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A
 ABSORPTION
RATE
The ratio of the number of properties in an area that have
been sold against the number available. Used to show the
volatility of a market.
ABSTRACTION METHOD
This method of estimating the value of property uses similar
properties available in the same market to extract the value
of a parcel of land.
ACCELERATION CLAUSE
A provision in a mortgage that gives the lender the right
to demand immediate payment of the outstanding loan balance
under certain circumstances. Usually when the borrower defaults
on the loan.
ACCESSORY BUILDING
A building separate from the main structure on a property.
Often used for a specific purpose, such as a workshop, storage
shed or garage.
ACCRETION
The natural growth of a piece of land resulting from forces
of nature
ACRE
43,560 square feet. A measurement of area.
ACTUAL AGE
The amount of time that has passed since a building or other
structure was built. See also: EFFECTIVE
AGE
ADJUSTMENT DATE
The date the interest rate changes on an adjustable rate
mortgage.
AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements
ADDENDUM
A supplement to any document that contains additional information
pertinent to the subject. Appraisers use an addendum to
further explain items for which there was inadequate space
on the standard appraisal form.
ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based
on a particular index, normally the prime lending rate.
ADJUSTED BASIS
The value of an asset (property or otherwise) that includes
the original price plus the value of any improvement, and
less any applicable depreciation.
ADJUSTED SALES PRICE
An estimate of a property's sales price, after adjustments
have been made to account for differences between it and
another comparable property.
AESTHETIC VALUE
The additional value a property enjoys based on subjective
criteria such as look or appeal.
AFFIRMATION
A declaration that a certain set of facts are truthful.
AFFORDABILITY ANALYSIS
A calculation used to determine an individual's likelihood
of being able to meet the obligations of a mortgage for
a particular property. Takes into account the down payment,
closing costs and on-going mortgage payments.
AGENT
A person who has been appointed to act on behalf of another
for a particular transaction.
AMENITY
Any feature of a property that increases its value or desirability.
These might include natural amenities such as location or
proximity to mountains, or man-made amenities like swimming
pools, parks or other recreation.
AMERICAN SOCIETY OF APPRAISERS
An organization of appraisal professionals and others interested
in the appraisal profession.
AMORTIZATION
The repayment of a loan through regular periodic payment.
AMORTIZATION SCHEDULE
The breakdown of individual payments throughout the life
of an amortized loan, showing both principal contribution
and debt service (interest) fees.
AMORTIZATION TERM
The length of time over which an amortized loan is repaid.
Mortgages are commonly amortized over 15 or 30 years.
AMPERAGE
A measure of electric current describing the magnitude.
ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.
ANNUITY
A sum of money paid at regular intervals, often annually.
APPLICATION
A form used to apply for a mortgage loan that details a
potential borrower's income, debt, savings and other information
used to determine credit worthiness.
APPRAISAL
A ''defensible'' and carefully documented opinion of value.
Most commonly derived using recent sales of comparable properties
by a licensed, professional appraiser.
APPRAISAL FOUNDATION
A not-for-profit educational organization established by
the appraisal profession in the United States in 1987. It
is dedicated to the advancement of professional valuation
and responsible for establishing, improving, and promoting
the Uniform Standards of Professional Appraisal Practice
(USPAP).
APPRAISAL INSTITUTE
A world-wide organization dedicated to real estate appraisal
education, publication and advocacy.
APPRAISAL PRINCIPLES
The basic building blocks of the property valuation process,
including property inspection, market analysis and basic
economics.
APPRAISAL REPORT
The end result of the appraisal process, usually consists
of one major, standardized form such as the Uniform Residential
Appraisal Report form 1004, as well as all supporting documentation
and additional detail information. The purpose of the report
is to convey the estimated value of the subject property
and support that estimate with corroborating information.
APPRAISAL STANDARDS BOARD (ASB)
An independent board of the APPRAISAL FOUNDATION, which
writes, amends, and interprets USPAP. The ASB is composed
of up to seven appraisers appointed by the Foundation's
Board of Trustees. The ASB holds public meetings throughout
the year to interpret and amend USPAP.
APPRAISED VALUE
The estimated fair market value of a property as developed
by a licensed, certified appraiser following accepted appraisal
principals.
APPRAISER
An educated, certified professional with extensive knowledge
of real estate markets, values and practices. The appraiser
is often the only independent voice in any real estate transaction
with no vested interest in the ultimate value or sales price
of the property.
APPRECIATION
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION
Any transaction in which the two parties are unconnected
and have no overt common interests. Such a transaction most
often reflects the true market value of a property.
ASSESSED VALUE
The value of a property according to jurisdictional tax
assessment.
ASSESSMENT
The function of assigning a value to a property for the
purpose of levying taxes.
ASSESSMENT RATIO
The comparative relationship of a property's assessed value
to its market value.
ASSESSOR
The jurisdictional official who performs the assessment
and assigns the value of a property.
ASSET
Any item of value which a person owns.
ASSIGNMENT
Transfer of ownership of a mortgage usually when the loan
is sold to another company.
ASSUMABLE MORTGAGE
A mortgage that can be taken over by the buyer when a home
is sold.
ASSUMPTION
When a buyer takes over, or "assumes" the sellers mortgage.
ATTACHED HOUSING
Any number of houses or other dwellings which are physically
attached to one another, but are occupied by a number of
different people. The individual houses may or may not be
owned by separate people as well.
B
BACKFILL
The slope of the ground around a house.
BALL COCK VALVE
The valve inside a toilet tank that controls the filling
of the tank.
BALLOON MORTGAGE
A mortgage loan in which the monthly payments are not large
enough to repay the loan by the end of the term. So at the
end of the term, the remaining balance comes due in a single
large payment.
BALLOON PAYMENT
The final large payment at the end of a balloon mortgage
term.
BANKRUPTCY
When a person or business is unable to pay their debts and
seeks protection of the state against creditors. Bankruptcies
remain on credit records for up to ten years and can prevent
a person from being able to get a loan.
BEAM
A structural supporting member.
BILL OF SALE
A physical receipt indicating the sale of property.
BIWEEKLY MORTGAGE
A mortgage where you make "half payments" every two weeks,
rather than one payment per month. This results in making
the equivalent of 13 monthly payments per year, rather than
12, significantly reducing the time it takes to pay off
a thirty year mortgage.
