Real Estate Glossary
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.
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.
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.
A building separate from the main structure on a property. Often used
for a specific purpose, such as a workshop, storage shed or garage.
The natural growth of a piece of land resulting from forces of nature
43,560 square feet. A measurement of area.
The amount of time that has passed since a building or other structure
was built. See also: EFFECTIVE AGE
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
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
ADJUSTABLE-RATE MORTGAGE (ARM) Back
A type of mortgage where the interest rate varies based on a particular
index, normally the prime lending rate.
ADJUSTED BASIS Back
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 Back
An opinion of a property's sales price, after adjustments have been
made to account for differences between it and another comparable
AESTHETIC VALUE Back
The additional value a property enjoys based on subjective criteria
such as look or appeal.
A declaration that a certain set of facts are truthful.
AFFORDABILITY ANALYSIS Back
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
A person who has been appointed to act on behalf of another for a
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
AMERICAN SOCIETY OF APPRAISERS Back
An organization of appraisal professionals and others interested in
the appraisal profession.
The repayment of a loan through regular periodic payment.
AMORTIZATION SCHEDULE Back
The breakdown of individual payments throughout the life of an amortized
loan, showing both principal contribution and debt service (interest)
AMORTIZATION TERM Back
The length of time over which an amortized loan is repaid. Mortgages
are commonly amortized over 15 or 30 years.
A measure of electric current describing the magnitude.
ANNUAL PERCENTAGE RATE (APR) Back
The rate of annual interest charged on a loan.
A sum of money paid at regular intervals, often annually.
A form used to apply for a mortgage loan that details a potential
borrower's income, debt, savings and other information used to determine
A ''defensible'' and carefully documented opinion of value. Most commonly
derived using recent sales of comparable properties by a licensed,
APPRAISAL FOUNDATION Back
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
APPRAISAL INSTITUTE Back
A world-wide organization dedicated to real estate appraisal education,
publication and advocacy.
APPRAISAL PRINCIPLES Back
The basic building blocks of the property valuation process, including
property inspection, market analysis and basic economics.
APPRAISAL REPORT Back
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
APPRAISAL STANDARDS BOARD (ASB) Back
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 Back
An opinion of the fair market value of a property as developed by
a licensed, certified appraiser following accepted appraisal principals.
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.
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION Back
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 Back
The value of a property according to jurisdictional tax assessment.
The function of assigning a value to a property for the purpose of
ASSESSMENT RATIO Back
The comparative relationship of a property's assessed value to its
The jurisdictional official who performs the assessment and assigns
the value of a property.
Any item of value which a person owns.
Transfer of ownership of a mortgage usually when the loan is sold
to another company.
ASSUMABLE MORTGAGE Back
A mortgage that can be taken over by the buyer when a home is sold.
When a buyer takes over, or "assumes" the sellers mortgage.
ATTACHED HOUSING Back
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
The slope of the ground around a house.
BALL COCK VALVE Back
The valve inside a toilet tank that controls the filling of the tank.
BALLOON MORTGAGE Back
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 Back
The final large payment at the end of a balloon mortgage term.
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 structural supporting member.
BILL OF SALE Back
A physical receipt indicating the sale of property.
BIWEEKLY MORTGAGE Back
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 Back
Any region of a city or town that has fallen into disrepair or otherwise
has become undesirable.
BONA FIDE Back
Any genuine offer, made without intent to defraud or deceive.
BRIDGE FINANCING Back
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.
Structural members used between beams to strengthen the structure.
An individual who facilitates the purchase of property by bringing
together a buyer and a seller.
British Thermal Unit. A unit of measurement used to describe heating
or cooling capacity.
BUFFER ZONE Back
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 Back
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 Back
The statutory distance between buildings and the property line, imposed
by municipalities, home associations, or other agreements.
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.
A one-story, home-style dating from the early twentieth century. Often
characterized by a low-pitched roof.
BUY DOWN Back
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 Back
Electrical cable shrouded in a galvanized steel outer cover.
