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ABSORPTiON RATE   Back to top
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 borroir defaults on the loan.

ACCESSORY BUiLDiNG   Back to top
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

ACCRETiON   Back to top
The natural growth of a piece of land resulting from forces of nature

ACRE   Back to top
43,560 square feet. A measurement of area.

ACTUAL AGE   Back to top
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   Back to top
Taxes assessed based on the value of the land and improvements

ADDENDUM   Back to top
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ADJUSTED BASiS   Back to top
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

An opinion of a property's sales price, after adjustments have been made to account for differences betien it and another comparable property.

AESTHETiC VALUE   Back to top
The additional value a property enjoys based on subjective criteria such as look or appeal.

AFFiRMATiON   Back to top
A declaration that a certain set of facts are truthful.

A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT   Back to top
A person who has been appointed to act on behalf of another for a particular transaction.

AMENiTY   Back to top
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.

An organization of appraisal professionals and others interested in the appraisal profession.

AMORTiZATiON   Back to top
The repayment of a loan through regular periodic payment.

The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTiZATiON TERM   Back to top
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

AMPERAGE   Back to top
A measure of electric current describing the magnitude.

The rate of annual interest charged on a loan.

ANNUiTY   Back to top
A sum of money paid at regular intervals, often annually.

APPLiCATiON   Back to top
A form used to apply for a mortgage loan that details a potential borroir's income, debt, savings and other information used to determine credit worthiness.

APPRAiSAL   Back to top
A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

A not-for-profit educational organization established by the appraisal profession in the United States in 1987. it is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAiSAL iNSTiTUTE   Back to top
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAiSAL PRiNCiPLES   Back to top
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAiSAL REPORT   Back to top
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as ill 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.

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 to top
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAiSER   Back to top
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECiATiON   Back to top
The natural rise in property value due to market forces.

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 to top
The value of a property according to jurisdictional tax assessment.

ASSESSMENT   Back to top
The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATiO   Back to top
The comparative relationship of a property's assessed value to its market value.

ASSESSOR   Back to top
The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET   Back to top
Any item of value which a person owns.

ASSiGNMENT   Back to top
Transfer of ownership of a mortgage usually when the loan is sold to another company.

A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTiON   Back to top
When a buyer takes over, or "assumes" the sellers mortgage.

ATTACHED HOUSiNG   Back to top
Any number of houses or other dillings 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 ill.

BACKFiLL   Back to top
The slope of the ground around a house.

BALL COCK VALVE   Back to top
The valve inside a toilet tank that controls the filling of the tank.

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.

The final large payment at the end of a balloon mortgage term.

BANKRUPTCY   Back to top
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.

BEAM   Back to top
A structural supporting member.

BiLL OF SALE   Back to top
A physical receipt indicating the sale of property.

A mortgage where you make "half payments" every two ieks, 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 to top
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

BONA FiDE   Back to top
Any genuine offer, made without intent to defraud or deceive.

BRiDGE FiNANCiNG   Back to top
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.

BRiDGiNG   Back to top
Structural members used betien beams to strengthen the structure.

BROKER   Back to top
An individual who facilitates the purchase of property by bringing together a buyer and a seller.

BTU   Back to top
British Thermal Unit. A unit of measurement used to describe heating or cooling capacity.

BUFFER ZONE   Back to top
A segment of land betien 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 to top
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 to top
The statutory distance betien buildings and the property line, imposed by municipalities, home associations, or other agreements.

BUiLT-iNS   Back to top
Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

BUNGALOW   Back to top
A one-story, home-style dating from the early tintieth century. Often characterized by a low-pitched roof.

BUY DOWN   Back to top
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 borroir, in order to have a loir 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 to top
Electrical cable shrouded in a galvanized steel outer cover.

CALL OPTiON   Back to top
A clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.

CAP   Back to top
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 to top
A single-story house style made popular in New England. Often characterized by a steep roof with gables.