BLIGHTED AREA
Any region of a city or town that has fallen into disrepair
or otherwise has become undesirable.
BONA FIDE
Any genuine offer, made without intent to defraud or deceive.
BRIDGE FINANCING
An interim loan made to facilitate the purchase of a new
home before the buyer's current residence sells and its
equity is available to fund the new purchase.
BRIDGING
Structural members used between beams to strengthen the
structure.
BROKER
An individual who facilitates the purchase of property by
bringing together a buyer and a seller.
BTU
British Thermal Unit. A unit of measurement used to describe
heating or cooling capacity.
BUFFER ZONE
A segment of land between two disparate municipal zones
which acts as a shield to keep one zone from encroaching
upon the other. Often used to separate residential districts
from commercial areas.
BUILDING CODE
Regulations that ensure the safety and material compliance
of new construction within a municipality. Building codes
are localized to ensure they are adequate to meet the risk
of common hazards.
BUILDING LINE OR SETBACK
The statutory distance between buildings and the property
line, imposed by municipalities, home associations, or other
agreements.
BUILT-INS
Specific items of personal property which are installed
in a real estate improvement such that they become part
of the building. Built-in microwave ovens and dishwashers
are common examples.
BUNGALOW
A one-story, home-style dating from the early twentieth
century. Often characterized by a low-pitched roof.
BUY DOWN
Extra money paid in a lump sum to reduce the interest rate
of a fixed rate mortgage for a period of time. The extra
money may be paid by the borrower, in order to have a lower
payment at the beginning of the mortgage. Or paid by the
seller, or lender, as incentive to buy the property or take
on the mortgage.
BX CABLE
Electrical cable shrouded in a galvanized steel outer cover.
C
CALL OPTION
A clause in a mortgage which allows the lender to demand
payment of the outstanding balance at a specific time.
CAP
Associated with Adjustable Rate Mortgages. A limit on how
high monthly payments or how much interest rates may change
within a certain time period or the life of the mortgage.
CAPE COD COLONIAL
A single-story house style made popular in New England.
Often characterized by a steep roof with gables.
CAPITAL
Accumulated goods and money which is most often used to
generate additional income.
CAPITAL EXPENDITURE
An outlay of funds designed to improve the income-producing
capabilities of an asset or to extend its economic life.
CASH-OUT REFINANCE
Refinancing a mortgage at a higher amount than the current
balance in order to transform a portion of the equity into
cash.
CAULKING
A pliable material used to seal cracks or openings such
as around windows.
CAVEAT EMPTOR
Literally translated: ''Let the buyer beware.'' A common
business tenet whereby the buyer is responsible for verifying
any and all claims by the seller of property.
CERTIFICATE OF DEPOSIT
A document showing that the bearer has a certain amount
of money, at a particular amount interest, on deposit with
a financial institution.
CERTIFICATE OF DEPOSIT INDEX
An index based on the interest rate of six month CD's. Used
to set interest rates on some Adjustable Rate Mortgages.
CERTIFICATE OF ELIGIBILITY
A document issued by the Veterans Administration that certifies
eligibility for a VA loan.
CERTIFICATE OF OCCUPANCY
Issued by an appropriate jurisdictional entity, this document
certifies that a building complies with all building codes
and is safe for use or habitation.
CERTIFICATE OF REASONABLE VALUE
(CRV)
Usually based on an independent appraisal, a CRV for a particular
property establishes the maximum amount which can be secured
by a VA mortgage.
CERTIFICATE OF TITLE
A document designating the legal owner of a parcel of real
estate. Usually provided by a title or abstract company.
CERTIFIED GENERAL APPRAISER
Generally, any professional who has met the local or state
requirements, and passed the appropriate certification exam,
and is capable of appraising any type of property.
CERTIFIED RESIDENTIAL APPRAISER
A sub-classification of appraiser who is only licensed to
appraise residential property, usually up to four units.
CHAIN OF TITLE
The complete history of ownership of a piece of property.
CHATTEL
Any personal property which is not attached to or an integral
part of a property. Chattel is not commonly taken into consideration
when appraising the value of real property.
CIRCUIT BREAKERS
Electrical devices which automatically open electrical circuits
if they are overloaded.
CLEAR TITLE
Ownership of property that is not encumbered by any counter-claim
or lien.
CLOSING
A torturous process designed to induce cramping in a home
buyer's hands by requiring signature on countless pieces
of documentation that nobody has ever read. Or, the process
whereby the sale of a property is consummated with the buyer
completing all applicable documentation, including signing
the mortgage obligation and paying all appropriate costs
associated with the sale (CLOSING COSTS).
CLOSING COSTS
All appropriate costs generated by the sale of property
which the parties must pay to complete the transaction.
Costs may include appraisal fees, origination fees, title
insurance, taxes and any points negotiated in the deal.
CLOSING STATEMENT
The document detailing the final financial arrangement between
a buyer and seller and the costs paid by each.
CO-BORROWER
A second person sharing obligation on the loan and title
on the property.
COLLATERAL
An asset which is placed at risk to secure the repayment
of a loan.
COLLECTION
The process a lender takes to pursue a borrower who is delinquent
on his payments in order to bring the mortgage current again.
Includes documentation that may be used in foreclosure.
CO-MAKER
A second party who signs a loan, along with the borrower,
and becomes liable for the debt should the borrower default.
COMMON LAW
As opposed to statute law. Laws that have been established
by custom, usage and courts over many years.
COMMISSION
A percentage of the sales price or a fixed fee negotiated
by an agent to compensate for the effort expended to sell
or purchase property.
COMMON AREA ASSESSMENTS
Fees which are charged to the tenets or owners of properties
to cover the costs of maintaining areas shared with other
tenets or owners. Commonly found in condominium, PUD or
office spaces.
COMMON AREAS
Any areas, such as entryways, foyers, pools, recreational
facilities or the like, which are shared by the tenets or
owners of property near by. Commonly found in condominium,
PUD or office spaces.
COMMUNITY PROPERTY
In many jurisdictions, any property which has been acquired
by a married couple. The ownership of the property is considered
equal unless stipulated otherwise by both parties.