CALL OPTION Back
A clause in a mortgage which allows the lender to demand payment of
the outstanding balance at a specific time.
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 Back
A single-story house style made popular in New England. Often characterized
by a steep roof with gables.
Accumulated goods and money which is most often used to generate additional
CAPITAL EXPENDITURE Back
An outlay of funds designed to improve the income-producing capabilities
of an asset or to extend its economic life.
CASH-OUT REFINANCE Back
Refinancing a mortgage at a higher amount than the current balance
in order to transform a portion of the equity into cash.
A pliable material used to seal cracks or openings such as around
CAVEAT EMPTOR Back
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 Back
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 Back
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 Back
A document issued by the Veterans Administration that certifies eligibility
for a VA loan.
CERTIFICATE OF OCCUPANCY Back
Issued by an appropriate jurisdictional entity, this document certifies
that a building complies with all building codes and is safe for use
CERTIFICATE OF REASONABLE VALUE (CRV) Back
Usually based on an independent appraisal, a CRV for a particular
property establishes the maximum amount which can be secured by a
CERTIFICATE OF TITLE Back
A document designating the legal owner of a parcel of real estate.
Usually provided by a title or abstract company.
CERTIFIED GENERAL APPRAISER Back
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 Back
A sub-classification of appraiser who is only licensed to appraise
residential property, usually up to four units.
CHAIN OF TITLE Back
The complete history of ownership of a piece of property.
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 Back
Electrical devices which automatically open electrical circuits if
they are overloaded.
CLEAR TITLE Back
Ownership of property that is not encumbered by any counter-claim
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 Back
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 Back
The document detailing the final financial arrangement between a buyer
and seller and the costs paid by each.
A second person sharing obligation on the loan and title on the property.
An asset which is placed at risk to secure the repayment of a loan.
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.
A second party who signs a loan, along with the borrower, and becomes
liable for the debt should the borrower default.
COMMON LAW Back
As opposed to statute law. Laws that have been established by custom,
usage and courts over many years.
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 Back
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 Back
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 Back
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.
An abbreviated term used by appraisers to describe properties which
are similar in size, condition, location and amenities to a subject
property whose value is being determined. The Uniform Standards
of Professional Appraisal Practice (USPAP) establish clear guidelines
for determining a comparable property.
COMPOUND INTEREST Back
Interest paid on the principal amount, as well as any accumulated
Additional value granted by a buyer or seller to entice another party
to complete a deal.
The official process by which a property is deemed to be uninhabitable
or unusable due to internal damage or other external conditions.
The transition of water vapor to liquid. Typically forms in areas
of high humidity.
A development where individual units are owned, but common areas and
amenities are shared equally by all owners.
CONDOMINIUM CONVERSION Back
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.
The pipe through which electric wiring is run.
CONSTRUCTION LOAN Back
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
Connected to or touching along an unbroken boundary.
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.
A legally binding agreement, oral or written, between two parties.
CONVENTIONAL MORTGAGE Back
A traditional, real estate financing mechanism that is not backed
by any government or other agency (FHA, VA, etc.).
CONVERTIBLE ARM Back
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) Back
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 Back
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) Back
An index of financial institutions costs used to set interest rates
for some Adjustable Rate Mortgages.
A stipulation in any mortgage that, if not met, can be cause for the
lender to foreclose.
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 Back
A record of debt payments, past and present. Used by mortgage lenders
in determining credit worthiness of individuals.
A person to whom money is owed.
CREDIT REPORT Back
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 Back
Large companies that gather and store financial and credit information
about individuals who apply for credit.
A dead-end street. One with only one entrance/exit.
DATE OF APPRAISAL Back
The specific point in time as of which an appraiser designates the
value of a home. Often stipulated as the date of inspection.
An obligation to repay some amount owed. This may or may not be monetary.
DEBT EQUITY RATIO Back
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.
A document indicating the ownership of a property.
DEED-IN-LIEU (OF FORECLOSURE) Back
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 Back
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 Back
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 Back
A document which dismisses a lien or other claim on a property.
DEED OF SURRENDER Back
A document used to surrender any claim a person has to a property.