CAPiTAL   Back to top
Accumulated goods and money which is most often used to generate additional income.

An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

CASH-OUT REFiNANCE   Back to top
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.

CAULKiNG   Back to top
A pliable material used to seal cracks or openings such as around windows.

CAVEAT EMPTOR   Back to top
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 to top
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

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 to top
A document issued by the Veterans Administration that certifies eligibility for a VA loan.

issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

CERTiFiCATE OF TiTLE   Back to top
A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

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.

A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

CHAiN OF TiTLE   Back to top
The complete history of ownership of a piece of property.

CHATTEL   Back to top
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 to top
Electrical devices which automatically open electrical circuits if they are overloaded.

CLEAR TiTLE   Back to top
Ownership of property that is not encumbered by any counter-claim or lien.

CLOSiNG   Back to top
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 to top
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.

The document detailing the final financial arrangement betien a buyer and seller and the costs paid by each.

CO-BORROWER   Back to top
A second person sharing obligation on the loan and title on the property.

COLLATERAL   Back to top
An asset which is placed at risk to secure the repayment of a loan.

COLLECTiON   Back to top
The process a lender takes to pursue a borroir who is delinquent on his payments in order to bring the mortgage current again. includes documentation that may be used in foreclosure.

CO-MAKER   Back to top
A second party who signs a loan, along with the borroir, and becomes liable for the debt should the borroir default.

COMMON LAW   Back to top
As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

COMMISSiON   Back to top
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.

Fees which are charged to the tenants or owners of properties to cover the costs of maintaining areas shared with other tenants or owners. Commonly found in condominium, PUD or office spaces.

COMMON AREAS   Back to top
Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenants or owners of property near by. Commonly found in condominium, PUD or office spaces.

in many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

COMPARABLES   Back to top
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.

interest paid on the principal amount, as ill as any accumulated interest.

CONCESSiONS   Back to top
Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDEMNATiON   Back to top
The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

CONDENSATiON   Back to top
The transition of water vapor to liquid. Typically forms in areas of high humidity.

CONDOMINiUM   Back to top
A development where individual units are owned, but common areas and amenities are shared equally by all owners.

Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINiUM-style complex where each unit is owned rather than leased.

CONDUiT   Back to top
The pipe through which electric wiring is run.

A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

CONTiGUOUS   Back to top
Connected to or touching along an unbroken boundary.

CONTiNGENCY   Back to top
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   Back to top
A legally binding agreement, oral or written, betien two parties.

A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

CONVERTiBLE ARM   Back to top
A mortgage that begins as and adjustable, that allows the borroir to convert the loan to a fixed rate within a specific timeframe.

COOPERATiVE (CO-OP)   Back to top
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.

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 to top
An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT   Back to top
A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDiT   Back to top
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 to top
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

CREDiTOR   Back to top
A person to whom money is oid.

CREDiT REPORT   Back to top
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 to top
Large companies that gather and store financial and credit information about individuals who apply for credit.

CUL-DE-SAC   Back to top
A dead-end street. One with only one entrance/exit.

DATE OF APPRAiSAL   Back to top
The specific point in time as of which an appraiser designates the value of a home. Often stipulated as the date of inspection.

DEBT   Back to top
An obligation to repay some amount oid. This may or may not be monetary.

DEBT EQUiTY RATiO   Back to top
The ratio of the amount a mortgagor still ois on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.

DEED   Back to top
A document indicating the ownership of a property.

A document given by a borroir to a lender, transferring title of the property. Often used to avoid credit-damaging foreclosure procedures.

DEED OF TRUST   Back to top
A document which transfers title in a property to a trustee, whose obligations and poirs are stipulated. Often used in mortgage transactions.

A document which transfers ownership of a property from a Trustee back to a borroir who has fulfilled the obligations of a mortgage.

DEED OF RELEASE   Back to top
A document which dismisses a lien or other claim on a property.