COMPARABLES
An abbreviated term used by appraisers to describe properties
which are similar in size, condition, location and amenities
to a subject property who's value is being determined. The
Uniform Standards of Professional Appraisal Practice (USPAP)
establish clear guidelines for determining a comparable
property.
COMPOUND INTEREST
Interest paid on the principal amount, as well as any accumulated
interest.
CONCESSIONS
Additional value granted by a buyer or seller to entice
another party to complete a deal.
CONDEMNATION
The official process by which a property is deemed to be
uninhabitable or unusable due to internal damage or other
external conditions.
CONDENSATION
The transition of water vapor to liquid. Typically forms
in areas of high humidity.
CONDOMINIUM
A development where individual units are owned, but common
areas and amenities are shared equally by all owners.
CONDOMINIUM CONVERSION
Commonly, the conversion of a rental property such as an
apartment complex into a CONDOMINIUM-style complex where
each unit is owned rather than leased.
CONDUIT
The pipe through which electric wiring is run.
CONSTRUCTION LOAN
A loan made to a builder or home owner that finances the
initial construction of a property, but is replaced by a
traditional mortgage one the property is completed.
CONTIGUOUS
Connected to or touching along an unbroken boundary.
CONTINGENCY
Something that must occur before something else happens.
Often used in real estate sales when a buyer must sell a
current home before purchasing a new one. Or, when a buyer
makes an offer the requires a complete home inspection before
it becomes official.
CONTRACT
A legally binding agreement, oral or written, between two
parties.
CONVENTIONAL MORTGAGE
A traditional, real estate financing mechanism that is not
backed by any government or other agency (FHA, VA, etc.).
CONVERTIBLE ARM
A mortgage that begins as and adjustable, that allows the
borrower to convert the loan to a fixed rate within a specific
timeframe.
COOPERATIVE (CO-OP)
A form of ownership where each resident of a multiunit property
owns a share in a cooperative corporation that owns the
building. With each resident having rights to a specific
unit within the building.
CORPORATE RELOCATION
A situation where a person's employer pays all or some of
the expenses associated with moving from one location to
another, usually over a substantial distance. Relocation
expenses often include the amounts, such as brokerage fees,
incurred in the selling and buying of the employee's primary
residence.
COST OF FUNDS INDEX (COFI)
An index of financial institutions costs used to set interest
rates for some Adjustable Rate Mortgages.
COVENANT
A stipulation in any mortgage that, if not met, can be cause
for the lender to foreclose.
CREDIT
A loan of money for the purchase of property, real or personal.
Credit is either secured by an asset, such as a home, or
unsecured.
CREDIT HISTORY
A record of debt payments, past and present. Used by mortgage
lenders in determining credit worthiness of individuals.
CREDITOR
A person to whom money is owed.
CREDIT REPORT
A detailed report of an individuals credit, employment and
residence history prepared by a credit bureau. Used by lenders
to determine credit worthiness of individuals.
CREDIT REPOSITORY
Large companies that gather and store financial and credit
information about individuals who apply for credit.
CUL-DE-SAC
A dead-end street. One with only one entrance/exit.
D
DATE OF APPRAISAL
The specific point in time as of which an appraiser designates
the value of a home. Often stipulated as the date of inspection.
DEBT
An obligation to repay some amount owed. This may or may
not be monetary.
DEBT EQUITY RATIO
The ratio of the amount a mortgagor still owes on a property
to the amount of equity they have in the home. Equity is
calculated at the fair-market value of the home, less any
outstanding mortgage debt.
DEED
A document indicating the ownership of a property.
DEED-IN-LIEU (OF FORECLOSURE)
A document given by a borrower to a lender, transferring
title of the property. Often used to avoid credit-damaging
foreclosure procedures.
DEED OF TRUST
A document which transfers title in a property to a trustee,
who's obligations and powers are stipulated. Often used
in mortgage transactions.
DEED OF RECONVEYANCE
A document which transfers ownership of a property from
a Trustee back to a borrower who has fulfilled the obligations
of a mortgage.
DEED OF RELEASE
A document which dismisses a lien or other claim on a property.
DEED OF SURRENDER
A document used to surrender any claim a person has to a
property.
DEFAULT
The condition in which a borrower has failed to meet the
obligations of a loan or mortgage.
DELINQUENCY
The state in which a borrow has failed to meet payment obligations
on time.
DEPOSIT
Cash given along with an offer to purchase property, Also
called EARNEST MONEY.
DEPRECIATION
The natural decline in property value due to market forces
or depletion of resources.
DETACHED SINGLE-FAMILY HOME
A single building improvement intended to serve as a home
for one family.
DISCOUNT POINTS
Points paid in addition to the loan origination fee to get
a lower interest rate. One point is equal to one percent
of the loan amount.
DISTRESSED PROPERTY
A mortgaged property which has been foreclosed on.
DOWNSPOUT
The pipe that water moves through to reach the ground from
the rain gutter.
DUE-ON-SALE PROVISION
A clause in a mortgage giving the lender the right to demand
payment of the full balance when the borrower sells the
property.
DUPLEX
A single-building improvement which is divided and provides
two units which serve as homes to two families.
DWELLING
A house or other building which serves as a home.
DOWN PAYMENT
An amount paid in cash for a property, with the intent to
mortgage the remaining amount due.
E
EARNEST MONEY DEPOSIT
A cash deposit made to a home seller to secure an offer
to buy the property. This amount is often forfeited if the
buyer decides to withdraw his offer.
EASEMENT
The right of a non-owner of property to exert control over
a portion or all of the property. For example, power companies
often own an easement over residential properties for access
to their power lines.
EAVE
The part of the roof that extends beyond the exterior wall.
ECONOMIC DEPRECIATION
The decline in property value caused by external forces,
such as neighborhood blight or adverse development.
ECONOMIC LIFE
The amount of time which any income-producing property is
able to provide benefits to its owner.
EFFECTIVE AGE
The subjective, estimated age of a property based on its
condition, rather than the actual time since it was built.
Excessive wear and tear can cause a property's effective
age to be greater than its actual age.
EMINENT DOMAIN
The legal process whereby a government can take ownership
of a piece of property in order to convert it to public
use. Often, the property owner is paid fair-market value
for the property.
ENCROACHMENT
A building or other improvement on one property which invades
another property or restricts its usage.
