Not sure about the meaning of a particular term or phrase? Select the first letter to view our comprehensive glossary. If you have a question about an abbreviation in a real estate listing, try our Real Estate Listings Decoder.
Abstract of Title:
A public records summary that relates to the title of a specific piece of land.
A title insurance company representative or attorney reviews this records
summary to determine if there are any title defects that must be cleared
before a buyer can purchase clear, marketable and insurable title.
Acceleration Clause:
Stipulation or clause in a mortgage document that may require the loan balance
to become due immediately. This condition usually applies if regularly scheduled
mortgage payments are not made or if there's a breach of other mortgage conditions.
Adjustable-Rate Mortgage (ARM):
A mortgage with an interest rate that is periodically adjusted by the lender
based on a specified index. Also known as a variable rate mortgage. These
types of mortgage products typically start with a lower interest rate, then
the interest rate may move up or down as market conditions and the index
change.
Agreement of Sale:
A contract in which a seller agrees to sell and a buyer agrees to buy, under
specific terms and conditions specified in writing and signed by both parties.
Also known as a Contract of Purchase, Purchase Agreement or Sales Agreement
according to location or jurisdiction.
Amenity:
An attractive or desirable feature in a property.
Amortization:
The gradual repayment of a mortgage loan by periodic installments.
Appraisal:
Estimate of value established by a licensed appraiser, which compares a subject
property to recently sold comparable properties.
Appraiser:
Licensed person who prepares an appraisal, which is a report of the value of
a property.
Appreciation:
Increase in the value of real estate over time.
ARM:
Acronym for adjustable-rate mortgage.
Bankruptcy:
The financial inability to pay debts. The debtor seeks relief through legal
proceedings.
Binder:
A preliminary agreement, frequently secured by the payment of earnest money,
between a buyer and seller that serves as an offer to purchase real estate.
The agreement secures the right to purchase real estate upon agreed terms
for a specific period of time. The earnest money is usually forfeited if
the buyer's situation changes or is unable to purchase, unless the agreement
specifically provides that the money is to be refunded. Also known as an
Offer to Purchase.
Broker:
An individual who, for a fee or commission, brings together parties and facilitates
business negotiation between them. See also Mortgage Broker and Real Estate
Broker.
Builder Registration:
Builder requirement that buyers and their sales professional register with
the builder before or in the early stage of the new home selection process.
Buydown Your Mortgage:
Paying additional points to your lender at closing in exchange for a reduced
rate of interest. The reduced rate may last for the entire or a portion of
the loan life.
Buyer Representation:
Describes the relationship between the sales professional performing real estate
services for a buyer. The sales professional places the interests of the
buyer above all others in the transaction.
Buyer Representation Agreement:
Formal contract signed by the buyer and sales professional which details the
sales professional agreement to represent the buyer.
Buyer's Market:
Market economy to the buyer's advantage. There is a greater supply of homes
than there are buyers to purchase them.
Cap:
Limit on the amount a rate or payment can increase in any one adjustment period.
Capital Gain:
Increase in the value of real estate between the time it was bought and the
time it was sold.
Certificate of Eligibility:
Certificate provided by the Veterans Administration (VA), which verifies the
veteran's eligibility to receive a VA loan.
Change Orders:
Written changes to the plans or specifications defined in original construction
documents, which the buyer makes after construction starts. Typically, these
changes are in writing and are signed by the builder and buyer.
Closing:
A meeting where the sale of a property is finalized by the buyers and sellers
signing certain documents to transfer the title of the property and paying
closing costs. Also known as the Closing Day or Settlement.
Closing Costs:
Certain expenses (over and above the property price) incurred by both buyers
and sellers when transferring ownership of real property. Typical closing
costs may include: attorney's fees, a loan origination fee, various taxes,
and an amount held in escrow, along with charges for obtaining title insurance
and a survey as needed. The percentage of closing costs varies according
to the area or jurisdiction. REALTORS® or lenders often provide estimates
of closing costs to prospective home buyers.
Closing Day:
The day specified in a real estate contract when the sale of a property is
finalized by the buyers and sellers signing certain documents to transfer
the title of the property and paying closing costs. Also known as the Settlement
or Closing.
Cloud On Title:
Conditions, typically revealed by a title search, that adversely affect the
title to real estate. Clouds on title can interfere with the transfer of
real estate because they generally cannot be removed except by court action,
quitclaim deed or release.
CMA:
Stands for competitive or comparative market analysis.
Commitment Letter:
A written offer or notification from a lender stating the terms under which
it agrees to lend money to a home buyer. Also known as a Loan Commitment.
Competitive Market Analysis (CMA):
A report comparing your property to others in your market that were recently
sold.
