An instrument to terminate a homestead interest.

A historical summary of all the recorded transactions that affect the title to the property. An attorney or a title company will review an abstract of title to determine if there are any problems affecting the title to the property. All such problems must be cleared before the buyer can be issued a clear and insurable title.

Bordering upon or next to; the joining or touching of adjoining land; sharing a common boundary.

A clause in a note, mortgage or deed of trust which give the lender the right to demand payment in full upon a happening of a certain event (s), such as a default.

An offeree’s consent to enter into a contract and be bound by the terms of the offer. In a real estate transaction an offer is made from the buyer to the seller. If the seller accepts the offer within the prescribed time limit, it becomes a binding contract. In this case Acceptance is documented by the Seller signing and delivering the signed document.

The addition to land through natural forces like wind or water.

Formal declaration before a public official (typically a Notary Public) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust.

A measure of land equal to 43,560 square feet.

A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

Also known as a variable rate mortgage. The interest rate on these mortgages changes periodically.

The adjusted basis figure is the value used to determine capital gains when you sell real property. The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

The length of time for which the interest rate is fixed on an adjustable. If the adjustment period is six months, then the interest rate will remain fixed for six months, after which time it will adjust.

A method of acquiring real property from the owner because of continuous, hostile and visible use of the property for a prescribed length of time.

A sworn statement by an individual.

A sworn statement required by the state to be attached to all conveyances, unless it has been specifically exempted. It includes the legal description, tax parcel number and the value of the property.

A detailed analysis to determine whether you can afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you might expect to pay.

An instrument that conveys the equitable title to real property and states the manner of payment required for payment in full.

A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction, although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.

A gradual paying off of a debt by periodic installments which pay principal and interest.

The effective rate of interest for a loan per year. This rate is typically higher than the note rate because it takes into account closing costs. This is one way to compare loan programs offered by different lenders. Caution : the APR is sometimes computed differently by different lenders and can be misleading.

A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security.

An opinion or estimate of the value of a property at a given date.

An increase in the value of a property due to changes in market conditions or for other reasons, such as additions and renovations. Opposite of depreciation.

A transaction among parties each of who acts in his or her own best interest.

The valuation placed on property by a public tax assessor for purposes of taxation.

A levy or tax imposed on land to raise revenue or to pay for improvements which benefit the land.

The public record of taxable property.

A public official who establishes the value of a property for taxation purposes.

Anything with a dollar value that you own. Banks consider your assets when determining how much you can borrow.

The transfer of a mortgage from one person to another.

A mortgage loan which allows a new home buyer to take over the obligation of making loan payments with no change in the terms of the loan. Assumable loans do not have a due-on-sale clause. The lender has to be notified and agree to the assumption. The lender may require the buyer to qualify for the loan and may charge an assumption fee. The seller should obtain a written release from the lender stating clearly that he/she is no longer liable to make mortgage payments.

A legal procedure where property is taken into custody pending the outcome of a lawsuit.

An agent authorized to act for another by virtue of a power of attorney.

The amount you pay in monthly debt (car payments, credit cards, student loans, etc.) divided by your gross monthly income.

Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.
 

The financial inability to pay one's debts when due. The debtor surrenders his assets to the bankruptcy court. An individual typically files for Chapter 7 (all debts wiped out) or Chapter 13 (establishes a payment plan to pay off debts). A bankruptcy stays on an individual's credit report for seven years.

A title file that includes all previous title search information on a particular property.

The person who receives or is to receive the benefits resulting from certain acts.

An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

A written document that transfers title to personal property.

A title insurance binder is the written commitment of a title insurance company to insure title to the property subject to the conditions and exclusions shown on the binder.

A mortgage which requires half the normal monthly payment every two weeks. Over the course of the year, twenty-six half payments are made which is equivalent to thirteen full mortgage payments. As a result of this extra payment the loan amortizes much faster than a loan with normal monthly payments.

A single policy that covers more than one piece of property (or more than one person).

A mortgage covering more than one piece of property.