ENCUMBRANCE
A claim against a property. Examples are mortgages, liens
and easements.
ENERGY EFFICIENCY RATIO
An efficiency rating system for air conditioning units that
corresponds to the number of BTU's output per watt of electricity
used.
EQUAL CREDIT OPPORTUNITY ACT
(ECOA)
U.S. federal law requiring that lenders afford people equal
chance of getting credit without discrimination based on
race, religion, age, sex etc
EQUITY
The difference between the fair market value of a property
and that amount an owner owes on any mortgages or loans
secured by the property.
EQUITY BUILDUP
The natural increase in the amount of equity an owner has
in a property, accumulated through market appreciation and
debt repayment.
ERRORS AND OMISSIONS INSURANCE
An insurance policy taken out by appraisers to cover their
liability for any mistakes made during the appraisal process.
ESCROW
An amount retained by a third party in a trust to meet a
future obligation. Often used in the payment of annual taxes
or insurance for real property.
ESCROW ACCOUNT
An account setup by a mortgage servicing company to hold
funds with which to pay expenses such as homeowners insurance
and property taxes. An extra amount is paid with regular
principal and interest payments that goes into the escrow
account each month.
ESCROW ANALYSIS
An analysis performed by the lender usually once each year
to see that the amount of money going into the escrow account
each month is correct for the forecasted expenses.
ESCROW DISBURSEMENTS
The payout of funds from an escrow account to pay property
expenses such as taxes and insurance.
ESTATE
The total of all property and assets owned by an individual.
EXAMINATION OF TITLE
The report on the title of a property from the public records
or an abstract of the title.
EXCLUSIVE LISTING
An agreement between the owner of a property and a real
estate agent giving the agent exclusive right to sell the
property.
EXECUTOR
The person named in a will to administer the estate.
F
FACADE
The front exposure of any building. Often used to describe
an artificial or false front which is not consistent with
the construction of the rest of the building.
FAIR CREDIT REPORTING ACT
A federal law regulating the way credit agencies disclose
consumer credit reports and the remedies available to consumers
for disputing and correcting mistakes on their credit history.
FAIR MARKET VALUE
The price at which two unrelated parties, under no duress,
are willing to transact business.
FANNIE MAE
A private, shareholder-owned company that works to make
sure mortgage money is available for people to purchase
homes. Created by Congress in 1938, Fannie Mae is the nation's
largest source of financing for home mortgages.
FASCIA
The boards that enclose the eaves.
FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC)
The U.S. Government agency created in 1933 which maintains
the stability of and public confidence in the nation's financial
system by insuring deposits and promoting safe and sound
banking practices.
FEDERAL HOUSING ADMINISTRATION
(FHA)
A sub-agency of the U.S. Department of Housing and Urban
Development created in the 1930's to facilitate the purchase
of homes by low-income, first-time home buyers. It currently
provides federally-subsidized mortgage insurance for private
lenders.
FEE APPRAISER
A certified, professional appraiser who estimates the fair
market value of property and receives a set fee in exchange.
FEE SIMPLE
A complete, unencumbered ownership right in a piece of property.
FEE SIMPLE ESTATE
A form or ownership, or holding title to real estate. It
is the most complete form of title, having an unconditional
and unlimited interest of perpetual duration.
FHA MORTGAGE
A mortgage that is insured by the Federal Housing Administration
(FHA).
FINAL VALUE ESTIMATE
The estimated value of a piece of property resulting from
an appraisal following the USPAP guidelines.
FIRST MORTGAGE
The primary loan or mortgage secured by a piece of property.
FIXED-RATE MORTGAGE (FRM)
A mortgage which has a fixed rate of interest over the life
of the loan.
FIXTURE
Any piece of personal property which becomes permanently
affixed to a piece of real property.
FLASHING
The metal used around the base of roof mounted equipment,
or at the junction of angles used to prevent leaking.
FLOOD INSURANCE
Supplemental insurance which covers a home owner for any
loss due to water damage from a flood. Often required by
lenders for homes located in FEMA-designated flood zones.
FLOOR PLAN
The representation of a building which shows the basic outline
of the structure, as well as detailed information about
the positioning of rooms, hallways, doors, stairs and other
features. Often includes detailed information about other
fixtures and amenities.
FLUE
The furnace exhaust pipe, usually going through the roof.
FLUSH VALVE
The valve between the toilet bowl and the tank.
FOOTING
The partially buried support for a vertical structural member
such as a post.
FORECLOSURE
The process whereby a lender can claim the property used
by a borrower to secure a mortgage and sell the property
to meet the obligations of the loan.
FORFEITURE
The loss of property or money due to the failure to meet
the obligations of a mortgage or loan secured by that property.
FOUNDATION
The solid structural element upon which a structure is built.
FRONTAGE
The segment of a property that runs along a point of access,
such as a street or water front.
FUNCTIONAL OBSOLESCENCE
A decrease in the value of property due to a feature or
lack thereof which renders the property undesirable. Functional
obsolescence can also occur when the surrounding area changes,
rendering the property unusable for its originally intended
purpose.
G
GABLE ROOF
A steeply angled, triangular roof.
GALVANIZED PIPE
Iron pipe with a galvanized (zinc) coating.
GAMBREL ROOF
A ''barn-like'' roof, where the upper portion of the roof
is less-steeply angled than the lower part.
GENERAL LIEN
A broad-based claim against several properties owned by
a defaulting party.
GEORGIAN
A classic, English-style hose characterized by simple rectangular
shape and multiple stories.
GFI
Ground Fault Interrupter. A type of circuit breaker required
in areas where water is present.
GINNIE MAE
A wholly owned corporation created in 1968 within the U.S.
Department of Housing and Urban Development to serve low-to
moderate-income homebuyers.
GIRDER
A main supporting beam.
GOVERNMENT MORTGAGE
Any mortgage insured by a government agency, such as the
FHA or VA.
GRADE
The slope of land around a building. Also ground level.
GRANTEE
Any person who is given ownership of a piece of property.
GRANTOR
Any person who gives away ownership of a piece of property.
GROSS AREA
The sum total of all floor space, including areas such as
stairways and closet space. Often measured based on external
wall lengths.
GROUTING
Material used around ceramic tile.