Complement of Services:
A quantity of real estate settlement services considered to complete a real
property purchase.
Conditional Offer:
A purchase contract (offer to buy) submitted to the property seller that stipulates
one or more requirements to be met before the purchaser is obligated to buy.
Condo/Condominium:
Individually owned units in a multi-unit structure. Stairs, sidewalks and hallways
are common areas.
Construction Financing:
Short term funds used to pay for the building of a home.
Contract of Purchase:
A contract in which a seller agrees to sell and a buyer agrees to buy, under
specific terms and conditions specified in writing and signed by both parties.
Also known as an Agreement of Sale, Purchase Agreement or Sales Agreement
according to location or jurisdiction.
Contractor:
One that agrees or contracts to furnish or supply specific materials or perform
services at a specified price, especially for construction work or development
of a property.
Contract-to-Release:
Stage of new construction between the time the final contract is signed by
the builder, and the buyer, and the time the home is released for construction.
Conventional Loan:
A loan that is not insured or guaranteed by the federal government, such as
the Veterans Administration or the Federal Housing Administration. Also known
as a Conventional Mortgage.
Conventional Mortgage:
A loan that is not insured or guaranteed by the federal government, such as
the Veterans Administration or the Federal Housing Administration. Also known
as a Conventional Loan.
Counter:
Rejection of an offer in written terms which a buyer or seller proposes a substitute
offer to the contract terms.
Credit Report:
Summary of a buyer's debt, borrowing and repayment history compiled by the
credit-reporting agency.
Deed:
A written document that is properly signed and delivered as an instrument of
bond, contract or conveyance, especially relating to property. This document
transfers property ownership from the seller to the buyer. The seller signs
the deed at closing and the buyer receives a copy. The closing sales professional
records the deed with the buyer listed as the new property owner. The buyer's
name appears on the deed and it is sent to the buyer after it is recorded.
Deed of Trust:
A document used in some states instead of a mortgage. When borrowers sign this
document, they receive title to the property but convey title to a neutral
third party, called a trustee, until the loan is repaid.
Demographic Data:
Information pertaining to characteristics of human populations and population
segments, including population growth and density.
Designated Dual Agent:
Real estate sales professionals who work for the same company where one is
assigned to work with the buyer and the other is assigned to work with the
seller in the same transaction. In such a transaction, there are two designated
sales professionals in the same firm: one for the buyer and one for the seller.
Disclosure:
A document, text or form that reveals or uncovers information about real estate.
For example, see Seller's Disclosure.
Discount Point:
Percentage of the buyer's loan usually paid by the seller to the lender in
cash at closing. Each point equals 1% on the loan balance. Discount points
account for the difference between the market interest rate and the loan
rate.
Documentary Stamps:
A state tax, in the forms of stamps, required on deeds and mortgages when real
estate title passes from one owner to another. The amount of stamps required
varies with each state.
Dual Agent:
The real estate sales professional who has signed agreements with the buyer
and the seller in the same transaction.
Earnest Money:
A deposit given to the seller or seller's sales professional by the potential
buyer upon signing the agreement of sale. The deposit shows that the buyer
is serious about buying the property, an expression of good faith. If the
sale goes through, the earnest money is applied against the down payment.
If the sale does not go through, the earnest money is forfeited or lost unless
the binder or offer to purchase expressly provides in writing that it is
refundable. Also known as Earnest Money Deposit.
Earnest Money Deposit:
A deposit given to the seller or seller's sales professional by the potential
buyer upon signing the agreement of sale. The deposit shows that the buyer
is serious about buying the property, an expression of good faith. If the
sale goes through, the earnest money is applied against the down payment.
If the sale does not go through, the earnest money is forfeited or lost unless
the binder or offer to purchase expressly provides in writing that it is
refundable. Also known as Earnest Money.
Easement Rights:
A right, interest or privilege provided to persons other than the owner granting
access to or over a property. For example, a utility easement provides public
utilities such as electric, gas or telephone the right to place their lines
or equipment across others' property.
Encroachment:
An improvement such as a building, or portion of a building, or an obstruction
that physically intrudes upon, overlaps or trespasses upon the property of
another.
Encumbrance:
Any right or interest in land that affects or limits the fee simple title to
a property, such as mortgages, leases, easements or restrictions.
Equity:
The value of a homeowner's unencumbered interest in real estate. Equity is
calculated by subtracting from the property's fair market value the total
of the unpaid mortgage balance and any outstanding liens or other debts against
the property. Equity increases as the mortgage balance declines or as the
property value appreciates. When the mortgage and all other debts against
the property are paid in full, the homeowner has 100% equity.
Escrow:
Something of value, such as money or documents, put into the custody of a third
party to be delivered upon the fulfillment of specified conditions. For example,
a buyer places a down payment in escrow with an attorney to be disbursed
when the transaction closes or a borrower places funds in escrow with a lender
to pay taxes when they are due.