The condition in which a borrower has failed to meet the obligations
of a loan or mortgage.
The state in which a borrow has failed to meet payment obligations
Cash given along with an offer to purchase property, Also called EARNEST
The natural decline in property value due to market forces or depletion
DETACHED SINGLE-FAMILY HOME Back
A single building improvement intended to serve as a home for one
DISCOUNT POINTS Back
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 Back
A mortgaged property which has been foreclosed on.
The pipe that water moves through to reach the ground from the rain
DUE-ON-SALE PROVISION Back
A clause in a mortgage giving the lender the right to demand payment
of the full balance when the borrower sells the property.
A single-building improvement which is divided and provides two units
which serve as homes to two families.
A house or other building which serves as a home.
DOWN PAYMENT Back
An amount paid in cash for a property, with the intent to mortgage
the remaining amount due.
EARNEST MONEY DEPOSIT Back
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
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.
The part of the roof that extends beyond the exterior wall.
ECONOMIC DEPRECIATION Back
The decline in property value caused by external forces, such as neighborhood
blight or adverse development.
ECONOMIC LIFE Back
The amount of time which any income-producing property is able to
provide benefits to its owner.
EFFECTIVE AGE Back
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
EMINENT DOMAIN Back
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.
A building or other improvement on one property which invades another
property or restricts its usage.
A claim against a property. Examples are mortgages, liens and easements.
ENERGY EFFICIENCY RATIO Back
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) Back
U.S. federal law requiring that lenders afford people equal chance
of getting credit without discrimination based on race, religion,
age, sex etc
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 Back
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 Back
An insurance policy taken out by appraisers to cover their liability
for any mistakes made during the appraisal process.
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 Back
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.
ESCROW ANALYSIS Back
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 Back
The payout of funds from an escrow account to pay property expenses
such as taxes and insurance.
The total of all property and assets owned by an individual.
EXAMINATION OF TITLE Back
The report on the title of a property from the public records or an
abstract of the title.
EXCLUSIVE LISTING Back
An agreement between the owner of a property and a real estate agent
giving the agent exclusive right to sell the property.
The person named in a will to administer the estate.
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 Back
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 Back
The price at which two unrelated parties, under no duress, are willing
to transact business.
FANNIE MAE Back
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
The boards that enclose the eaves.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) Back
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) Back
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 Back
A certified, professional appraiser who forms an opinion of the fair
market value of property and receives a set fee in exchange.
FEE SIMPLE Back
A complete, unencumbered ownership right in a piece of property.
FEE SIMPLE ESTATE Back
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 Back
A mortgage that is insured by the Federal Housing Administration (FHA).
FINAL VALUE ESTIMATE Back
The opinion of value of a piece of property resulting from an appraisal
following the USPAP guidelines.
FIRST MORTGAGE Back
The primary loan or mortgage secured by a piece of property.
FIXED-RATE MORTGAGE (FRM) Back
A mortgage which has a fixed rate of interest over the life of the
Any piece of personal property which becomes permanently affixed to
a piece of real property.
The metal used around the base of roof mounted equipment, or at the
junction of angles used to prevent leaking.
FLOOD INSURANCE Back
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 Back
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.
The furnace exhaust pipe, usually going through the roof.
FLUSH VALVE Back
The valve between the toilet bowl and the tank.
The partially buried support for a vertical structural member such
as a post.
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.
The loss of property or money due to the failure to meet the obligations
of a mortgage or loan secured by that property.
The solid structural element upon which a structure is built.
The segment of a property that runs along a point of access, such
as a street or water front.
FUNCTIONAL OBSOLESCENCE Back
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.
GABLE ROOF Back
A steeply angled, triangular roof.
GALVANIZED PIPE Back
Iron pipe with a galvanized (zinc) coating.
GAMBREL ROOF Back
A ''barn-like'' roof, where the upper portion of the roof is less-steeply
angled than the lower part.
GENERAL LIEN Back
A broad-based claim against several properties owned by a defaulting
A classic, English-style hose characterized by simple rectangular
shape and multiple stories.