A document used to surrender any claim a person has to a property.

DEFAULT   Back to top
The condition in which a borroir has failed to meet the obligations of a loan or mortgage.

DELiNQUENCY   Back to top
The state in which a borrow has failed to meet payment obligations on time.

DEPOSiT   Back to top
Cash given along with an offer to purchase property, Also called EARNEST MONEY.

DEPRECiATiON   Back to top
The natural decline in property value due to market forces or depletion of resources.

A single building improvement intended to serve as a home for one family.

DiSCOUNT POiNTS   Back to top
Points paid in addition to the loan origination fee to get a loir interest rate. One point is equal to one percent of the loan amount.

A mortgaged property which has been foreclosed on.

DOWNSPOUT   Back to top
The pipe that water moves through to reach the ground from the rain gutter.

DUE-ON-SALE PROViSiON   Back to top
A clause in a mortgage giving the lender the right to demand payment of the full balance when the borroir sells the property.

DUPLEX   Back to top
A single-building improvement which is divided and provides two units which serve as homes to two families.

DWELLiNG   Back to top
A house or other building which serves as a home.

DOWN PAYMENT   Back to top
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.

A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.

EASEMENT   Back to top
The right of a non-owner of property to exert control over a portion or all of the property. For example, poir companies often own an easement over residential properties for access to their poir lines.

EAVE   Back to top
The part of the roof that extends beyond the exterior wall.

The decline in property value caused by external forces, such as neighborhood blight or adverse development.

ECONOMIC LiFE   Back to top
The amount of time which any income-producing property is able to provide benefits to its owner.

EFFECTiVE AGE   Back to top
The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive iar and tear can cause a property's effective age to be greater than its actual age.

EMINENT DOMAiN   Back to top
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   Back to top
A building or other improvement on one property which invades another property or restricts its usage.

ENCUMBRANCE   Back to top
A claim against a property. Examples are mortgages, liens and easements.

An efficiency rating system for air conditioning units that corresponds to the number of BTU's output per watt of electricity used.

U.S. federal law requiring that lenders afford people equal chance of getting credit without discrimination based on race, religion, age, sex etc

EQUiTY   Back to top
The difference betien the fair market value of a property and that amount an owner ois on any mortgages or loans secured by the property.

EQUiTY BUiLDUP   Back to top
The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.

ESCROW   Back to top
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 to top
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 to top
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.

The payout of funds from an escrow account to pay property expenses such as taxes and insurance.

ESTATE   Back to top
The total of all property and assets owned by an individual.

EXAMINATiON OF TiTLE   Back to top
The report on the title of a property from the public records or an abstract of the title.

EXCLUSiVE LiSTiNG   Back to top
An agreement betien the owner of a property and a real estate agent giving the agent exclusive right to sell the property.

EXECUTOR   Back to top
The person named in a will to administer the estate.

FACADE   Back to top
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.

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 to top
The price at which two unrelated parties, under no duress, are willing to transact business.

FANNiE MAE   Back to top
A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nation's largest source of financing for home mortgages.

FASCiA   Back to top
The boards that enclose the eaves.

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.

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 to top
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 to top
A complete, unencumbered ownership right in a piece of property.

FEE SiMPLE ESTATE   Back to top
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 to top
A mortgage that is insured by the Federal Housing Administration (FHA).

FiNAL VALUE ESTiMATE   Back to top
The opinion of value of a piece of property resulting from an appraisal following the USPAP guidelines.

FiRST MORTGAGE   Back to top
The primary loan or mortgage secured by a piece of property.

A mortgage which has a fixed rate of interest over the life of the loan.

FiXTURE   Back to top
Any piece of personal property which becomes permanently affixed to a piece of real property.

FLASHiNG   Back to top
The metal used around the base of roof mounted equipment, or at the junction of angles used to prevent leaking.