A debt instrument in the capital markets. The U.S. government, corporations and municipalities use bonds to raise money. Bonds can also be backed by mortgages. The best known bond is the 30-yr. treasury bond issued by the U.S. government.

One who applies for a loan secured by real estate and is responsible for repaying the loan.

To break or violate an agreement.

An interim loan typically used when the buyer is unable to sell his/her house but needs money to close the transaction on the house he/she is buying. The bridge loan is made on the buyer's current residence to finance the buyer's new residence. The loan is paid off when the buyer's current residence is sold.

Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.

Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

The sale of a business.

Obtaining a lower interest rate (buying down the rate) by paying additional points to the lender. The lower rate may apply for the full duration of the loan or for just the first few years. A buy down may be used to qualify a borrower who would otherwise not qualify since a buy down results in lower payments.

An agent hired by a buyer to locate a property for purchase. The broker represents the buyer and negotiates with the seller's broker for the best possible deal for the buyer.

Market conditions that favor the buyer. I.e., a market in which there are more sellers than buyers. As a result, a buyer has an excess supply of homes from which to choose and can negotiate a lower price. A buyer's market may be caused by an economic slump or overbuilding.

A booklet that provides an overview of the lending process and is required to be given to consumers after the loan application is completed.

A clause in the mortgage that gives the lender the right to "call" the mortgage due and payable at the end of a given length of time, for whatever reason.

The cost of an improvement made either to extend the life of a property or to increase its value.

When you sell a capital asset at a profit, such as real estate, the difference between the amount you sell it for and your basis, which is usually what you paid for it, is a capital gain.

Capital Improvement

Any item, structure or addition that is a permanent improvement to the property.

Limits on the amount that the interest rate on an ARM can change per year and/or during the life of the loan. Payment caps limit the amount that monthly payments for an ARM may change.

The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).

A legal term meaning "let the buyer beware." The buyer must examine the property and buy at his/her own risk.

A certificate from a bank stating that the named party has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.

The document issued by the Department of Veterans Affairs to those who qualify for a VA loan which may be used to buy a house with zero down. Certificates of eligibility may be obtained by sending the form DD-214 to the local VA office along with VA form 1880.

Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. This document is normally required by a lender prior to closing the loan.

An appraisal performed by a VA approved appraiser which establishes the property's current market value. This value establishes the ceiling on the maximum VA mortgage loan principal.

An opinion rendered by an attorney as to the status of title to a property, according to the public records. This certificate does not the same level of protection as title insurance.

The document given to veterans or reservists who have served 90 days of continuous active duty (including training time). This document enables veterans to obtain lower down payments on certain FHA-insured loans.

A chronological list of the recorded instruments affecting title to real property.

Personal property.

A marketable title, free of clouds and disputed interests. Most lenders require a clear title prior to closing.

The final meeting between the buyer, seller and lender (or their agents) at which the property and funds legally change hands.

Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs: recurring and non-recurring.

Non-recurring costs are one time transactional costs which include:

• Discount and origination points

• Lender fees: underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc

• Title insurance fees

• Escrow, attorney or closing agent fees

• Recording fees

• Inspection and appraisal fees

• Real estate brokerage commissions

Recurring fees are costs associated with owning the property and they recur month after month. These costs may include hazard insurance, interest, property taxes, mortgage insurance (PMI), and association fees. A pro-rated amount of these fees may have to be paid at closing including:

• Pre-paid interest - interest charges from the date of closing to the end of the month

• Property taxes if due Hazard insurance, fire insurance or homeowners insurance has to be paid for one year Mortgage insurance (PMI) may be required if the loan amount is more than 80 percent of the value of the property. In the past a whole year of PMI had to be paid up-front, however in recent years many PMI companies only require on to two months up-front. Mortgage insurance premiums are normally paid every month with the loan payment

• Impound account may need money to be set up for future payments

A detailed written summary of the financial settlement of a real estate transaction, showing all charges and credits made, all cash received and paid.

An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title.

