Vocabulary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Acceptance
An agreement to the terms of an offer.

Adjustable Rate Mortgage (ARM)
A loan with an interest rate that is tied to an index. The interest rate changes periodically in relation to the index, thus payments may increase or decrease accordingly.

Agent
A person who acts for or represents another when dealing with buyers and sellers.

Alienation
The transfer of ownership or an interest in property from one person to another.

Amenity
An attractive or desirable feature, as of something that adds to one's comfort.

Amortization
A payment plan structured to gradually reduce the amount borrowed through payments towards the principal thereby retiring the full amount of debt at the end of the loan term.

Appraisal
An opinion of property value given by an appraiser as of a given date.

Appreciation
A rise in value or price, especially over a period of time.

Appurtenance
Anything that pertains to the land, but is not necessarily a part of the actual property. Two common appurtenances are easements and stock rights in a mutual water company.

ARM
See Adjustable Rate Mortgage

Balloon Payment
The final payment due on a partially amortized loan. This payment is larger than preceding payments on the loan.

Beneficiary
A person receiving benefit. On a trust deed, the beneficiary is the person or entity entitled to receive payment on a loan.

Bill of Sale
A written agreement used to transfer ownership of personal property from the seller to the buyer.

Blanket Loan
A loan secured by more than one parcel of property.

Bona Fide
In good faith; genuine.

Broker
A person who acts as an agent for the buyer or seller by negotiating the sale for a fee or commission.

Buy Down
When an interest rate on a loan is reduced by paying points to a lender.

CAP
The maximum amount that the interest rate may increase for the specified time period on an adjustable rate mortgage.

Chattel
Personal property.

Comps
A term used by real estate agents that refers to comparable properties.

Condition
A provision in a contract that must be fulfilled in order to carry out the contract.

Contingency
See Condition

Credit History
A record of an individual's or company's history of borrowing and repaying of debt.

Credit Report
A report containing an individual's or company's credit history prepared by a credit bureau.

Curb Appeal
The view that buyers see when they drive by or arrive for a showing of a property.

Deposit
Money offered in good faith for the purchase of real estate. Also referred to as earnest money.

Deposit Receipt
A purchase agreement presented to the seller as a buyer's offer to purchase real estate. Also the buyer's receipt for the deposit.

Discount Points
A percentage of the loan paid to the lender at the time the loan is made. A point is one percent of the loan amount.

Dual Agent
An agent who represents both the buyer and the seller in a transaction.

Dwelling
A place to live in such as a residence.

Earnest Money
Money offered in good faith for the purchase of real estate.

Easement
A right of way held by a person or entity other than the owner to access real property for a particular purpose. A common example would be an easement granted to a utility company for access to a specific area of private property.

Eminent Domain
The government's right to take private property for public use, as long as the owner is fairly compensated.

Equity
The financial interest of the property owner. It is the difference between the value of the property, and the outstanding mortgage's and other liens on the property.

Erosion
The gradual loss of land due to natural processes such as the action of water.

Escrow
A neutral third party who holds funds in a transaction between the buyer and the seller until specified conditions have been met.

Fair Market Value
The price of property that a buyer is willing to buy and a seller is willing to sell on the open market.

FDIC (The Federal Deposit Insurance Corporation)
Insures deposits in member banks for a specified dollar limit. Headquartered in the District of Columbia and managed by a Board of Directors whom are appointed by the President and confirmed by the Senate.

Fiduciary Relationship
A relationship of trust and confidence such as the relationship between the agent and the buyer or seller.

Fixed Rate Mortgage
A mortgage with an interest rate that remains constant over the life of the loan.

Fixture
An item of personal property that has become attached or affixed to real property.

Frontage
The section of property that extends along a street or a body of water.

Gift
Funds given to a buyer as a present. In cases where a gift is given to a buyer by a friend or relative for a down payment, the buyer must sign a document stating that the money is a gift and that it does not have to be repaid.

Good Faith Estimate
An estimate provided by the lender of all costs for acquiring a loan.

Government Survey Description
A legal description that divides land into squares called townships which are divided into 36 sections. Each section is approximately one mile square and contains approximately 640 acres.

Grant Deed
A written document that transfers legal title of real property. Common in western states.

Grantee
The party who receives a transfer of real property.

Grantor
The party who transfers real property.

Hazard Insurance
A form of insurance that protects a property owner against property damage. Lenders will require an owner or buyer to show proof of or acquire a hazard insurance policy when refinancing or financing the purchase of property.

Home Equity Loan
A loan that allows an owner to borrow funds by using the equity in the home. This type of loan is often used to pay for major expenses and purchases, debt consolidation, and home improvements.

Homeowner's Exemption
A property tax exemption of a specified amount provided to an owner that occupies a dwelling as a primary residence. To claim the exemption, a Homeowner's Exemption Form can be filed with the Assessor's Office. The form need only be filed once and the exemption will continue for succeeding years.

Impound Account
A bank account established by a lender to collect and disburse insurance premiums and property taxes.

Index
An economic indicator that is used by lenders as a basis for rate adjustments on Adjustable Rate Mortgage's (ARM's).

Interest
The charge for the borrowing of money for a period of time.

Interest Rate
The charge for the borrowing of money expressed as a percentage.

Interest Rate CAP
The maximum amount that the interest rate may increase for the specified time period on an adjustable rate mortgage.

Intestate
A person who dies having made no will, or one which is defective.

Joint Tenancy
Ownership by two or more persons with equal undivided interests and the right of survivorship.

