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Fixture Personal property that becomes real property when attached in a permanent manner to real estate.

 

Flood Insurance Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas.

 

Foreclosue The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

 

Government Loan A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.

 

Government National Mortgage Association (Ginnie Mae) A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA performs the same role as Fannie Mae and Freddie Mac in providing funds to lenders for making home loans. The difference is that Ginnie Mae provides funds for government loans (FHA and VA)

 

Grantee The person to whom an interest in real property is conveyed.

 

Hazard Insurance Insurance coverage that in the event of physical damage to a property from fire, wind, vandalism, or other hazards.

 

Home Inspection A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

 

Homeowner's Association A nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements.

 

Homeowner's Warranty A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.

 

Joint Tenancy A form of ownership or taking title to property which means each party owns the whole property and that ownership is not separate. In the event of the death of one party, the survivor owns the property in its entirety.

 

Jumbo Loan A Loan that exceeds Fannie Mae's and Freddie Mac's loan limits, currently at $227,150. Also called a nonconforming loan. Freddie Mac and Fannie Mae loans are referred to as conforming loans.

 

Lease A written agreement between the property owner and a tenant that stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.

 

Lease Option An alternative financing option that allows home buyers to lease a home with an option to buy. Each month's rent payment may consist of not only the rent, but an additional amount which can be applied toward the down payment on an already specified price.

 

Legal Description A property description, recognized by law, that is sufficient to locate and identify the property without verbal testimony.

 

Lender A term which can refer to the institution making the loan or to the individual representing the firm.

 

Liabilities A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

 

Lien A legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.

 

Liquid Asset A cash asset or an asset that is easily converted into cash.

 

Loan A sum of borrowed money (principal) that is generally repaid with interest.

 

Loan Officer Also referred to by a variety of other terms, such as lender, loan representative, loan "rep," and account executive.

 

Loan Servicing After you obtain a loan, the company you make the payments to is "servicing" your loan. They process payments, send statements, manage the escrow/impound account, provide collection efforts on delinquent loans, ensure that insurance and property taxes are made on the property, handle pay-offs and assumptions, and provide a variety of other services.

 

Lock In Period The time period during which the lender has guaranteed an interest rate to a borrower.

 

Margin The difference between the interest rate and the index on an adjustable rate mortgage.

 

Maturity The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

 

Mortgage A legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.

 

Mortgage Banker For a more complete discussion of mortgage banker, see "Types of Lenders." A mortgage banker is generally assumed to originate and fund their own loans, which are then sold on the secondary market, usually to Fannie Mae, Freddie Mac, or Ginnie Mae.

 

Mortgage Broker A mortgage company that originates loans, then places those loans with a variety of other lending institutions with whom they usually have pre-established relationships.

 

Mortgagee The lender in a mortgage agreement.

 

Mortgagor The borrower in a mortgage agreement.

 

Negative Amortization Some adjustable rate mortgages allow the interest rate to fluctuate independently of a required minimum payment. If a borrower makes the minimum payment it may not cover all of the interest that would normally be due at the current interest rate.The interest is deferred and the loan balance grows larger instead of smaller, which is called negative amortization.

 

No Point Loan Almost all lenders offer loans at "no points." You will find the interest rate on a "no points" loan is approximately a quarter percent higher than on a loan where you pay one point.

 

Notice of Default A formal written notice to a borrower that a default has occurred and that legal action may be taken.

 

Origination Fee On a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points." One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.

 

PITI This stands for principal, interest, taxes and insurance. If you have an "impounded" loan, then your monthly payment to the lender includes all of these and probably includes mortgage insurance as well. If you do not have an impounded account, then the lender still calculates this amount and uses it as part of determining your debt-to-income ratio.

 

Point A point is 1 percent of the amount of the mortgage.

 

Pre Approval A borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others.

 

Pre Payment Penalty A fee that may be charged to a borrower who pays off a loan before it is due.

 

Pre Qualification This usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.

 

Prime Rate The interest rate that banks charge to their preferred customers. Changes in the prime rate are widely publicized in the news media and are used as the indexes in some adjustable rate mortgages, especially home equity.

 

Principal The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.

 

Principal Balance The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges. See remaining balance.

 

Purchase Agreement A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

 

Qualifying Ratios Calculations that are used in determining whether a borrower can qualify for a mortgage. There are two ratios. The top or front ratio is a calculation of the borrower's monthly housing costs (principle, taxes, insurance, mortgage insurance, homeowner’s association fees) as a percentage of monthly income. The "back" or "bottom" ratio includes housing costs as will as all other monthly debt.

 

Quitclaim Deed A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

 

Rate Lock A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time at a specific cost.

 

Real Estate Real Estate is a legal term (in some jurisdictions, notably in the USA, United Kingdom, Canada, Australia and The Bahamas) that encompasses land along with anything permanently affixed to the land, such as buildings, specifically property that is fixed in location

 

Real Estate Agent A person licensed to negotiate and transact the sale of real estate.

 

Real Property Land and accessories, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

 

Realtor® A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

Real Estate Speculation Real Estate investing involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.

 

Recorder The public official who keeps records of transactions that affect real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk."

 

Recording The noting in the registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

 

Rent Loss Insurance Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

 

Right of First Refusal A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

 

Right of Survivorship In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

 

Second Mortgage A mortgage that has a lien position subordinate to the first mortgage.

 

Secondary Market The buying and selling of existing mortgages, usually as part of a "pool" of mortgages.

 

Title A legal document evidencing a person's right to or ownership of a property.

 

Title Company A company that specializes in examining and insuring titles to real estate.

 

Title Insurance Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.

 

Title Search A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.

 

Transfer of Ownership Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be a transfer of ownership: the purchase of a property "subject to" the mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.

 

Truth in Lending A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

 

Trustee A fiduciary who holds or controls property for the benefit of another.

 

VA Loan A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

 

 

Extended Glossary

 

Victorian Architecture can refer to one of a number of architectural styles predominantly employed during the Victorian era. As with the latter, the period of building that it covers may slightly overlap the actual reign, 20 June 1837 – 22 January 1901, of Queen Victoria after whom it is named.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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