GUTTER
The trough around the edge of the roof that catches and
diverts rain.
H
HALF-SECTION
320 acres.
HAZARD INSURANCE
Insurance covering damage to a property caused by hazards
such as fire, wind and accident.
HEADER
The framing elements above an opening such as a window or
door.
HEARTH
The floor of a fireplace or the area immediately in front
of it.
HEIGHT ZONING
A municipal restriction on the maximum height of any building
or other structure.
HIDDEN AMENITIES
Assets of a property which contribute to its value, but
are not readily apparent. Examples might include upgraded
or premium building materials.
HIGHEST AND BEST USE
The most profitable and likely use of a property. Selected
from reasonably probable and legal alternative uses, which
are found to be physically possible, appropriately supported
and financially feasible to result in the highest possible
land value.
HOME EQUITY CONVERSION MORTGAGE
(HECM)
Also known as a reverse annuity mortgage. It allows home
owners (usually older) to convert equity in the home into
cash. Normally paid by the lender in monthly payments. HECM's
typically don't have to be repaid until the borrower is
no longer occupying the home.
HOME EQUITY LINE OF CREDIT
A type of mortgage loan that allows the borrower to draw
cash against the equity in his home.
HOME INSPECTION
A complete examination of a building to determine its structural
integrity and uncover any defects in materials or workmanship
which may adversely affect the property or decrease its
value.
HOME INSPECTOR
A person who performs professional home inspections. Usually,
with an extensive knowledge of house construction methods,
common house problems, how to identify those problems and
how to correct them.
HOMEOWNER'S ASSOCIATION
An organization of home owners in a particular neighborhood
or development formed to facilitate the maintenance of common
areas and to enforce any building restrictions or covenants.
HOMEOWNER'S INSURANCE
A policy which covers a home owner for any loss of property
due to accident, intrusion or hazard.
HOMEOWNER'S WARRANTY
An insurance policy covering the repair of systems and appliances
within the home for the coverage period.
HUD MEDIAN INCOME
Median family income for a particular county or metropolitan
statistical area (MSA), as estimated by the Department of
Housing and Urban Development (HUD).
HUD-1 STATEMENT
A standardized, itemized list, published by the U.S. Department
of Housing and Urban Development (HUD), of all anticipated
CLOSING COSTS connected with a particular property purchase.
I
IMPROVED LAND
Any parcel of land which has been changed from its natural
state through the creation of roads, buildings or other
structures.
IMPROVEMENTS
Any item added to vacant land with the intent of increasing
its value or usability.
IMPROVEMENT RATIO
The comparative value of a improved piece of land to its
natural, unaltered state.
INCOME APPROACH
The process of estimating the value of property by considering
the present value of a stream of income generated by the
property.
INCOME PROPERTY
A piece of property whose highest and best use is the generation
of income through rents or other sources.
INDEPENDENT APPRAISAL
An estimation of value created by a professional, certified
appraiser with no vested interest in the value of the property.
INSPECTION
The examination of a piece of property, its buildings or
other amenities.
INSURABLE TITLE
The title to property which has been sufficiently reviewed
by a title insurance company, such that they are willing
to insure it as free and clear.
INTEREST RATE
A percentage of a loan or mortgage value that is paid to
the lender as compensation for loaning funds.
INVESTMENT PROPERTY
Any piece of property that is expected to generate a financial
return. This may come as the result of periodic rents or
through appreciation of the property value over time.
J
JAMB
The side of a door frame.
JOINT TENANCY
A situation where two or more parties own a piece of property
together. Each of the owners has an equal share, and may
not dispose of or alter that share without the consent of
the other owners.
JOISTS
Horizontal beams laid on edge to support flooring or a ceiling.
JUDGMENT
An official court decision. If the judgment requires payment
from one party to another, the court may put a lien against
the payees property as collateral.
JUDICIAL FORECLOSURE
A type of foreclosure conducted as a civil suit in a court
of law.
JUMBO LOAN
A mortgage loan for an amount greater than the limits set
by Fannie Mae and Freddie Mac. Often called non-conforming
loans.
K
L
LALLY COLUMN
A concrete filled steel pipe used to support beams.
LATE CHARGE
An extra charge, or penalty added to a regular mortgage
payment when the payment is made late by an amount of time
specified in the original loan document.
LATENT DEFECTS
Any defect in a piece of property which is not readily apparent,
but which has an impact of the value. Structural damage
or termite infestation would be examples of latent defects.
LEASE
A contract between a property owner and a tenant specifying
the payment amount, terms and conditions, as well as the
length of time the contract will be in force.
LEASEHOLD ESTATE
A type of property ''ownership'' where the buyer actually
has a long-term lease on the property.
LEASE OPTION
A lease agreement that gives the tenant an option to buy
the property. Usually, a portion of the regular monthly
rent payment will be applied towards the down payment.
LEGAL DESCRIPTION
The description of a piece of property, identifying its
specific location in terms established by the municipality
or other jurisdiction in which the property resides. Often
related in specific distances from a known landmark or intersection.
LENDER
The person or entity who loans funds to a buyer. In return,
the lender will receive periodic payments, including principal
and interest amounts.
LIABILITIES
A person's outstanding debt obligations.
LIABILITY INSURANCE
Insurance that covers against potential lawsuit brought
against a property owner for alleged negligence resulting
in damage to another party.
LIEN
Any claim against a piece of property resulting from a debt
or other obligation.
LIFE CAP
A limit on how far the interest rate can move for an Adjustable
Rate Mortgage.
LIKE-KIND PROPERTY
Any property which is substantially similar to another property.
LINE OF CREDIT
An extension of credit for a certain amount for a specific
amount of time. To be used by the borrower at his discretion.
LIQUID ASSET
Any asset which can be quickly converted into cash at little
or no cost, or cash itself.
LOAN
Money borrowed, to be repaid with interest, according to
the specific terms and conditions of the loan.
LOAN OFFICER
A person that "sells" loans, representing the lender to
the borrower, and the borrower to the lender.
LOAN ORIGINATION
How a lender refers to the process of writing new loans.
LOAN SERVICING
The processing of payments, mailing of monthly statements,
management and disbursement of escrow funds etc Typically
carried out by the company you make payments to.
