Real Estate Glossary

Back	Mortgage Loan Terms
Variable Rate Mortgage:	A type of adjustable rate mortgage that generally originates at a given rate of interest, with the rate fluctuating up and down during the term of the loan based on a pre-determined economic indicator spelled out in the provision of the instrument. Typically interest rate adjustments are limited to one per year and there is a set maximum number of increases allowed over the life of the loan.
Renegotiable Rate Mortgage:	Another type of adjustable rate loan, generally renewable every three to five years at a higher or lower interest rate. Changes in rate are typically limited to a maximum of one-half percent each year, with five percent maximum over the life of the loan, depending on the provisions set forth in the note. Prepayment without penalty is usually allowed.
Balloon Mortgage:	Periodic payments are required that do not fully amortize the amount of the loan. The final payment, larger than previous installments, is paid in a lump sum to retire the debt.
Conventional Fixed Rate Mortgage:	Payment of the debt rests solely upon the ability of the borrower to repay, with security provided by the mortgage. The ratio of debt to the value of the property is generally lower than with insured or guaranteed loans. Interest rates are fixed for the life of the loan. The term of the loan may extend up to 30 years.
Federal Housing Administration (FHA) Insured Mortgage:	An FHA loan is not made by the federal agency but rather a loan that insures the lender against loss. Interest charged on the loan is limited by law and fluctuates as economic conditions influence the market. A variety of regulations set standards of construction and credit requirements.

Back	Real Estate Terms
Abstract of Title:	A condensed history of title transactions to a particular parcel of land covering a period from the original grant through all subsequent conveyances and encumbrances affecting the property, including a certification as to the completeness and accuracy.
Ad Valorem Taxes:	Taxes levied on the assessed value of a property.
Amenity:	An aspect of a property that enhances its value, such as nearby good public transportation, good schools, or a nearby recreation center.
Amortization:	Loan retirement by equal, periodic payments calculated to pay off the principal at the end of a fixed period of time, and to pay accrued interest on the outstanding balance.
Annual Percentage Rate (APR):	A term used in related legislation to represent the percentage relationship of the total finance charge to the amount of the loan.
Appurtenance:	Anything tangible or abstract attached to the land and thus a part of the property (such as water rights, a boat ramp, a fence, or an easement).
Certificate of Title:	A written statement furnished by an abstract or title company, or by an attorney of a client, stating tat the title to a property is legally vested in the present owner.
Closing Costs:	Money paid by borrowers and sellers to effect the closing of a mortgage loan. This normally includes an origination fee, discount points, title insurance, survey, attorney fees, and such prepaid times as taxes and insurance escrow payments.
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Contingency or Conditional Sale Contract:	A contract for the sale of property which becomes binding only after as specific condition or set of conditions are met. IN many cases, the contingency is that the prospective buyer by able to sell his or her home before being obligated to purchase the property in question.
Deed of Trust:	An instrument used to create a mortgage lien by which the mortgagor conveys title to a third party in order to secure payment of a loan on a particular piece of property.
Earnest Money:	A sum of money a purchaser places on deposit under the terms of the contract, that is to be forfeited if the buyer defaults, but is applied to the purchase price if the sale is consummated.
Encumbrance:	Any lien or restriction (a mortgage, tax, judgment, lease, easement, etc.) that may diminish the value of a property.
Escrow:	A method of closing a real estate transaction in which a disinterested third party is authorized to act as agent for the delivery of funds/documents upon performance of conditions set forth in the escrow agreement.
Fair Market Value:	The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and neither being under any compulsion to buy or to sell.
Latent Defect:	A hidden defect in a property that is known to the seller but not to the buyer, and is not readily discovered through an ordinary inspection.
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Listing Agreement:	A contract between a property owner and a licensed real estate broker by which the broker is designated as agent to sell the property in accordance with the owner's terms, within a specified period of time, and for which service the seller agrees to pay a sales commission.
Listing Broker:	Under a multiple listing system, a broker from whose office a listing agreement is executed, as opposed to a selling broker from whose office negotiations leading up to the sale are initiated. Often, the two functions are performed by the same broker.
Lien:	A charge or claim against a property that provides security for the property owner's debt or obligation.
Loan Origination Fee:	Fee charged by the lender to process and service a loan.
Market Data Value:	A process of estimating the value of a property by comparing actual prices paid for similar properties recently sold in the same general area.
Multiple Listing:	A listing granted by a seller to a broker with the authority and obligation on the part of the listing agent to distribute the listing to other real estate companies in the multiple listing network.
PITI Ratio:	The principal / interest / taxes / insurance payment to income ratio; used in mortgage lending decisions.
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Discount Point:	An amount of money equal to 1% of the principal amount of an investment or note. Loan discount points are a one-time charge assessed at closing by the lender to increase the yield on the mortgage loan to a competitive position with other types of investments.
Prorations:	Division of financial responsibility between buyer and seller for such items as loan interest, taxes, rents, and utility bills.
Realtor®:	A registered trademark reserved for the sole use of active members of local real estate boards that are affiliated with the National Association of Realtors.
Tenancy in Common:	A form of coownership by which each owner holds an undivided interest in real property as if each were the sole owner. Each has the right to partition but neither holds the right of survivorship (as contrasted with a joint tenancy form of ownership).
Title Insurance:	An insurer (generally a title company) agrees to indemnify an owner (optional) and/or lender (required) against any losses resulting from any nonexcepted defects in the title to a piece of property.