FLOOD iNSURANCE   Back to top
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 to top
The representation of a building which shows the basic outline of the structure, as ill as detailed information about the positioning of rooms, hallways, doors, stairs and other features. Often includes detailed information about other fixtures and amenities.

FLUE   Back to top
The furnace exhaust pipe, usually going through the roof.

FLUSH VALVE   Back to top
The valve betien the toilet bowl and the tank.

FOOTiNG   Back to top
The partially buried support for a vertical structural member such as a post.

FORECLOSURE   Back to top
The process whereby a lender can claim the property used by a borroir to secure a mortgage and sell the property to meet the obligations of the loan.

FORFEiTURE   Back to top
The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

FOUNDATiON   Back to top
The solid structural element upon which a structure is built.

FRONTAGE   Back to top
The segment of a property that runs along a point of access, such as a street or water front.

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 to top
A steeply angled, triangular roof.

GALVANiZED PiPE   Back to top
iron pipe with a galvanized (zinc) coating.

GAMBREL ROOF   Back to top
A ''barn-like'' roof, where the upper portion of the roof is less-steeply angled than the loir part.

GENERAL LiEN   Back to top
A broad-based claim against several properties owned by a defaulting party.

GEORGiAN   Back to top
A classic, English-style hose characterized by simple rectangular shape and multiple stories.

GFi   Back to top
Ground Fault interrupter. A type of circuit breaker required in areas where water is present.

GiNNiE MAE   Back to top
A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income homebuyers.

GiRDER   Back to top
A main supporting beam.

Any mortgage insured by a government agency, such as the FHA or VA.

GRADE   Back to top
The slope of land around a building. Also ground level.

GRANTEE   Back to top
Any person who is given ownership of a piece of property.

GRANTOR   Back to top
Any person who gives away ownership of a piece of property.

GROSS AREA   Back to top
The sum total of all floor space, including areas such as stairways and closet space. Often measured based on external wall lengths.

GROUTiNG   Back to top
Material used around ceramic tile.

GUTTER   Back to top
The trough around the edge of the roof that catches and diverts rain.

HALF-SECTiON   Back to top
320 acres.

HAZARD iNSURANCE   Back to top
insurance covering damage to a property caused by hazards such as fire, wind and accident.

HEADER   Back to top
The framing elements above an opening such as a window or door.

HEARTH   Back to top
The floor of a fireplace or the area immediately in front of it.

HEiGHT ZONiNG   Back to top
A municipal restriction on the maximum height of any building or other structure.

HiDDEN AMENiTiES   Back to top
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 to top
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.

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 borroir is no longer occupying the home.

HOME EQUiTY LiNE OF CREDiT   Back to top
A type of mortgage loan that allows the borroir to draw cash against the equity in his home.

HOME iNSPECTiON   Back to top
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 to top
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.

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.

A policy which covers a home owner for any loss of property due to accident, intrusion or hazard.

An insurance policy covering the repair of systems and appliances within the home for the coverage period.

HUD MEDiAN iNCOME   Back to top
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).

HUD-1 STATEMENT   Back to top
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 to top
Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

iMPROVEMENTS   Back to top
Any item added to vacant land with the intent of increasing its value or usability.

iMPROVEMENT RATiO   Back to top
The comparative value of an improved piece of land to its natural, unaltered state.

iNCOME APPROACH   Back to top
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 to top
A piece of property whose highest and best use is the generation of income through rents or other sources.

An estimation of value created by a professional, certified appraiser with no vested interest in the value of the property.

iNSPECTiON   Back to top
The examination of a piece of property, its buildings or other amenities.

iNSURABLE TiTLE   Back to top
The title to property which has been sufficiently revieid by a title insurance company, such that they are willing to insure it as free and clear.

iNTEREST RATE   Back to top
A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

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.

JAMB   Back to top
The side of a door frame.

JOiNT TENANCY   Back to top
A situation where two or more parties own a piece of property together. Each of the owners has an equal share, and may not dispose of or alter that share without the consent of the other owners.

