What the heck did that Realtor just say?
Every industry tends to talk in shorthand, jargon, and TLA's (Three Letter Acronyms). We're as guilty of this in our business as anybody. So the next time you hear one of us going on and on about something and you aren't quite sure what it means, look here to see if you can find an explanation. If you can't find it here, call us - we'll let you in on the secret (if we can).
ACRE - 43,560 square feet. A measurement of area.
ADJUSTMENT DATE - The date the interest rate changes on an adjustable rate mortgage.
ADDENDUM - A supplement to any document that contains additional information pertinent to the subject.
ADJUSTABLE-RATE MORTGAGE (ARM) - A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.
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.
AMORTIZATION SCHEDULE - The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.
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 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 opinion of value of the subject property and support that opinion with corroborating information.
APPRECIATION - The natural rise in property value due to market forces.
ASSESSMENT - The function of assigning a value to a property for the purpose of levying taxes.
ASSESSOR - The jurisdictional official who performs the assessment and assigns the value of a property.
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.
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.
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.
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.
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.
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.
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.
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.
CERTIFICATE OF ELIGIBILITY - A document issued by the Veterans Administration that certifies eligibility for a VA loan.
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.
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.
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.
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.
COMPARABLES - Properties which are similar in size, condition, location and amenities to a subject property whose value is being determined.
CONCESSIONS - Additional value granted by a buyer or seller to entice another party to complete a deal.
CONDOMINIUM - A development where individual units are owned, but common areas and amenities are shared equally by all owners.
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.
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 that 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.).
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.
COVENANT - A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.
CREDIT HISTORY - A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.
CUL-DE-SAC - A dead-end street. One with only one entrance/exit.
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, whose 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.
DEFAULT - The condition in which a borrower has failed to meet the obligations of a loan or mortgage.
DEPOSIT - Cash given along with an offer to purchase property, Also called earnest money.
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.
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.
DOWN PAYMENT - An amount paid in cash for a property, with the intent to mortgage the remaining amount due.
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.
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.
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.
ESCROW - An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.
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 go into the escrow account each month.
EXCLUSIVE LISTING - An agreement between the owner of a property and a real estate agent giving the agent exclusive right to sell the property.
FAIR MARKET VALUE - The price at which two unrelated parties, under no duress, are willing to transact business.
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.
FHA MORTGAGE - A mortgage that is insured by the Federal Housing Administration (FHA).
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.
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.
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.
FOUNDATION - The solid structural element upon which a structure is built.
GFI - Ground Fault Interrupter. A type of circuit breaker required in areas where water is present.
GOVERNMENT MORTGAGE - Any mortgage insured by a government agency, such as the FHA or VA.
HAZARD INSURANCE - Insurance covering damage to a property caused by hazards such as fire, wind and accident.
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.
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.
HOME WARRANTY - An insurance policy covering the repair of systems and appliances within the home for the coverage period.
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.
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.
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.
JUMBO LOAN - A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.
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.
LIABILITY INSURANCE - Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.
LOAN-TO-VALUE RATIO (LTV) - The comparison of the amount owed on a mortgaged property to its fair market value.
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.
MORTGAGE - A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.
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.
MORTGAGE INSURANCE - A policy that fulfills those obligations of a mortgage when the policy holder defaults or is no longer able to make payments.
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.
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.
NOTICE OF DEFAULT - Formal written notice from a lender to a borrower that default has occurred.
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.
OWNER FINANCING - A transaction where the property owner provides all or part of the financing.
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.
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.
PREPAYMENT - Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.
PRE-QUALIFICATION - Less formal than 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.
PRINCIPAL - The amount owed on a mortgage which does not include interest or other fees.
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%.
PURCHASE AGREEMENT - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
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.
RATE LOCK - A guarantee from a lender of a specific interest rate for a period of time.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) - A federal law requiring lenders to give full disclosure of closing costs to borrowers.
REAL ESTATE OWNED (REO) - Properties that have been reposessed by a lending institution, typically as a result of a foreclosure.
REALTOR® - A real estate agent or broker who is a member of the NATIONAL ASSOCIATION of REALTORS®.
RECORDING - The filing of a real estate transaction with the appropriate government agent (normally the County 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.
SALE PRICE - The actual price a property sells for, exclusive of any special financing concessions.
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.
SUBDIVISION - A residential development that is created from a piece of land which has been subdivided into individual lots.
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.
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.
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.
TRUTH IN LENDING - A federal law requiring full disclosure by lenders to borrowers of all terms, conditions and costs of a mortgage.
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).
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.