Ground Fault Interrupter. A type of circuit breaker required in areas
where water is present.
GINNIE MAE Back
A wholly owned corporation created in 1968 within the U.S. Department
of Housing and Urban Development to serve low-to moderate-income homebuyers.
A main supporting beam.
GOVERNMENT MORTGAGE Back
Any mortgage insured by a government agency, such as the FHA or VA.
The slope of land around a building. Also ground level.
Any person who is given ownership of a piece of property.
Any person who gives away ownership of a piece of property.
GROSS AREA Back
The sum total of all floor space, including areas such as stairways
and closet space. Often measured based on external wall lengths.
Material used around ceramic tile.
The trough around the edge of the roof that catches and diverts rain.
HAZARD INSURANCE Back
Insurance covering damage to a property caused by hazards such as
fire, wind and accident.
The framing elements above an opening such as a window or door.
The floor of a fireplace or the area immediately in front of it.
HEIGHT ZONING Back
A municipal restriction on the maximum height of any building or other
HIDDEN AMENITIES Back
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 Back
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) Back
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 do not have to be
repaid until the borrower is no longer occupying the home.
HOME EQUITY LINE OF CREDIT Back
A type of mortgage loan that allows the borrower to draw cash against
the equity in his home.
HOME INSPECTION Back
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 Back
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 Back
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 Back
A policy which covers a home owner for any loss of property due to
accident, intrusion or hazard.
HOMEOWNER'S WARRANTY Back
An insurance policy covering the repair of systems and appliances
within the home for the coverage period.
HUD MEDIAN INCOME Back
Median family income for a particular county or metropolitan statistical
area (MSA), as estimated by the Department of Housing and Urban Development
HUD-1 STATEMENT Back
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.
IMPROVED LAND Back
Any parcel of land which has been changed from its natural state through
the creation of roads, buildings or other structures.
Any item added to vacant land with the intent of increasing its value
IMPROVEMENT RATIO Back
The comparative value of an improved piece of land to its natural,
INCOME APPROACH Back
The process of estimating the value of property by considering the
present value of a stream of income generated by the property.
INCOME PROPERTY Back
A piece of property whose highest and best use is the generation of
income through rents or other sources.
INDEPENDENT APPRAISAL Back
An estimation of value created by a professional, certified appraiser
with no vested interest in the value of the property.
The examination of a piece of property, its buildings or other amenities.
INSURABLE TITLE Back
The title to property which has been sufficiently reviewed by a title
insurance company, such that they are willing to insure it as free
INTEREST RATE Back
A percentage of a loan or mortgage value that is paid to the lender
as compensation for loaning funds.
INVESTMENT PROPERTY Back
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.
The side of a door frame.
JOINT TENANCY Back
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.
Horizontal beams laid on edge to support flooring or a ceiling.
An official court decision. If the judgment requires payment from
one party to another, the court may put a lien against the payee's
property as collateral.
JUDICIAL FORECLOSURE Back
A type of foreclosure conducted as a civil suit in a court of law.
JUMBO LOAN Back
A mortgage loan for an amount greater than the limits set by Fannie
Mae and Freddie Mac. Often called non-conforming loans.
LALLY COLUMN Back
A concrete filled steel pipe used to support beams.
LATE CHARGE Back
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
LATENT DEFECTS Back
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.
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 Back
A type of property ''ownership'' where the buyer actually has a long-term
lease on the property.
LEASE OPTION Back
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 Back
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.
The person or entity who loans funds to a buyer. In return, the lender
will receive periodic payments, including principal and interest amounts.
A person's outstanding debt obligations.
LIABILITY INSURANCE Back
Insurance that covers against potential lawsuit brought against a
property owner for alleged negligence resulting in damage to another
Any claim against a piece of property resulting from a debt or other
LIFE CAP Back
A limit on how far the interest rate can move for an Adjustable Rate
LIKE-KIND PROPERTY Back
Any property which is substantially similar to another property.
LINE OF CREDIT Back
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 Back
Any asset which can be quickly converted into cash at little or no
cost, or cash itself.