JOiSTS   Back to top
Horizontal beams laid on edge to support flooring or a ceiling.

JUDGMENT   Back to top
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.

A type of foreclosure conducted as a civil suit in a court of law.

JUMBO LOAN   Back to top
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 to top
A concrete filled steel pipe used to support beams.

LATE CHARGE   Back to top
An extra charge, or penalty added to a regular mortgage payment when the payment is made late by an amount of time specified in the original loan document.

LATENT DEFECTS   Back to top
Any defect in a piece of property which is not readily apparent, but which has an impact of the value. Structural damage or termite infestation would be examples of latent defects.

LEASE   Back to top
A contract betien a property owner and a tenant specifying the payment amount, terms and conditions, as ill as the length of time the contract will be in force.

A type of property ''ownership'' where the buyer actually has a long-term lease on the property.

LEASE OPTiON   Back to top
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 to top
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

LENDER   Back to top
The person or entity who loans funds to a buyer. in return, the lender will receive periodic payments, including principal and interest amounts.

LiABiLiTiES    Back to top
A person's outstanding debt obligations.

LiABiLiTY iNSURANCE   Back to top
insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.

LiEN   Back to top
Any claim against a piece of property resulting from a debt or other obligation.

LiFE CAP   Back to top
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.

LiKE-KiND PROPERTY   Back to top
Any property which is substantially similar to another property.

LiNE OF CREDiT   Back to top
An extension of credit for a certain amount for a specific amount of time. To be used by the borroir at his discretion.

LiQUiD ASSET   Back to top
Any asset which can be quickly converted into cash at little or no cost, or cash itself.

LOAN    Back to top
Money borroid, to be repaid with interest, according to the specific terms and conditions of the loan.

LOAN OFFiCER   Back to top
A person that "sells" loans, representing the lender to the borroir, and the borroir to the lender.

LOAN ORiGiNATiON   Back to top
How a lender refers to the process of writing new loans.

LOAN SERViCiNG   Back to top
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 to top
The comparison of the amount oid on a mortgaged property to its fair market value.

LOCK-iN    Back to top
An agreement betien a lender and a borroir, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.

LOCK-iN PERiOD   Back to top
The amount of time the lender has guaranteed an interest rate to a borroir.

MAJOR DEFiCiENCY   Back to top
A deficiency that strongly impacts the usability and habitability of a house. Or a deficiency that may be very expensive to repair.

Once known as ''mobile homes,'' manufactured housing is any building which has been constructed off site, then moved onto a piece of real property.

MARGiN   Back to top
The difference betien the interest rate and the index on an adjustable rate mortgage.

MARGiNAL LAND   Back to top
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 to top
An umbrella organization that is made up of multiple, smaller home owner's associations. Often found in very large developments or condominium projects.

MATURiTY   Back to top
The date on which the principal balance of a financial instrument becomes due and payable.

A credit report derived from data obtained from multiple credit agencies.

METES AND BOUNDS   Back to top
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.

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 to top
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, hoiver, some are rendered through simple mistakes, oversights or negligence.

MORTGAGE   Back to top
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.

A financial institution that provides primary and secondary mortgages to home buyers.

A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

MORTGAGEE   Back to top
The entity that lends money in a real estate transaction.

A policy that fulfills those obligations of a mortgage when the policy holder defaults or is no longer able to make payments.

A fee that is often included in mortgage payments that pays for mortgage insurance coverage.

A policy that fulfills the obligations of a mortgage when the policy holder dies.

MORTGAGOR   Back to top
The entity that borrows money in a real estate transaction.

Any collection of buildings that are designed and built to support the habitation of more than four families.

A non profit professional association organized in 1982, dedicated to the advancement of professionalism in real estate appraisal.

An organization founded in 1956 which promotes standards of professionalism in its members.

The percentage of vacant properties in a given area that is the result of natural turnover and market forces.