An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.

A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment.

The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.

A written document provided by a lender to agreeing to make a loan on specific terms to a borrower or builder.

An unwritten body of law based on general custom in England and used to an extent in the United States.

An alternative financing option that allows low- and moderate-income home buyers to obtain 95 percent financing for the purchase and improvement of a home in need of modest repairs. The repair work can account for as much as 30 percent of the appraised value.

An alternative financing option that enables low- and moderate-income home buyers to purchase housing that has been improved by a nonprofit Community Land Trust and to lease the land on which the property stands.

In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.

An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate at all). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.

An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Interest paid on the original principal balance and on the accrued and unpaid interest.

Comparable properties; properties in close proximity which have sold recently and are about the same size with similar amenities, used to determine the value of a property by comparison.

The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.

A written document provided by a lender agreeing to make a loan provided certain conditions are met prior to closing.

Parcels of property that are adjoining.

A monthly cost-of-funds index (COFI) reflecting the average interest rate paid by 11th Federal Home Loan Bank District savings institutions for savings and checking accounts. The 11th district covers Arizona, California and Nevada. The index is published on the last day of the month and reflects the cost of funds for the prior month. This rate is used by lenders to determine the index rate for some of their variable rate loan products.

The basic rules establishing the rights and obligations of owners of real property within a condominium, townhouse, PUD, subdivision or other tract of land. An association is organized for the purpose of operating and maintaining property commonly owned by the individual owners. The association is normally made up of property owners.

A real estate sales contract in which she seller (vendor) agrees to convey title to the buyer (vendee) after certain conditions have been met and transfer is not required within one year (installment selling arrangement whereby the buyer may use and occupy land, but no deed is given by seller until the sales price has been paid).

Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.

A short term loan to pay for the construction of buildings or homes. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed a take-out or permanent loan is used to pay off the construction loan.

An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources. Experian, TransUnion and Equifax are the 3 main repositories.

The requirement that a particular event occur before a contract is binding.

An agreement between competent parties to do or not do certain things for consideration.

To have a valid contract for the sale of real estate there must be:

Any mortgage loan other than a VA or an FHA loan. A convention loan may be conforming or non-conforming.

A clause in some ARMs which allows the buyer (borrower) to change to a fixed-rate mortgage at a specified time.

The transfer of title of real property from one party to another.

A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.

Some variable loans come with options to convert to a fixed loan based on a pre-determined formula, during a given time period.

A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.

A report detailing a borrower's credit and payment history including: revolving and installment accounts; public records such as tax liens and judgments.

An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit. Experian, TransUnion and Equifax.

A credit score is a snapshot of a person’s credit risk at a particular point in time. It is used by lenders to help determine if a borrower qualifies for a loan. There are three main credit reporting companies that issue these credit scores. Experian calls it the FICO score, TransUnion calls it Empirica, and Equifax calls it the Beacon.

A person or entity (a bank or other lender) who funded the loan and to whom a debt is owed.

A dead-end street with a turn-around space at the end. These are attractive to some homeowners because the ending street cuts down on "thru" traffic, speeding, etc.

A court order after the probate of a deceased person's estate, which when recorded, transfers the title to their heirs.

This is a loan qualifying ratio used by lenders to determine if a borrower qualifies for a loan. The debt (-to-income) ratio is calculated by taking the borrower’s monthly debts, including house payments, credit cards and personal loans, and dividing it by the monthly income.

A written document by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the buyer at closing.

A deed given by a mortgagor (homeowner) to the mortgagee (lender) to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance." This avoids the foreclosure process, however it may still be considered a negative mark on your credit and affect your credit scores.

A security instrument (document describing the rights and duties of the lender and borrower) used in real estate transactions in many states. The parties to a deed of trust are: trustee (third party), trustor (borrower), beneficiary (lender).

A clause in a deed that limits the use of land.

Failure to meet legal obligations in a contract, such as the failure to make the monthly mortgage payment.

Any recorded instrument that would prevent a grantor/seller from giving a clear title.