Money borrowed, to be repaid with interest, according to the specific
terms and conditions of the loan.
LOAN OFFICER Back
A person that "sells" loans, representing the lender to the borrower,
and the borrower to the lender.
LOAN ORIGINATION Back
How a lender refers to the process of writing new loans.
LOAN SERVICING Back
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) Back
The comparison of the amount owed on a mortgaged property to its fair
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 Back
The amount of time the lender has guaranteed an interest rate to a
MAJOR DEFICIENCY Back
A deficiency that strongly impacts the usability and habitability
of a house. Or a deficiency that may be very expensive to repair.
MANUFACTURED HOUSING Back
Once known as ''mobile homes,'' manufactured housing is any building
which has been constructed off site, then moved onto a piece of real
The difference between the interest rate and the index on an adjustable
MARGINAL LAND Back
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 Back
An umbrella organization that is made up of multiple, smaller home
owner's associations. Often found in very large developments or condominium
The date on which the principal balance of a financial instrument
becomes due and payable.
MERGED CREDIT REPORT Back
A credit report derived from data obtained from multiple credit agencies.
METES AND BOUNDS Back
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 Back
The accumulated land in and around a city or other municipality which
falls under the political and economic influence of that entity.
MINERAL RIGHTS Back
The legal right to exploit and enjoy the benefits of any minerals
located below the surface of a parcel of land.
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.
A financial arrangement wherein an individual borrows money to purchase
real property and secures the loan with the property as collateral.
MORTGAGE BANKER Back
A financial institution that provides primary and secondary mortgages
to home buyers.
MORTGAGE BROKER Back
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.
The entity that lends money in a real estate transaction.
MORTGAGE INSURANCE Back
A policy that fulfills those obligations of a mortgage when the
policy holder defaults or is no longer able to make payments.
MORTGAGE INSURANCE PREMIUM (MIP) Back
A fee that is often included in mortgage payments that pays for mortgage
MORTGAGE LIFE INSURANCE Back
A policy that fulfills the obligations of a mortgage when the policy
The entity that borrows money in a real estate transaction.
MULTI-FAMILY PROPERTIES Back
Any collection of buildings that are designed and built to support
the habitation of more than four families.
NATIONAL ASSOCIATION OF MASTER APPRAISERS (NAMA) Back
A non profit professional association organized in 1982, dedicated
to the advancement of professionalism in real estate appraisal.
NATIONAL SOCIETY OF REAL ESTATE APPRAISERS Back
An organization founded in 1956 which promotes standards of professionalism
in its members.
NATURAL VACANCY RATE Back
The percentage of vacant properties in a given area that is the result
of natural turnover and market forces.
NEGATIVE AMORTIZATION Back
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 Back
The evolution of neighborhood use and demographics over time. Economic
fluctuations, municipal zoning changes and population shifts can effect
the life cycle.
A subsection of a municipality that has been designated by a developer,
economic forces or physical formations.
NET LEASABLE AREA Back
The space in a development, outside of the common areas, that can
be rented to tenants.
NEW ENGLAND COLONIAL Back
An architectural style dating from early American history typified
by a two-story building with clapboard siding.
NO-COST LOAN Back
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
NO-POINT LOAN Back
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 Back
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 Back
Any asset which can not be quickly converted into cash at little or
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 Back
The interest rate stated on a mortgage note.
NOTICE OF DEFAULT Back
Formal written notice from a lender to a borrower that default has
The process of an assets value diminishing due to the development
of more desirable alternatives or because of the degradation of its
A physical presence within and control of a property.
OCCUPANCY RATE Back
The percentage of properties in a given area that are occupied.
OCTOPUS RECEPTACLE Back
An outlet with too many devices plugged into it, using a power strip
or other device to multiply the outlets.
OFF-SITE IMPROVEMENTS Back
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 Back
Designated parking spaces associated with a particular building or
other structure which are not located on public streets.
OLD TERMITE ACTIVITY Back
Where no termites are currently active, but indications of past activity
can be seen.