LOAN-TO-VALUE RATIO (LTV)
The comparison of the amount owed on a mortgaged property
to its fair market value.
LOCK-IN
An agreement between a lender and a borrower, guaranteeing
an interest rate for a loan if the loan is closed within
a certain amount of time.
LOCK-IN PERIOD
The amount of time the lender has guaranteed an interest
rate to a borrower.
M
MAJOR DEFICIENCY
A deficiency that strongly impacts the usability and habitability
of a house. Or a deficiency that may be very expensive to
repair.
MANUFACTURED HOUSING
Once known as ''mobile homes,'' manufactured housing is
any building which has been constructed off site, then moved
onto a piece of real property.
MARGIN
The difference between the interest rate and the index on
an adjustable rate mortgage.
MARGINAL LAND
Land whose value has been diminished due to some internal
defect or external condition. In most cases, the cost to
correct the flaw or condition is as much or more than the
expected return from the property.
MASTER ASSOCIATION
An umbrella organization that is made up of multiple, smaller
home owner's associations. Often found in very large developments
or condominium projects.
MATURITY
The date on which the principal balance of a financial instrument
becomes due and payable.
MERGED CREDIT REPORT
A credit report derived from data obtained from multiple
credit agencies.
METES AND BOUNDS
A traditional way of describing property, generally expressed
in terms of distance from a known landmark or intersection,
and then following the boundaries of the property back to
its origin.
METROPOLITAN AREA
The accumulated land in and around a city or other municipality
which falls under the political and economic influence of
that entity.
MINERAL RIGHTS
The legal right to exploit and enjoy the benefits of any
minerals located below the surface of a parcel of land.
MISREPRESENTATION
A statement by one party in a transaction that is incorrect
or misleading. Most misrepresentations are deemed to be
intentional and thus may constitute fraud. Others, however,
some are rendered through simple mistakes, oversights or
negligence.
MORTGAGE
A financial arrangement wherein an individual borrows money
to purchase real property and secures the loan with the
property as collateral.
MORTGAGE BANKER
A financial institution that provides primary and secondary
mortgages to home buyers.
MORTGAGE BROKER
A person or organization that serves as a middleman to facilitate
the mortgage process. Brokers often represent multiple mortgage
bankers and offer the most appropriate deal to each buyer.
MORTGAGEE
The entity that lends money in a real estate transaction.
MORTGAGE INSURANCE
A policy that fulfills that obligations of a mortgage when
the policy holder defaults or is no longer able to make
payments.
MORTGAGE INSURANCE PREMIUM
(MIP)
An fee that is often included in mortgage payments that
pays for mortgage insurance coverage.
MORTGAGE LIFE INSURANCE
A policy that fulfills the obligations of a mortgage when
the policy holder dies.
MORTGAGOR
The entity that borrows money in a real estate transaction.
MULTI-FAMILY PROPERTIES
Any collection of buildings that are designed and built
to support the habitation of more than four families.
N
NATIONAL ASSOCIATION OF MASTER
APPRAISERS (NAMA)
A non profit professional association organized in 1982,
dedicated to the advancement of professionalism in real
estate appraisal.
NATIONAL SOCIETY OF REAL ESTATE
APPRAISERS
An organization founded in 1956 which promotes standards
of professionalism in its members.
NATURAL VACANCY RATE
The percentage of vacant properties in a given area that
is the result of natural turnover and market forces.
NEGATIVE AMORTIZATION
When the balance of a loan increases instead of decreases.
Usually due to a borrower making a minimum payment on an
Adjustable Rate Mortgage during a period when the rate fluctuates
to a high enough point that the minimum payment does not
cover all of the interest.
NEIGHBORHOOD LIFE-CYCLE
The evolution of neighborhood use and demographics over
time. Economic fluctuations, municipal zoning changes and
population shifts can effect the life cycle.
NEIGHBORHOOD
A subsection of a municipality that has been designated
by a developer, economic forces or physical formations.
NET LEASABLE AREA
The space in a development, outside of the common areas,
that can be rented to tenants.
NEW ENGLAND COLONIAL
An architectural style dating from early American history
typified by a two-story building with clapboard siding.
NO-COST LOAN
Many lenders offer loans that you can obtain at "no cost."
You should inquire whether this means there are no "lender"
costs associated with the loan, or if it also covers the
other costs you would normally have in a purchase or refinance
transactions, such as title insurance, escrow fees, settlement
fees, appraisal, recording fees, notary fees, and others.
These are fees and costs which may be associated with buying
a home or obtaining a loan, but not charged directly by
the lender. Keep in mind that, like a "no-point" loan, the
interest rate will be higher than if you obtain a loan that
has costs associated with it.
NO-POINT LOAN
A loan with no "points". The interest rate on such a loan
will be higher than a loan with points paid. Also sometimes
refers to a refinance loan where closing costs are included
in the loan.
NON-CONFORMING USE
The use of land for purposes contrary to the applicable
municipal zoning specifications. Often occurs when zoning
changes after a property is in use.
NONLIQUID ASSET
Any asset which can not be quickly converted into cash at
little or no cost.
NOTE
A legal document that obligates a borrower to repay a mortgage
loan at a stated interest rate during a specified period
of time.
NOTE RATE
The interest rate stated on a mortgage note.
NOTICE OF DEFAULT
Formal written notice from a lender to a borrower that default
has occurred.
O
OBSOLESCENCE
The process of an assets value diminishing due to the development
of more desirable alternatives or because of the degradation
of its capabilities.
OCCUPANCY
A physical presence within and control of a property.
OCCUPANCY RATE
The percentage of properties in a given area that are occupied.
OCTOPUS RECEPTACLE
An outlet with too many devices plugged into it, using a
power strip or other device to multiply the outlets.
OFF-SITE IMPROVEMENTS
Buildings, structures or other amenities which are not located
on a piece of property, but are necessary to maximize the
use of the property or in some way contribute to the value
of the property.
OFF-STREET PARKING
Designated parking spaces associated with a particular building
or other structure which are not located on public streets.
OLD TERMITE ACTIVITY
Where no termites are currently active, but indications
of past activity can be seen.
ON-SITE IMPROVEMENTS
Buildings, structures or other amenities that are erected
on a piece of property and contribute to its value.