Unpaid interest added to the loan balance. This is common in a negative amortized or option arm loan program. The minimum payment is less than the interest charges. The interest that is not paid is added to the balance.

Personal claim against the debtor when the sale of foreclosed property does not yield sufficient proceeds to pay off the mortgages, accrued interest, legal fees, etc.

Failure to make payments on time. A Notice of Default and foreclosure process usually takes place after you are delinquent for more than a few months.

When related to the appraisal of property, depreciation is the decrease in value from any cause. When related to taxation, "book depreciation" is a steady decrease (calculated using mathematical formulas or schedules) in the owner's tax basis.

An independent governmental agency which guarantees long-term, low- or no-money-down mortgages to eligible veterans.

Fees paid to a lender to reduce the interest rate.

Stamps affixed to a deed showing the amount of transfer tax.

The rights of a widow or child to part of a deceased husband's or father's property.

The amount paid for the purchase of a property in addition to the mortgage, but not including any closing costs.

A provision in a mortgage that pledges several properties as collateral. A default in the mortgage could lead to foreclosure proceedings on any of the properties in the dragnet.

A clause in the Deed of Trust or Mortgage that states that the entire loan is due upon the sale of the property.

The monetary interest the owner has in the real property.

Ownership by one who does not have legal title, such as a vendee under a land contract.

Process that reverts property to the state when a deceased owner has no apparent heirs, or when a party does not make claim to monies held in escrow.

The degree, quantity, nature and extent of the interest a person has in real property.

Rules of law which precludes a person from alleging or denying certain facts resulting from their previous conduct or admissions.

Transfer of one property for another.

A deposit made by a buyer of real estate towards the down payment to evidence good faith. This money is typically held by the real estate brokers or the escrow company.

The right to use the land of another for a specific purpose. Easements may be temporary or permanent.

The right of the government or a public utility to acquire property for necessary public use by condemnation, with proper compensation to the owner.

A building, part of a building, or an obstruction (e.g., a fence or wall) that physically intrudes upon or overlaps the property of another.

Any interest or right in real property possessed by a stranger to the title, which affects the owner's property value, but does not prevent the owner from transferring title. Encumbrances may affect title, or condition or use of the property.

VA home loan benefits are known as entitlement and/or eligibility.

A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

The market value of real property, less the amount of any liens. Equity is often expressed as a percentage of the property value.

Joint ownership of a property between the owner/occupant and the owner/investor, that results in tax advantages for both parties. Upon sale of the property the joint owners split profits based on the percentage they own.

The reversion of property to the state in the event that the owner dies without leaving a will and has no legal heirs.

Delivery of a deed by a grantor to a third party for delivery to the grantee upon the occurrence of a conditional event.

The account in which a mortgage servicer holds the borrower’s escrow payments prior to paying property expenses.

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

The lawful expulsion of an occupant from real property. The legal process of eviction is different in each state.

The report on the title of a property from the public records or an abstract of the title.

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.

A person named in a will to carry out its provisions for the disposition of the estate.

Personal property that becomes real property when attached to real property.

A proceeding in or out of court, to extinguish all rights, title and interest of the owner of property in order to sell the property to satisfy a lien against it.

The process used by the seller or vendor under a land agreement to recover the property from the buyer or vendee in the event of default.

A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record.

The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Fannie Mae pools large quantities of mortgages, creates securities with them, and sells them as Fannie Mae-backed securities. The rates on these securities influence mortgage rates very strongly.

An agency, within the U.S. Department of Agriculture, that administers assistance programs for purchasers of homes and farms in small towns and rural areas.

The rate that the New York Fed charges for loans to member banks.

The Rate banks charge each other for overnight loans.

Provides financing to farmers.

Freddie Mac maintains a nationwide secondary market primarily for conventional loans originated by banks, thrift institutions and other HUD-approved lenders. Freddie Mac finances most of its operations through the sale of mortgage Participation Certificates.