ON-SITE IMPROVEMENTS Back
Buildings, structures or other amenities that are erected on a piece
of property and contribute to its value.
OPEN SPACE Back
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 Back
An uncovered electrical connection.
ORIGINAL EQUITY Back
The amount of cash a home buyer initially invests in the home.
ORIGINAL PRINCIPAL BALANCE Back
The total amount of principal owed on a mortgage loan at the time
ORIGINATION FEE Back
Refers to the total number of points paid by a borrower at closing.
OWNER FINANCING Back
A transaction where the property owner provides all or part of the
OWNER OCCUPIED Back
The state of property wherein the owner occupies at least some portion
of the property.
The cement coat applied to block foundations.
PARTIAL INTEREST Back
A shared ownership in a piece of property. May be divided among two
or more parties.
PARTIAL PAYMENT Back
A payment of less than the regular monthly amount. Usually, a lender
will not accept partial payments.
PERIODIC PAYMENT CAP Back
The limit on how much regular monthly payments on an Adjustable Rate
Mortgage can change during one adjustment period.
PERIODIC RATE CAP Back
The limit on how much the interest rate on an Adjustable Rate Mortgage
can change during any one adjustment period.
PERSONAL PROPERTY Back
Owned items which are not permanently affixed to the land.
PERSONAL RESIDENCE Back
The primary domicile of a person or family.
PLANNED UNIT DEVELOPMENT (PUD) Back
A coordinated, real estate development where common areas are shared
and maintained by an owner's association or other entity.
A plan or chart of a piece of land which lays out existing or planned
streets, lots or other improvements.
A percentage of a mortgage amount (one point = 1 percent).
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.
Any building or portion thereof which is manufactured and assembled
off site, then erected on a property.
Payment made that reduces the principal balance of a loan before the
due date and before the loan has become fully amortized.
PREPAYMENT PENALTY Back
A fee that may be charged to a borrower who pays off a loan before
it is due.
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 Back
The interest rate that banks and other lending institutions charge
other banks or preferred customers.
The amount owed on a mortgage which does not include interest or other
PRINCIPAL BALANCE Back
The outstanding balance of principal on a mortgage. Does not included
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI) Back
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI) Back
A form of mortgage insurance provided by private, non-government entities.
Normally required when the LOAN TO VALUE RATIO is less that 20%.
Any item which is owned or possessed.
PURCHASE AGREEMENT Back
A written contract signed by the buyer and seller stating the terms
and conditions under which a property will be sold.
Any building designed to accommodate four families.
QUALIFYING RATIOS Back
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 Back
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.
A structural element of the roof, sloping from the peak to the outer
RANCH HOUSE Back
An architectural style typified by a single-story, low-roof construction.
Popular in the western U.S.
RATE LOCK Back
A guarantee from a lender of a specific interest rate for a period
RAW LAND Back
Any land which has not been developed.
REAL ESTATE Back
A piece of land and any improvements or fixtures located on that land.
REAL ESTATE AGENT Back
A licensed professional who facilitates the buying and selling of
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Back
A federal law requiring lenders to give full disclosure of closing
costs to borrowers.
REAL PROPERTY Back
Land, improvements and appurtenances, and the interest and benefits
A real estate agent or broker who is a member of the NATIONAL ASSOCIATION
An electrical outlet to plug into.
A local government employee whose role it is to keep records of all
real estate transactions within the jurisdiction.
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 Back
A new loan to pay off an existing loan. Typically to gain a lower
interest rate or convert equity into cash.
Where air from a furnace or air conditioning system enters the room.
RELOCATION SERVICE Back
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 Back
The amount of principal, interest and other costs that has not yet
REMAINING TERM Back
The amount of time remaining on the original amortization schedule.
An activity designed to improve the value or desirability of a property
through rebuilding, refurbishing, redecorating or adding on to it.
REPAYMENT PLAN Back
A plan to repay delinquent payments, agreed upon between a lender
and borrower, in an effort to avoid foreclosure.