OPEN SPACE
Any land which has not had any significant buildings or
structures erected on it. Most often used to describe desirable
neighborhood features like parks.
OPEN SPLICE
An uncovered electrical connection.
ORIGINAL EQUITY
The amount of cash a home buyer initially invests in the
home.
ORIGINAL PRINCIPAL BALANCE
The total amount of principal owed on a mortgage loan at
the time of closing.
ORIGINATION FEE
Refers to the total number of points paid by a borrower
at closing.
OWNER FINANCING
A transaction where the property owner provides all or part
of the financing.
OWNER OCCUPIED
The state of property wherein the owner occupies at least
some portion of the property.
P
PARGING
The cement coat applied to block foundations.
PARTIAL INTEREST
A shared ownership in a piece of property. May be divided
among two or more parties.
PARTIAL PAYMENT
A payment of less than the regular monthly amount. Usually,
a lender will not accept partial payments.
PERIODIC PAYMENT CAP
The limit on how much regular monthly payments on an Adjustable
Rate Mortgage can change during one adjustment period.
PERIODIC RATE CAP
The limit on how much the interest rate on an Adjustable
Rate Mortgage can change during any one adjustment period.
PERSONAL PROPERTY
Owned items which are not permanently affixed to the land.
PERSONAL RESIDENCE
The primary domicile of a person or family.
PLANNED UNIT DEVELOPMENT (PUD)
A coordinated, real estate development where common areas
are shared and maintained by an owner's association or other
entity.
PLAT
A plan or chart of a piece of land which lays out existing
or planned streets, lots or other improvements.
POINT
A percentage of a mortgage amount (one point = 1 percent).
PRE-APPROVAL
The process of applying for a mortgage loan and becoming
approved for a certain amount at a certain interest rate
before a property has been chosen. Pre-approval allows the
borrower greater freedom in negotiations with sellers.
PREFABRICATED
Any building or portion thereof which is manufactured and
assembled off site, then erected on a property.
PREPAYMENT
Payment made that reduces the principal balance of a loan
before the due date and before the loan has become fully
amortized.
PREPAYMENT PENALTY
A fee that may be charged to a borrower who pays off a loan
before it is due.
PRE-QUALIFICATION
Less formal that pre-approval, pre-qualification usually
means a written statement from a loan officer indicating
his or her opinion that the borrower will be able to become
approved for a mortgage loan.
PRIME RATE
The interest rate that banks and other lending institutions
charge other banks or preferred customers.
PRINCIPAL
The amount owed on a mortgage which does not include interest
or other fees.
PRINCIPAL BALANCE
The outstanding balance of principal on a mortgage. Does
not included interest due.
PRINCIPAL, INTEREST, TAXES,
AND INSURANCE (PITI)
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE
(PMI)
A form of mortgage insurance provided by private, non-government
entities. Normally required when the LOAN TO VALUE RATIO
is less that 20%.
PROPERTY
Any item which is owned or possessed.
PURCHASE AGREEMENT
A written contract signed by the buyer and seller stating
the terms and conditions under which a property will be
sold.
Q
QUADRAPLEX
Any building designed to accommodate four families.
QUALIFYING RATIOS
Two ratios used in determining credit worthiness for a mortgage
loan. One is the ratio of a borrower's monthly housing costs
to monthly income. The other is a ratio of all monthly debt
to monthly income.
QUITCLAIM DEED
A legal document which transfers any ownership an individual
has in a piece of property. Often used when the amount of
ownership is not known or is unclear.
R
RAFTER
A structural element of the roof, sloping from the peak
to the outer walls.
RANCH HOUSE
An architectural style typified by a single-story, low-roof
construction. Popular in the western U.S.
RATE LOCK
A guarantee from a lender of a specific interest rate for
a period of time.
RAW LAND
Any land which has not been developed.
REAL ESTATE
A piece of land and any improvements or fixtures located
on that land.
REAL ESTATE AGENT
A licensed professional who facilitates the buying and selling
of real estate.
REAL ESTATE SETTLEMENT PROCEDURES
ACT (RESPA)
A federal law requiring lenders to give full disclosure
of closing costs to borrowers.
REAL PROPERTY
Land, improvements and appurtenances, and the interest and
benefits thereof.
REALTOR
A real estate agent or broker who is a member of the National
Association of Realtors.
RECEPTACLE
An electrical outlet to plug into.
RECORDER
A local government employee whose role it is to keep records
of all real estate transactions within the jurisdiction.
RECORDING
The filing of a real estate transaction with the appropriate
government agent (normally the RECORDER). A real estate
transaction is considered final when it is recorded.
REFINANCE TRANSACTION
A new loan to pay off an existing loan. Typically to gain
a lower interest rate or convert equity into cash.
REGISTER
Where air from a furnace or air conditioning system enters
the room.
RELOCATION SERVICE
Any company or agency that assists corporate employees in
relocating from one place to another. Services may include
hiring and coordinating real estate agents, moving companies,
utilizes and the like.
REMAINING BALANCE
The amount of principal, interest and other costs that has
not yet been repaid.
REMAINING TERM
The amount of time remaining on the original amortization
schedule.
REMODEL
An activity designed to improve the value or desirability
of a property through rebuilding, refurbishing, redecorating
or adding on to it.
REPAYMENT PLAN
A plan to repay delinquent payments, agreed upon between
a lender and borrower, in an effort to avoid foreclosure.
REPLACEMENT RESERVE FUND
An account, or fund, setup for the replacement of short
life items , such as carpeting, in the common areas of a
cooperative property.
RESIDENTIAL PROPERTY
A piece of property whose highest and best use is the maintenance
of a residence.
REVOLVING DEBT
A type of credit that allows the borrower/customer to make
charges against a predetermined line of credit. The customer
then pays monthly installments on the amount borrowed, plus
interest.
RIDGE BOARD
The structural member of a roof where the rafters join at
the top.
RIGHT OF FIRST REFUSAL
An agreement giving a person the first opportunity to buy
or lease a property before the owner offers it for sale
to others.
ROOF PITCH
The degree of slope in a roof.
RURAL
An area outside of an established urban area or metropolitan
district.
S
SALE PRICE
The actual price a property sells for, exclusive of any
special financing concessions.