An agency within the U.S. Department of Housing and Urban Development (HUD). FHA offers mortgage insurance programs to protect the lender in the event of default. Because lenders are insured against loss, they can make affordable financing available to borrowers who would not otherwise qualify.

Provides a secondary market for FHA, VA and conventional loans. Fannie Mae issues mortgage-backed securities and guarantees timely payment their principal and interest to investors.

The central federal banking system that regulates and provides services to member commercial banks. Also has the responsibility for conducting federal monetary policy.

Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition during the owners life and upon his death the property descends to the owner's designated heirs.

Fair Isaac Corporation. This credit score is reported on your Experian (formerly TRW) credit report. A FICO score is a snapshot of a person’s credit risk at a particular point in time.

A person in a position of trust or responsibility with specific duties to act in the best interest of a client. A real estate broker is a fiduciary for his/her clients.

Interest charged by a lender.

A lender’s agreement to make a loan to a specific borrower on a specific property. This is usually given as a written loan approval from a lender.

A mortgage that has priority as a lien over all other mortgages. In the case of a foreclosure the first mortgage will be satisfied before other mortgages. See also second mortgage.

Personal property attached to the land in such a way as to be considered part of the real property.

An insurance policy that covers property damage due to natural flooding. Flood insurance may be required on properties in a flood zone.

A legal process in which the right, title and interest of a mortgagor or trustor in real property are terminated by selling the property and applying the proceeds to satisfy liens of creditors.

A property that has no liens.

A quasi-governmental agency that purchases conventional mortgage loans from insured depository institutions (savings and loans) and HUD-approved mortgage bankers.

The loss of money, property, rights, or privileges due to a breach of legal obligation.

Monthly mortgage payments (PITI, principal, interest, taxes and insurance) divided by your gross monthly income. This comes out to a percentage, and a lender uses this percentage to get an idea of how much of your income will be going towards paying your loan. Most programs require a maximum ratio of 28-33%. A low ratio is better.

A fully indexed rate is the value of an index plus a margin. See adjustable loans.

A statutory proceeding wherein a court gives directions to a third party regarding the payment of money.

A deed in which the grantor (seller) agrees to the protect the grantee (buyer) against any other claim to title of the property. See also warranty deed.

The form that lists the settlement charges the borrower must pay at closing. The lender is obligated to provide the borrower this form within three business days of receiving the loan application.

A government corporation which guarantees mortgage-backed securities issued by approved lenders. GNMA mortgage-backed securities are considered by many to be as safe as Treasury securities.

That party in the deed who is the buyer or recipient.

A trust deed or mortgage requiring increasingly higher payments during the life of the loan. Negative amortization may occur under some circumstances.

The clause in a law permitting the continuation of a use, business, etc., which was permissible but because of a change in the law is now no longer permissible.

That party who is the seller or the giver.

The persons designated in a will, or by operation of law, to succeed to the estate of a deceased person.

A gap unintentionally left when describing two adjacent properties.

A type of real estate insurance providing protection against loss due to fire and other risks.

A special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. This is commonly known as a reverse mortgage.

A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.

A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.

Fannie Mae's adjustable-rate conventional reverse mortgage, which allows older homeowners to borrow against the value of their homes and receive the proceeds according to the payment option they select. The amount available is based on the number of borrowers and their ages and the adjusted property value. Anyone 62 years or older who either owns his or her own home free and clear or has very low mortgage debt is eligible.

Insurance that covers appliances, heating systems, etc. Typically purchased at the time of closing.

An association of homeowners in a particular subdivision, planned unit development (PUD), or condominium organized to manage the common area of the development and to enforce the association rules and regulations.

Status provided to a homeowner's principal residence that protects the home against certain types of judgments.

A statutory exemption shielding real homestead property against the rights of certain creditors. Regarding taxation: an exemption reducing the assessed value of a principal residence for the purposes of calculating property tax.

A U.S. government agency established to implement certain federal housing and community development programs.

A local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings.