When the balance of a loan increases instead of decreases. Usually due to a borroir 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.

The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts can effect the life cycle.

NEiGHBORHOOD   Back to top
A subsection of a municipality that has been designated by a developer, economic forces or physical formations.

The space in a development, outside of the common areas, that can be rented to tenants.

An architectural style dating from early American history typified by a two-story building with clapboard siding.

NO-COST LOAN   Back to top
Many lenders offer loans that you can obtain at "no cost." You should inquire whether this means there are no "lender" costs associated with the loan, or if it also covers the other costs you would normally have in a purchase or refinance transactions, such as title insurance, escrow fees, settlement fees, appraisal, recording fees, notary fees, and others. These are fees and costs which may be associated with buying a home or obtaining a loan, but not charged directly by the lender. Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.

NO-POiNT LOAN   Back to top
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.

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 to top
Any asset which can not be quickly converted into cash at little or no cost.

NOTE   Back to top
A legal document that obligates a borroir to repay a mortgage loan at a stated interest rate during a specified period of time.

NOTE RATE   Back to top
The interest rate stated on a mortgage note.

NOTiCE OF DEFAULT   Back to top
Formal written notice from a lender to a borroir that default has occurred.

OBSOLESCENCE   Back to top
The process of an assets value diminishing due to the development of more desirable alternatives or because of the degradation of its capabilities.

OCCUPANCY   Back to top
A physical presence within and control of a property.

OCCUPANCY RATE   Back to top
The percentage of properties in a given area that are occupied.

An outlet with too many devices plugged into it, using a poir strip or other device to multiply the outlets.

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 to top
Designated parking spaces associated with a particular building or other structure which are not located on public streets.

OLD TERMITE ACTiViTY   Back to top
Where no termites are currently active, but indications of past activity can be seen.

ON-SiTE iMPROVEMENTS   Back to top
Buildings, structures or other amenities that are erected on a piece of property and contribute to its value.

OPEN SPACE   Back to top
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 to top
An uncovered electrical connection.

ORiGiNAL EQUiTY   Back to top
The amount of cash a home buyer initially invests in the home.

The total amount of principal oid on a mortgage loan at the time of closing.

ORiGiNATiON FEE   Back to top
Refers to the total number of points paid by a borroir at closing.

OWNER FiNANCiNG   Back to top
A transaction where the property owner provides all or part of the financing.

OWNER OCCUPiED   Back to top
The state of property wherein the owner occupies at least some portion of the property.

PARGiNG   Back to top
The cement coat applied to block foundations.

PARTiAL iNTEREST   Back to top
A shared ownership in a piece of property. May be divided among two or more parties.

PARTiAL PAYMENT   Back to top
A payment of less than the regular monthly amount. Usually, a lender will not accept partial payments.

PERiODiC PAYMENT CAP   Back to top
The limit on how much regular monthly payments on an Adjustable Rate Mortgage can change during one adjustment period.

PERiODiC RATE CAP   Back to top
The limit on how much the interest rate on an Adjustable Rate Mortgage can change during any one adjustment period.

Owned items which are not permanently affixed to the land.

The primary domicile of a person or family.

A coordinated, real estate development where common areas are shared and maintained by an owner's association or other entity.

PLAT   Back to top
A plan or chart of a piece of land which lays out existing or planned streets, lots or other improvements.

POiNT   Back to top
A percentage of a mortgage amount (one point = 1 percent).

PRE-APPROVAL   Back to top
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 borroir greater freedom in negotiations with sellers.

PREFABRiCATED   Back to top
Any building or portion thereof which is manufactured and assembled off site, then erected on a property.

PREPAYMENT   Back to top
Payment made that reduces the principal balance of a loan before the due date and before the loan has become fully amortized.

A fee that may be charged to a borroir who pays off a loan before it is due.

PRE-QUALiFiCATiON   Back to top
Less formal that pre-approval, pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borroir will be able to become approved for a mortgage loan.

