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ACCELERATION CLAUSE Back to top
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.
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
ADJUSTMENT DATE Back to top
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.
ADJUSTABLE-RATE MORTGAGE (ARM) Back to top
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.
ADJUSTED SALES PRICE Back to top
An opinion of a property's sales price, after adjustments have been made to account for differences between 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.
AFFORDABILITY ANALYSIS Back to top
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.
AMERICAN SOCIETY OF APPRAISERS Back to top
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.
AMORTIZATION SCHEDULE Back to top
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.
ANNUAL PERCENTAGE RATE (APR) Back to top
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 borrower's income, debt, savings and other information used to determine credit worthiness. To fill out a loan application with Strategic Funding, click here.
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.
APPRAISAL FOUNDATION Back to top
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 well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.
APPRAISAL STANDARDS BOARD (ASB) Back to top
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.
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.
ASSUMABLE MORTGAGE Back to top
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.
BALLOON MORTGAGE Back to top
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 to top
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.
BILL OF SALE Back to top
A physical receipt indicating the sale of property.
BIWEEKLY MORTGAGE Back to top
A mortgage where you make "half payments" every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.
BRIDGE FINANCING 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.
BROKER Back to top
An individual who facilitates the purchase of property by bringing together a buyer and a seller.
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 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.
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.
CAPITAL Back to top
Accumulated goods and money which is most often used to generate additional income.
CAPITAL EXPENDITURE Back to top
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.
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 ELIGIBILITY Back to top
A document issued by the Veterans Administration that certifies eligibility for a VA loan.
CERTIFICATE OF REASONABLE VALUE (CRV) Back to top
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.
CERTIFIED GENERAL APPRAISER Back to top
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 to top
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.
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.
CLOSING STATEMENT Back to top
The document detailing the final financial arrangement between 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 borrower 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 borrower, and becomes liable for the debt should the borrower default.
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.
COMMUNITY PROPERTY Back to top
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 (COMPS) 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.
COMPOUND INTEREST Back to top
Interest paid on the principal amount, as well as any accumulated interest.
CONCESSIONS Back to top
Additional value granted by a buyer or seller to entice another party to complete a deal.
CONSTRUCTION LOAN Back to top
A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.
CONTINGENCY 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, between two parties.
CONVENTIONAL MORTGAGE Back to top
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 borrower 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.
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 owed.
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.
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 owed. This may or may not be monetary.
DEBT EQUITY RATIO Back to top
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.
DEBT TO INCOME RATIO (DTI) Back to top A way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met.
DEED Back to top
A document indicating the ownership of a property.
DEED-IN-LIEU (OF FORECLOSURE) Back to top
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 to top
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 to top
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 to top
A document which dismisses a lien or other claim on a property.
DEED OF SURRENDER Back to top
A document used to surrender any claim a person has to a property.
DEFAULT Back to top
The condition in which a borrower 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.
DISCOUNT POINTS Back to top
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 to top
A mortgaged property which has been foreclosed on.
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 borrower sells the property.
DOWN PAYMENT Back to top
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.
EARNEST MONEY DEPOSIT Back to top
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, power companies often own an easement over residential properties for access to their power lines.
ECONOMIC DEPRECIATION Back to top
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 wear 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.
ENCUMBRANCE Back to top
A claim against a property. Examples are mortgages, liens and easements.
EQUAL CREDIT OPPORTUNITY ACT (ECOA) Back to top
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 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 to top
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 to top
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.
ESCROW DISBURSEMENTS Back to top
The payout of funds from an escrow account to pay property expenses such as taxes and insurance.
EXAMINATION OF TITLE Back to top
The report on the title of a property from the public records or an abstract of the title.
FAIR CREDIT REPORTING ACT Back to top
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.
FEDERAL HOUSING ADMINISTRATION (FHA) Back to top
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.
FIXED-RATE MORTGAGE (FRM) Back to top
A mortgage which has a fixed rate of interest over the life of the loan.
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.
FORECLOSURE Back to top
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.
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.
GENERAL LIEN Back to top
A broad-based claim against several properties owned by a defaulting party.
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.
GOVERNMENT MORTGAGE Back to top
Any mortgage insured by a government agency, such as the FHA or VA.
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.
HAZARD INSURANCE Back to top
Insurance covering damage to a property caused by hazards such as fire, wind and accident.
HOME EQUITY CONVERSION MORTGAGE (HECM) Back to top
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 to top
A type of mortgage loan that allows the borrower 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.