A closing document required by HUD that outlines the settlement cost of a loan. The closing agent prepares this document and sends it to the buyer upon closing.

To pledge a property as security without having to give up possession of it.

A person who is incapable of binding himself to an enforceable obligation.

A letter or statement wherein one party agrees to hold harmless another party from loss or damage.

The liberty of entrance and exit from property.

A person who dies without leaving a will.

That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as reserves.

Additions to raw land such as buildings, streets, etc. that add value to the land.

An appraisal method used for the valuation of income-producing property in which net income is capitalized.

Real estate that generates rental income.

A statistic that indicates some current economic of financial condition. Indexes are used to make adjustments in variable rate loans.

In economics, inflation is an increase in the general level of prices of a given kind. General inflation is a fall in the market value or purchasing power of money within an economy, and is referred to as a rise in the general level of prices.

Re Taxation: When selling real property and receiving one or more payments in subsequent years, the taxpayer may report the sale as an installment sale. This allows the taxpayer to defer the recognition of gain over many years and save taxes.  Installment sale land contract.

An interest-only loan program is a loan program that has an interest-only payment option. The loan can be a fixed rate or variable rate program. The interest only monthly payment is the amount of the interest rate times the original loan amount divided by twelve. No principal is paid, and the loan balance does not decrease. You may pay the interest only payment amount or pay the fully amortized payment amount. The interest only payment option is only available in the initial years of the loan term. Conforming loan programs have the interest only term for ten to fifteen years. Jumbo programs vary from three years up to ten years.

A creditor can demand full repayment from any and all of those who have borrowed. Each borrower is liable for the full debt, not just the prorated share.

Ownership of a property by two or more people, each of whom has an undivided interest with the right of survivorship.

A decree entered by the court after final determination of the rights of the parties in legal action.

The claim on the property of a debtor resulting from a judgment.

A type of foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court.

Loan size that is larger than the conforming loan limit established by the Fannie Mae or Freddie Mac.

A mortgage subordinate to another mortgage. In the case of a foreclosure a senior mortgage will be paid prior to a junior mortgage.

A payment required by a mortgage in addition to normal principal and interest. Sometimes known as a participation loan.

A contract where the owner grants to another the possession or use of their property.

A court order empowering an individual to deal with a deceased person's estate.

A charge upon real property as security for the payment of a debt.

The interest in property that exists only for the life of an individual.

The penalty a borrower must pay when a payment is made a stated number of days (usually 15) after the due date.

Legally acceptable identification of real estate by one of the following:

• the government rectangular survey

• metes and bounds

• recorded plat (lot and block number)

An estate in real property for the life of a living person. The estate then reverts back to the grantor or to a third party.

A claim against the property for the payment of a debt, judgment, mortgage or taxes.

An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit.

Latin for "lawsuit pending." Recorded notice that litigation is pending on a property. Most lenders will require the clearance of the Lis Pendens prior to closing.

Real Estate properties for sale are usually considered listed when a real estate agent is contracted to sell the property, using a listing agreement, and the property is posted in the multiple listing service, MLS, for that local region. It can also be in an Internet listing service online, which can be done directly by the homeowner.

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

A document required by a lender prior to loan approval. The application includes detailed information about the borrower and the property.

Charge by a lender or broker connected with originating a loan. This is different from discount points which are used to buy down the rate of interest.

The act of collecting loan payments, handling property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investors.

The loan amount divided by the value of the property.

A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time. The lock-in also usually specifies the number of points to be paid at closing.

The time period during which the lender has guaranteed an interest rate to a borrower. See lock-in.

A legal description based on footage and direction prepared through a survey of the property.

Objects or markers used to fix or establish a property boundary.

A fixed number added to the index to compute the rate on an adjustable rate mortgage.

Title that is free of liens, clouds and other legal defects and hence is readily acceptable by a buyer.

The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for at a given time.

The right of an unpaid contractor or subcontractor to file a lien against property to recover the amount due to him/her.