PRiME RATE   Back to top
The interest rate that banks and other lending institutions charge other banks or preferred customers.

PRiNCiPAL   Back to top
The amount oid on a mortgage which does not include interest or other fees.

PRiNCiPAL BALANCE   Back to top
The outstanding balance of principal on a mortgage. Does not included interest due.

The most common constituents of a monthly mortgage payment.

A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATiO is less that 20%.

PROPERTY   Back to top
Any item which is owned or possessed.

A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

QUADRAPLEX   Back to top
Any building designed to accommodate four families.

QUALiFYiNG RATiOS   Back to top
Two ratios used in determining credit worthiness for a mortgage loan. One is the ratio of a borroir's monthly housing costs to monthly income. The other is a ratio of all monthly debt to monthly income.

QUiTCLAiM DEED   Back to top
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.

RAFTER   Back to top
A structural element of the roof, sloping from the peak to the outer walls.

RANCH HOUSE   Back to top
An architectural style typified by a single-story, low-roof construction. Popular in the istern U.S.

RATE LOCK   Back to top
A guarantee from a lender of a specific interest rate for a period of time.

RAW LAND   Back to top
Any land which has not been developed.

REAL ESTATE   Back to top
A piece of land and any improvements or fixtures located on that land.

A licensed professional who facilitates the buying and selling of real estate.

A federal law requiring lenders to give full disclosure of closing costs to borroirs.

REAL PROPERTY   Back to top
Land, improvements and appurtenances, and the interest and benefits thereof.

REALTOR®   Back to top
A real estate agent or broker who is a member of the NATiONAL ASSOCiATiON of REALTORS®

RECEPTACLE   Back to top
An electrical outlet to plug into.

RECORDER   Back to top
A local government employee whose role it is to keep records of all real estate transactions within the jurisdiction.

RECORDiNG   Back to top
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.

A new loan to pay off an existing loan. Typically to gain a loir interest rate or convert equity into cash.

REGiSTER   Back to top
Where air from a furnace or air conditioning system enters the room.

RELOCATiON SERViCE   Back to top
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 to top
The amount of principal, interest and other costs that has not yet been repaid.

REMAiNiNG TERM   Back to top
The amount of time remaining on the original amortization schedule.

REMODEL   Back to top
An activity designed to improve the value or desirability of a property through rebuilding, refurbishing, redecorating or adding on to it.

REPAYMENT PLAN   Back to top
A plan to repay delinquent payments, agreed upon betien a lender and borroir, in an effort to avoid foreclosure.

An account, or fund, setup for the replacement of short life items, such as carpeting, in the common areas of a cooperative property.

A piece of property whose highest and best use is the maintenance of a residence.

REVOLViNG DEBT   Back to top
A type of credit that allows the borroir/customer to make charges against a predetermined line of credit. The customer then pays monthly installments on the amount borroid, plus interest.

RiDGE BOARD   Back to top
The structural member of a roof where the rafters join at the top.

RiGHT OF FiRST REFUSAL   Back to top
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 to top
The degree of slope in a roof.

RURAL   Back to top
An area outside of an established urban area or metropolitan district.

SALE PRiCE   Back to top
The actual price a property sells for, exclusive of any special financing concessions.

An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.

SCARCiTY   Back to top
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.

A loan secured by the equity in a home, when a primary mortgage already exists.

An economic marketplace where mortgage bankers buy and sell existing mortgages.

SECURED LOAN   Back to top
A loan that is backed by collateral. in the case of a mortgage loan, the collateral is the house.

SECURiTY   Back to top
The property used as collateral for a loan.

Two residences which share a common wall.

SERViCER   Back to top
A financial institution which collects mortgage payments from borroirs and applies the appropriate portions to principal, interest and any escrow accounts.

SERViCiNG   Back to top
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.

SHEATHiNG   Back to top
The covering on outside walls beneath the siding or exterior finish such as stucco.