REPLACEMENT RESERVE FUND Back
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 Back
A piece of property whose highest and best use is the maintenance
of a residence.
REVOLVING DEBT Back
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 Back
The structural member of a roof where the rafters join at the top.
RIGHT OF FIRST REFUSAL Back
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 Back
The degree of slope in a roof.
An area outside of an established urban area or metropolitan district.
SALE PRICE Back
The actual price a property sells for, exclusive of any special financing
SALES COMPARISON APPROACH Back
An appraisal practice which estimates the value of a property by comparing
it to comparable properties which have sold recently.
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 Back
A loan secured by the equity in a home, when a primary mortgage already
SECONDARY MORTGAGE MARKET Back
An economic marketplace where mortgage bankers buy and sell existing
SECURED LOAN Back
A loan that is backed by collateral. In the case of a mortgage loan,
the collateral is the house.
The property used as collateral for a loan.
SEMIDETACHED HOUSING Back
Two residences which share a common wall.
A financial institution which collects mortgage payments from borrowers
and applies the appropriate portions to principal, interest and any
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.
The covering on outside walls beneath the siding or exterior finish
such as stucco.
Also called drywall, the gypsum board commonly used on interior walls.
SILL PLATE Back
The lumber used around the foundation to support exterior wall framing.
SILL COCK Back
Garden hose pipe connection.
SINGLE-FAMILY PROPERTY Back
A property designed and built to support the habitation of one family.
The underside of a cornice at the eaves.
A textured plaster exterior (and occasionally interior) wall finish.
A vertical framing piece in a wall, generally 2x4 lumber in interior
A residential development that is created from a piece of land which
has been subdivided into individual lots.
SUBJECT PROPERTY Back
A term which indicates a property which is being appraised.
A basin into which water drains and from which the water is pumped
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 Back
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.
TAX-EXEMPT PROPERTY Back
Any property which is not taxed.
The right to occupy a building or unit.
TENANCY IN COMMON Back
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 Back
When a lender uses a third party to originate and package loans for
sale to the secondary market (Fannie Mae, Freddie Mac).
A specific document which serves as proof of ownership.
TITLE COMPANY Back
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 Back
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 Back
The process whereby the TITLE COMPANY researches a properties title
history and ensures that no outstanding claims exist.
TRANSFER OF OWNERSHIP Back
Any means by which the ownership of a property changes hands.
TRANSFER OF TAX Back
Taxes payable when title passes from one owner to another.
A bend in water pipe.
A fiduciary that holds or controls property for the benefit of
TRUTH IN LENDING Back
A federal law requiring full disclosure by lenders to borrowers of
all terms, conditions and costs of a mortgage.
A style of architecture typified by exposed stone, wood and brick
construction. Similar in style to English manor homes.
UNDER IMPROVED LAND Back
A piece of land which has been improved, but not to the full extent
of its potential.
UNENCUMBERED PROPERTY Back
Any property which has no outstanding claims or liens against it.
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE
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
USEFUL LIFE Back
The span of time over which a property can be used or can provide
benefits to its owner.
VACANCY RATE Back
The current percentage of vacant properties in a given area, regardless
of why they are vacant.
VA MORTGAGE Back
A mortgage that is guaranteed by the Department of Veterans Affairs
An exception to municipal zoning regulations granted for a specific
time period to allow for non-conforming use of the land.
VENT PIPE Back
A pipe allowing gas to escape.
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) Back
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.
An expression of electric force, or pressure. One volt being the force
needed to move one amp against one ohm resistance.
WALK-THROUGH INSPECTION Back
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.
An affidavit given to stipulate the condition of a property. The person
giving the warranty assumes liability if the condition turns out to
An expression of amount of electrical power. Volt times amps equals
WEAR AND TEAR Back
A term used to indicate the normal damage inflicted on a property
through every-day use.
WEATHER STRIPPING Back
Material used around windows and doors to prevent drafts.
WEEP HOLE Back
Drainage hole that allows water to escape.
ZERO LOT LINE Back
A municipal zoning category wherein a building or other fixture may
abut the property line.
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.