Real Estate Glossary Terms & Definitions to Know. Many terms in real estate are universal throughout the nation. For example, “closing” in one area is sometimes called a “settlement” or “escrow” in another.
Adjustable-Rate Mortgage (ARM):
A mortgage that provides for periodic changes in the interest rate, based on changing market conditions.
To liquidate or extinguish (a mortgage, debt, or other obligation), especially by periodic payments to the creditor or to a sinking fund, to write off a cost of (an asset) gradually.
Annual Percentage Rate (APR):
Annual percentage rate: the annual rate of interest; the total interest to be paid in a year divided by the balance due.
The act of estimating or judging the nature or value of something or someone. An estimate of value, as for sale, assessment, or taxation; valuation.
The final step in property purchase where the title is transferred from the seller to the buyer. At closing the seller receives payment for the property. Also known as a settlement.
Fees charged to a purchaser by a bank, lawyer, etc. For services related to a sale, a title search, an appraisal, etc. Any expenses over the purchase price of a house, land, etc., that is paid by the purchaser or seller at the completion of the sale.
A clause in a purchase contract outlining conditions that must be fulfilled before the contract is executed. Both buyer and/ or seller may include contingencies in a contract, but both parties must accept the contingency.
A private-sector loan, one that is not guaranteed or insured by the U.S. Government. GLOSSARY 109GLOSSARY
Writing or document executed under seal and delivered to effect a conveyance, especially of real estate.
The release of relevant information about a property that may influence the final sale, especially if it represents defects or problems. “Full disclosure” usually refers to the responsibility of the seller to voluntarily provide all known information about the property. A seller found to have knowingly lied about a defect may face legal penalties.
Money given by a buyer to a seller to bind a contract.
A right held by one property owner to make use of the land of another for a limited purpose, as right of passage.
A contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition.
Fannie Mae (FNMA):
A federally-chartered enterprise owned by private stockholders that purchase residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.
Federal Housing Administration (FHA):
Provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single-family and multifamily homes including manufactured homes and hospitals.
A home mortgage for which equal monthly payments of interest and principal are paid over the life of the loan, usually for a term of 30 years.
Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, secures them, and sells them to investors; this provides lenders with funds for new home buyers.
The legal claim of one person upon the property of another person to secure the payment of a debt or the satisfaction of an obligation. 110
A fee charged by a lender for evaluating and processing a loan application, usually a percentage of the face value of the loan.
PITI: Principal, interest, taxes, and insurance.
A written promise to pay a specified sum of money to a designated person or to his or her order, or to the bearer of the note, at a fixed time or on-demand.
A commitment by a lender to a borrower guaranteeing a specific interest rate over a period of time at a set cost.
The HUD-1 Settlement Statement is a standard form in use in the United States of America which is used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate.
In property law, a title is a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership.
Insurance protecting the owner or mortgagee of real estate from lawsuits or claims arising from a defective title.
The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.