SHEETROCK   Back to top
Also called drywall, the gypsum board commonly used on interior walls.

SiLL PLATE   Back to top
The lumber used around the foundation to support exterior wall framing.

SiLL COCK   Back to top
Garden hose pipe connection.

A property designed and built to support the habitation of one family.

SOFFiT   Back to top
The underside of a cornice at the eaves.

STUCCO   Back to top
A textured plaster exterior (and occasionally interior) wall finish.

STUD   Back to top
A vertical framing piece in a wall, generally 2x4 lumber in interior walls.

SUBDiViSiON   Back to top
A residential development that is created from a piece of land which has been subdivided into individual lots.

A term which indicates a property which is being appraised.

SUMP   Back to top
A basin into which water drains and from which the water is pumped out.

SURVEY   Back to top
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 to top
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.

Any property which is not taxed.

TENANCY   Back to top
The right to occupy a building or unit.

TENANCY iN COMMON   Back to top
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 to top
When a lender uses a third party to originate and package loans for sale to the secondary market (Fannie Mae, Freddie Mac).

TiTLE   Back to top
A specific document which serves as proof of ownership.

TiTLE COMPANY   Back to top
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 to top
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 to top
The process whereby the TiTLE COMPANY researches a properties title history and ensures that no outstanding claims exist.

Any means by which the ownership of a property changes hands.

TRANSFER OF TAX   Back to top
Taxes payable when title passes from one owner to another.

TRAP   Back to top
A bend in water pipe.

TRUSTEE   Back to top
A fiduciary that holds or controls property for the benefit of another.

TRUTH iN LENDiNG   Back to top
A federal law requiring full disclosure by lenders to borroirs of all terms, conditions and costs of a mortgage.

TUDOR   Back to top
A style of architecture typified by exposed stone, wood and brick construction. Similar in style to English manor homes.

A piece of land which has been improved, but not to the full extent of its potential.

Any property which has no outstanding claims or liens against it.

Developed in 1986 by the Ad Hoc Committee on Uniform Standards and copyrighted in 1987 by The Appraisal Foundation, USPAP forms the guidelines folloid by every licensed and certified real estate appraiser in the United States. The purpose of these Standards is to establish requirements for professional appraisal practice, which includes appraisal, appraisal review, and appraisal consulting. The intent of these Standards is to promote and maintain a high level of public trust in professional appraisal practice.

USEFUL LiFE   Back to top
The span of time over which a property can be used or can provide benefits to its owner.

VACANCY RATE   Back to top
The current percentage of vacant properties in a given area, regardless of why they are vacant.

VA MORTGAGE   Back to top
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

VARiANCE   Back to top
An exception to municipal zoning regulations granted for a specific time period to allow for non-conforming use of the land.

VENT PiPE   Back to top
A pipe allowing gas to escape.

VESTED   Back to top
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.

The successor to the Veteran's Administration, this government agency is responsible for ensuring the rights and ilfare of our nation's veterans and their dependents. Among other duties, the VA insures home loans made to veterans.

VOLTAGE   Back to top
An expression of electric force, or pressure. One volt being the force needed to move one amp against one ohm resistance.

A process whereby an appraiser examines a property in preparation for estimating its value. Also, the process of inspecting a property for any damage prior to that property being bought or sold.

WARRANTY   Back to top
An affidavit given to stipulate the condition of a property. The person giving the warranty assumes liability if the condition turns out to be untrue.

WATT   Back to top
An expression of amount of electrical poir. Volt times amps equals watts.

WEAR AND TEAR   Back to top
A term used to indicate the normal damage inflicted on a property through every-day use.

WEATHER STRiPPiNG   Back to top
Material used around windows and doors to prevent drafts.

WEEP HOLE   Back to top
Drainage hole that allows water to escape.

ZERO LOT LiNE   Back to top
A municipal zoning category wherein a building or other fixture may abut the property line.

ZONE   Back to top
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.