and two composite indexes, all released monthly
contract that contains the terms of the agreement between the buyer and seller for the sale of a particular parcel or parcels of real estate
lien on property that is subordinate to a first mortgage. In the event of default, the second mortgage is repaid after the first. Also called a junior mortgage, and in some circumstances a home equity loan
market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; plays an important role in getting money from those who want to lend to those who want to borrow
one structure containing two dwelling units separated vertically by a common wall
a tax imposed on specific parcels of real estate that will benefit from a proposed public improvement, such as a street or sewer
the illegal practice of directing potential home buyers to or away from certain neighborhoods either to maintain or to change the character of an area, or to create a speculative situation
a tract of land divided by the owner into smaller lots for homesites or other use
the leasing of premises by a lessee to a third party for part of the lessee’s remaining term
the price paid for a property plus certain costs and expenses, such as closing costs, legal counsel, and a commission paid to help find the property
an allowed deduction that can be subtracted from your income tax. If you are entitled to a $1,500 credit, and your income tax would otherwise be $10,000, the credit would reduce the tax due to $8,500
the rate at which real property is taxed in a tax district or county. For example, in a certain county, real property may be taxed at a rate of 55 mills (or 0.055) per dollar of assessed valuation
a form of joint ownership reserved for married persons; right of survivorship exists and neither spouse has a disposable interest during the lifetime of the other
style of ownership in which two or more persons purchase a property jointly, but with no right of survivorship and separate undivided interests. They are free to will their share to anyone they choose, a principal difference between this form of ownership and joint tenancy
part ownership of a property coupled with a right to exclusive use of it for a specified number of days per year
actual ownership; the right of possession; also the evidence of ownership such as a deed or bill of sale
an insurance policy that protects against any losses incurred because of defects in the title not listed in the title report or abstract
a professional examination of public records to determine the chain of ownership of a particular piece of property and to note any liens, encumbrances, easements, restrictions or other factors that might affect the title
usually a two- or three-story dwelling with shared walls, or a living unit operating under the condominium or townhouse form of ownership
a document used in place of a mortgage in certain states; a third-party trustee, not the lender, holds the title to the property until the loan is paid out or defaulted. Also called a deed of trust
ownership by two or more persons that gives each the right to use the entire property
the period of time over which a commercial property can be depreciated for federal income-tax purposes. Also known as economic life
also known as a home evaluation, a valuation is an analysis of the value of land or property based on market trends and the sales history of similar real estate. Cyberhomes™ real estate valuations are not the same as appraisal reports of the market value of the subject property prepared by licensed professional appraisers
a permit granted as an exception to a zoning ordinance that allows a property owner to meet certain specified needs