Jumbo Loan
A loan that exceeds the conforming limits set by the Federal National Mortgage Association (FNMA, "Fannie Mae") and the Government National Mortgage Association (GNMA, "Ginnie Mae").

Junior Loan
A loan that is subordinate to a previous loan.

Key Lot
A lot that is surrounded by the backyards of other lots. So named because it resembles a key fitting into a lock.

Legacy
A gift of personal property by will.

Legal Description
A precise description of property such as a government survey description, a lot and block description, or a metes and bounds description.

Lessee
One who leases property from another; renter or tenant.

Lessor
One who leases property to another; landlord or property owner.

Loan-To-Value (LTV)
The percentage of a property's value that a lender is willing to loan to a borrower.

Lot and Block Description
A legal description used for platted property which states the property's lot number and block number in a particular subdivision.

Margin
The difference between the index rate and the interest charged on an Adjustable Rate Mortgage (ARM).

Market Value
The price of property that a buyer is willing to buy and a seller is willing to sell on the open market.

Maturity
When a loan completes its term. For example, a loan with a term of 30 years reaches maturity in 30 years.

Metes and Bounds Description
A legal property description that starts at an easily identifiable location, then describes the property's boundaries in terms of compass directions and distances, ultimately retuning to the original location.

Multiple Listing Service (MLS)
A service that permits member brokers to help find a buyer for property listed in the service. When a member broker procures a sale of another brokers listing, the listing broker pays the procuring broker a share of the commission.

Negative Amortization
Occurs when the monthly loan payment does not cover the monthly interest and principal.

Negative Amortization CAP
A limit on the amount of negative amortization in a loan such as an Adjustable Rate Mortgage (ARM).

Non-conforming Loan
A loan that does not meet conforming criteria set by the Federal National Mortgage Association (FNMA, "Fannie Mae") and the Government National Mortgage Association (GNMA, "Ginnie Mae").

Notary Public
An official authorized to witness and certify the signing of a legal document. Also known as a notary.

Obsolescence
A loss in value of a structure due to reduced desirability and usefulness because its design and construction have become obsolete; a loss in income due to an outdated structure.

Option
The right to buy, sell or lease property at a specific price within a specified period of time.

Ordinance
A law passed by local government such as a city council or county board of supervisors.

Ownership in Severalty
Ownership by a single individual.

Personal Property
Anything that is movable and not affixed to land. Also known as chattel and is sold using a bill of sale.

PMI
See Private Mortgage Insurance.

Points
A percentage of the loan paid to the lender at the time the loan is made. A point is one percent of the loan amount.

Principal
The amount borrowed or remains unpaid excluding interest. On a monthly mortgage statement, it is the amount that is paid towards reducing the remaining loan balance.

Private Mortgage Insurance (PMI)
Protects the lender against loss in the event of borrower default. Required on certain types of loans.

Promissory Note
A written evidence of debt.

Purchase Agreement
An agreement presented to the seller as a buyer's offer to purchase real estate. Also the buyer's receipt for the deposit.

Quitclaim Deed
Conveys any interest that a grantor has in real property at the time the deed is executed.

Range
Used in the government survey system, a strip of land six miles wide that runs north and south.

Ready, Willing, and Able Buyer
A buyer ready to make an offer to purchase property on acceptable terms and having the proper financing to complete the purchase.

Real Property
Land with anything permanently attached to it; anything appurtenant to land; and anything immovable by law.

Reconveyance Deed
An instrument that releases the security property from the lien created by the trust deed. Recorded by the trustee when the borrower has paid the debt in full.

Replacement Cost
The cost of replacing a structure with an equivalent, but using modern materials, and according to current standards, design, and layout.

Reproduction Cost
The cost to replace the subject structure with an exact replica, having the same quality of workmanship, design, and layout.

Section
Used in the government survey system, a section is one mile square and contains 640 acres.

Seizin
The legal possession of a freehold estate; ownership.

Separate Property
Property owned by husband or a wife that is not community property. Includes property acquired before marriage, or by gift or inheritance after marriage.

Severalty
See Ownership in Severalty.

Severance
Terminates a joint tenancy and changes it into a tenancy in common.

Testator
A man who has made a will.

Testatrix
A woman who has made a will.

The Federal Deposit Insurance Corporation (FDIC)
Insures deposits in member banks for a specified dollar limit. Headquartered in the District of Columbia and managed by a Board of Directors whom are appointed by the President and confirmed by the Senate.

Title
Ownership of real property. Also, a legal document that is evidence of property ownership.

Title Report
A report issued by a title company, disclosing the condition of title to a property.

Trust Deed
A legal document that creates a voluntary lien on real property to secure the repayment of debt.

Underwriting
A lender's technical analysis of a borrower's ability to repay a particular loan.

Upside Down
A situation where the debt on the property is greater than the property value.

Urban
A classification of the Census Bureau for a community having 2,500 or more people.

Urban Area
A Census Bureau classification for communities having 50,000 or more population with a density of 1,000 or more per square mile.

Valid
Legally binding.

Verification of Deposit
A document sent by a lender to a borrower's bank requesting verification of a borrower's funds.

Will
A legal document stipulating a person's disposition of his or her estate after his or her death.

Yield
The interest earned by an investor on an investment.

Yield Rate
The yield expressed as a percentage of the total investment.

Zoning
The regulation of the uses of real property by government agencies. It restricts certain geographic areas or zones to certain uses, such as commercial, industrial, multi-use, and residential.

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Finance and Real Estate Vocabulary