HOMEOWNER'S ASSOCIATION Back to top
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 to top
A policy which covers a home owner for any loss of property due to accident, intrusion or hazard.
HOMEOWNER'S WARRANTY Back to top
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.
INDEPENDENT APPRAISAL Back to top
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 reviewed 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.
INVESTMENT PROPERTY Back to top
Any piece of property that is expected to generate a financial return. This may come as the result of periodic rents or through appreciation of the property value over time.
JOINT TENANCY 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.
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.
JUDICIAL FORECLOSURE Back to top
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.
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.
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 borrower 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 borrowed, 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 borrower, and the borrower 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 owed on a mortgaged property to its fair market value.
LOCK-IN Back to top
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 to top
The amount of time the lender has guaranteed an interest rate to a borrower.
MARGIN Back to top
The difference between the interest rate and the index on an adjustable rate mortgage.
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.
MERGED CREDIT REPORT Back to top
A credit report derived from data obtained from multiple credit agencies.
MISREPRESENTATION Back to top
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.
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.
MORTGAGE BANKER Back to top
A financial institution that provides primary and secondary mortgages to home buyers.
MORTGAGE BROKER Back to top
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.
MORTGAGE INSURANCE Back to top
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 to top
A fee that is often included in mortgage payments that pays for mortgage insurance coverage.
MORTGAGE LIFE INSURANCE Back to top
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.
NATIONAL ASSOCIATION OF MASTER APPRAISERS (NAMA) Back to top
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 to top
An organization founded in 1956 which promotes standards of professionalism in its members.
NEGATIVE AMORTIZATION Back to top
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.
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.
NON-CONFORMING USE Back to top
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 borrower 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 borrower that default has occurred.
ORIGINAL EQUITY Back to top
The amount of cash a home buyer initially invests in the home.
ORIGINAL PRINCIPAL BALANCE Back to top
The total amount of principal owed on a mortgage loan at the time of closing.
ORIGINATION FEE Back to top
Refers to the total number of points paid by a borrower at closing.
OWNER FINANCING Back to top
A transaction where the property owner provides all or part of the financing.
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.
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 borrower greater freedom in negotiations with sellers.
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.
PREPAYMENT PENALTY Back to top
A fee that may be charged to a borrower 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 borrower 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 owed 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.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI) Back to top
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI) Back to top
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.
PURCHASE AGREEMENT Back to top
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
QUALIFYING RATIOS Back to top
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 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.
RATE LOCK Back to top
A guarantee from a lender of a specific interest rate for a period of time.
REAL ESTATE Back to top
A piece of land and any improvements or fixtures located on that land.
REAL ESTATE AGENT Back to top
A licensed professional who facilitates the buying and selling of real estate.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) Back to top
A federal law requiring lenders to give full disclosure of closing costs to borrowers.
REALTOR Back to top
A real estate agent or broker who is a member of the NATIONAL ASSOCIATION of REALTORS
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.
REFINANCE TRANSACTION Back to top
A new loan to pay off an existing loan. Typically to gain a lower interest rate or convert equity into cash.
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.
REPAYMENT PLAN Back to top
A plan to repay delinquent payments, agreed upon between a lender and borrower, in an effort to avoid foreclosure.
REPLACEMENT RESERVE FUND Back to top
An account, or fund, setup for the replacement of short life items, such as carpeting, in the common areas of a cooperative property.
REVERSE MORTGAGE Back to top
A loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner moves into a retirement community.
REVOLVING DEBT Back to top
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.
SALE PRICE Back to top
The actual price a property sells for, exclusive of any special financing concessions.
SALES COMPARISON APPROACH Back to top
An appraisal practice which estimates the value of a property by comparing it to comparable properties which have sold recently.
SECOND MORTGAGE Back to top
A loan secured by the equity in a home, when a primary mortgage already exists.
SECONDARY MORTGAGE MARKET Back to top
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.
SERVICER Back to top
A financial institution which collects mortgage payments from borrowers 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.
SUBJECT PROPERTY Back to top
A term which indicates a property which is being appraised.
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.
TAX-EXEMPT PROPERTY Back to top
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.
TRANSFER OF OWNERSHIP Back to top
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.
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 borrowers of all terms, conditions and costs of a mortgage.
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP) Back to top
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 appraisal practice.
VA MORTGAGE Back to top
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).
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.
VETERANS AFFAIRS, DEPARTMENT OF (VA) Back to top
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.
WALK-THROUGH INSPECTION Back to top
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.
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.
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