SALES COMPARISON APPROACH
An appraisal practice which estimates the value of a property
by comparing it to comparable properties which have sold
recently.
SCARCITY
An economic principal that dictates the price of a good
or service through the interaction of supply and demand.
When an item is scarce, its price tends to rise, given a
constant demand. Real Estate is a classic example of scarcity.
SECOND MORTGAGE
A loan secured by the equity in a home, when a primary mortgage
already exists.
SECONDARY MORTGAGE MARKET
An economic marketplace where mortgage bankers buy and sell
existing mortgages.
SECURED LOAN
A loan that is backed by collateral. In the case of a mortgage
loan, the collateral is the house.
SECURITY
The property used as collateral for a loan.
SEMIDETACHED HOUSING
Two residences which share a common wall.
SERVICER
A financial institution which collects mortgage payments
from borrowers and applies the appropriate portions to principal,
interest and any escrow accounts.
SERVICING
The processing of payments, mailing of monthly statements,
management and disbursement of escrow funds etc Typically
carried out by the company you make payments to.
SHEATHING
The covering on outside walls beneath the siding or exterior
finish such as stucco.
SHEETROCK
Also called drywall, the gypsum board commonly used on interior
walls.
SILL PLATE
The lumber used around the foundation to support exterior
wall framing.
SILL COCK
Garden hose pipe connection.
SINGLE-FAMILY PROPERTY
A property designed and built to support the habitation
of one family.
SOFFIT
The underside of a cornice at the eaves.
STUCCO
A textured plaster exterior (and occasionally interior)
wall finish.
STUD
A vertical framing piece in a wall, generally 2x4 lumber
in interior walls.
SUBDIVISION
A residential development that is created from a piece of
land which has been subdivided into individual lots.
SUBJECT PROPERTY
A term which indicates a property which is being appraised.
SUMP
A basin into which water drains and from which the water
is pumped out.
SURVEY
A specific map of a piece of property which includes the
legal boundaries and any improvements or features of the
land. Surveys also depict any rights-of-way, encroachments
or easements.
SWEAT EQUITY
The method whereby a home owner develops equity in a property,
either during the purchase or throughout its life, by personally
constructing improvements rather than paying to have them
built.
T
TAX-EXEMPT PROPERTY
Any property which is not taxed.
TENANCY
The right to occupy a building or unit.
TENANCY IN COMMON
A form of holding title, whereby there are two or more people
on title to a property, ownership does not pass on to the
others upon the death of one individual.
THIRD PARTY ORIGINATION
When a lender uses a third party to originate and package
loans for sale to the secondary market (Fannie Mae, Freddie
Mac).
TITLE
A specific document which serves as proof of ownership.
TITLE COMPANY
An organization which researches and certifies ownership
of real estate before it is bought or sold. Title companies
also act at the facilitator ensures all parties are paid
during the real estate transaction.
TITLE INSURANCE
A policy which insures a property owner should a prior claim
arise against the property after the purchase has been completed.
This also covers a lender should a question of ownership
arise.
TITLE SEARCH
The process whereby the TITLE COMPANY researches a properties
title history and ensures that no outstanding claims exist.
TRANSFER OF OWNERSHIP
Any means by which the ownership of a property changes hands.
TRANSFER OF TAX
Taxes payable when title passes from one owner to another.
TRAP
A bend in water pipe.
TRUSTEE
A fiduciary who holds or controls property for the benefit
of another.
TRUTH IN LENDING
A federal law requiring full disclosure by lenders to borrowers
of all terms, conditions and costs of a mortgage.
TUDOR
A style of architecture typified by exposed stone, wood
and brick construction. Similar in style to English manor
homes.
U
UNDER IMPROVED LAND
A piece of land which has been improved, but not to the
full extent of its potential.
UNENCUMBERED PROPERTY
Any property which has no outstanding claims or liens against
it.
UNIFORM STANDARDS OF PROFESSIONAL
APPRAISAL PRACTICE (USPAP)
Developed in 1986 by the Ad Hoc Committee on Uniform Standards
and copyrighted in 1987 by The Appraisal Foundation, USPAP
forms the guidelines followed by every licensed and certified
real estate appraiser in the United States. The purpose
of these Standards is to establish requirements for professional
appraisal practice, which includes appraisal, appraisal
review, and appraisal consulting. The intent of these Standards
is to promote and maintain a high level of public trust
in professional appraisal practice.
USEFUL LIFE
The span of time over which a property can be used or can
provide benefits to its owner.
V
VACANCY RATE
The current percentage of vacant properties in a given area,
regardless of why they are vacant.
VA MORTGAGE
A mortgage that is guaranteed by the Department of Veterans
Affairs (VA).
VARIANCE
An exception to municipal zoning regulations granted for
a specific time period to allow for non-conforming use of
the land.
VENT PIPE
A pipe allowing gas to escape.
VESTED
Having the right to use a portion of a fund such as an IRA.
Typically vesting occurs over time. If you are 100% vested,
you have a right to 100% of the fund.
VETERANS AFFAIRS, DEPARTMENT
OF (VA)
The successor to the Veteran's Administration, this government
agency is responsible for ensuring the rights and welfare
of our nation's veterans and their dependents. Among other
duties, the VA insures home loans made to veterans.
VOLTAGE
An expression of electric force, or pressure. One volt being
the force needed to move one amp against one ohm resistance.
W
WALK-THROUGH INSPECTION
A process whereby an appraiser examines a property in preparation
for estimating its value. Also, the process of inspecting
a property for any damage prior to that property being bought
or sold.
WARRANTY
An affidavit given to stipulate the condition of a property.
The person giving the warranty assumes liability if the
condition turns out to be untrue.
WATT
An expression of amount of electrical power. Volt times
amps equals watts.
WEAR AND TEAR
A term used to indicate the normal damage inflicted on a
property through every-day use.
WEATHER STRIPPING
Material used around windows and doors to prevent drafts.
WEEP HOLE
Drainage hole that allows water to escape.
X
Y
Z
ZERO LOT LINE
A municipal zoning category wherein a building or other
fixture may abut the property line.
ZONE
A specific area within a municipality or other jurisdiction
which conforms to certain guidelines regarding the use of
property in the zone. Typical zones include single-family,
multi-family, industrial, commercial and mixed-use.
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