A credit report that contains information from three credit repositories. When the report is created, the information is compared for duplicate entries. Any duplicates are combined to provide a summary of your credit.

The act of changing any of the terms of the mortgage.

A written instrument that creates a lien upon real estate as security for the payment of a specified debt.

A bond or other financial obligation secured by a pool of mortgage loans.

Specializes in originating and servicing loans. They generally sell their loans to investors, but may continue to service them.

Arranges financing for a borrower by placing loans with lenders. Mortgage brokers are paid a fee by the borrower or the lender when a loan closes.

A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.

The lender.

The borrower.

A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

An increase in principal balance which occurs when the monthly payments do not cover all of the interest cost. The interest cost which is not covered by the payment is added to the unpaid principal balance.

The borrowers gross income minus federal income tax.

A loan requiring very little loan documentation. These loans usually require large (25%) down payments.

Loans that do not comply with Fannie Mae or Freddie Mac guidelines.

One authorized to take acknowledgments of certain types of documents, such as deeds, contracts, and mortgages.

The Note is a promissory note, which is signed with loan documents and states the loan amount, interest rate and loan terms.

A letter sent to the defaulting party as a reminder of the default.

Substitution of a new contract, debt or obligation for an existing one, between the same or different parties.

An expression of willingness to purchase a property at a specified price.

One who receives the offer. When the buyer makes an offer to the seller the seller is an offeree.

One who makes the offer. When the buyer makes an offer to the seller the buyer is an offeror.

A mortgage permitting the mortgagor to borrow additional money under the same mortgage, with certain conditions.

A method of showing a home for sale to prospective buyers where the home is left open for inspection by those who may be interested in making a purchase.

The Option Arm loan program, commonly referred to as the negative amortized loan, has a low starting payment rate. Typically the starting rate is 1 to 2 percent. The initial monthly loan payment is calculated based on the starting rate, but the note rate will adjust to the Index plus the Margin after the first one to three months. The payment remains the same for the entire year, and is only adjusted yearly on the anniversary date. Since the interest charges may exceed the monthly payment, the interest that is not paid is added to the loan balance. This increases the loan amount, rather than decreasing the loan balance as in a fully amortized loan. Thus we have a negative amortization, or increasing loan balance, during the initial years of this loan.

One who receives or purchases an option.

One who gives or sells an option.

A verbal agreement. Verbal agreements for the sale or use of real estate are normally unenforceable.

A court order given during a probate or bankruptcy proceeding which authorizes the sale of a part of the estate property.

A property purchase transaction in which the property seller provides all or part of the financing.

The individual named on a deed that has been recorded at the county recorders office.

A tenant of a residence who also owns the property.

An instrument used by the state or federal government to transfer title to property.

A court appointed individual who is authorized to deal with the matters of an estate, which was formerly referred to as an administrator or executor.

An authority or instrument by which one person (principal) enables another (attorney in fact) to act for him.

A court proceeding in which descendant's estate is administered.

Mortgage covering both real and personal property.

A mortgage, deed of trust or land contract provided in lieu of cash.

A provision in a mortgage that allows some of the property secured to be freed from serving as collateral.

A mortgage that allows the lender to share in part of the income or resale proceeds.

Interests in a pool of mortgages sold by mortgage bankers to investors. Money collected as monthly mortgage payments is distributed to those who own certificates.

A mortgage for a long period of time. Often referred to as the mortgage that pays off a construction loan on a completed property.

A document issued by a government regulatory authority that allows the bearer to take some specific action. An occupancy permit allows the owner of a building to occupy or rent the building.

Principal, Interest, Taxes and Insurance. Your mortgage loan payment usually includes the principal and interest amounts. When you borrow more than 80 percent of the value of your home, lenders usually require that you also pay the taxes and insurance payments with your loan payment.

A zoning classification that allows flexibility in the design of a subdivision. PUD's include individually owned units as well as some common space that is jointly owned.

A plan or map of a specific land area.

A public record containing maps of land, showing the division of the land into streets, blocks, and lots and indicating the measurements of the indi