Escrow Money:
Funds held by a lender or service provider to pay for taxes, hazard insurance,
mortgage insurance and other expenses as they become due. Also known as Escrow
Payment.
Escrow Payment:
Funds held by a lender or service provider to pay for taxes, hazard insurance,
mortgage insurance and other expenses as they become due. Also known as Escrow
Money.
FHA Loan:
A mortgage where the lender is insured against loss by the Federal Housing
Administration (FHA).
FICO Score:
Computer score, based on information from a borrower's credit history, used
by a lender to predict the likelihood that the borrower will repay a mortgage.
Fiduciary:
A person who acts on the behalf of others in a legal manner.
Fixed-Rate Mortgage (FRM):
A debt instrument in which the interest rate does not change during the entire
loan term. Also referred to as FRM.
Foreclosure:
Legal loss of property because of non-payment of a mortgage.
FRM:
A debt instrument in which the interest rate does not change during the entire
loan term. Also referred to as Fixed-Rate Mortgage.
FSBO:
Real estate jargon (pronounced fiz-bow), an acronym that stands for "For
Sale By Owner" is used to describe someone who is not working with a sales
professional to sell property.
Full Service Agent:
A real estate office with licensed sales professionals for the purpose of listing
homes for sale and representing buyers in real estate transactions.
Gage (Open-End):
A mortgage with a provision that permits borrowing additional money in the
future without refinancing the loan or paying additional finance charges.
Provisions usually limit borrowing to no more than would raise the balance
to the original loan amount.
General Warranty Deed:
A deed in which the grantor fully warrants that title is free from defects,
or does not have a cloud on title. See Cloud On Title. Commonly used in most
real estate deed transfers because it offers the greatest protection of any
deed.
Good Faith Estimate:
Lender disclosure of credit terms and costs associated with a mortgage.
Grantee:
A person who receives a conveyance of real property from a grantor.
Grantor:
The person transferring title to, or an interest in, real property to a grantee.
Hazard Insurance:
A policy with coverage that compensates for physical damage to a property from
wind, fire, vandalism, or other perils. Coverage should be equal to at least
the replacement cost of the property to ensure that the home will be fully
rebuilt in case of a total loss. Also referred to as Homeowner's Insurance.
Highrise:
A residential building equipped with elevators that exceeds six stories.
Home Builder:
A service provider that specializes in building new homes.
Home Inspection:
A thorough examination that evaluates the mechanical and structural condition
of a property.
Home Warranty:
A type of insurance policy that covers repairs to specified parts of a house
for a specific period. Also known as a Residential Service Contract.
Homeowner's Insurance:
A policy with coverage that compensates for physical damage to a property from
wind, fire, vandalism or other perils. Coverage should be equal to at least
the replacement cost of the property to ensure that the home will be fully
rebuilt in case of a total loss. Also referred to as Hazard Insurance.
HUD:
An acronym for the Department of Housing and Urban Development.
Index:
A market fund rate that may be tied to an adjustable rate.
Intangible Mortgage Tax:
Tax based on the amount of the buyer's mortgage.
Interest:
The amount charged by a lender for the use of money.
Judgment:
A legal claim filed against a person or property to repay a debt.
Latent Defect:
Unknown property defect not readily apparent to the buyer, but may surface
later.
Lender's Inspection Fee:
Fee charged by a lender to inspect the property to verify that required repairs
are completed.
Lien:
The legal right to take and hold or sell the property of a debtor as security
or payment for a debt.
Liquidate:
Sell an asset and receive cash.
Listing Agent:
The sales professional who has signed an agreement to exclusively market the
seller's property.
Listing Agreement:
Formal contract signed by the seller and the real estate sales professional
at the time the seller places a property on the market.
Listing Commission:
The percentage of the final home price sellers agree to pay a sales professional
to list and sell their property.
Listing Fee:
The percentage of the final home price sellers agree to pay a sales professional
to list and sell their property.
Loan Commitment:
A written offer or notification from a lender stating the terms under which
it agrees to lend money to a home buyer. Also known as a Commitment Letter.
Loan Processing:
Verifying financial information provided by a borrower to a lender, packaging
the information on standardized forms, and submitting the package to an underwriter
for formal loan approval.
Loan Term:
Maximum length of time within which a loan must be repaid.
Lock-in:
A written agreement in which the mortgage lender guarantees a specified interest
rate if the loan closes within a set time.
Lot Acquisition:
Purchase of a lot for building a house on it.
Lot Survey:
The report that includes a detailed map of an area of land, including its boundaries,
area and elevation, using geometry and trigonometry to measure angles and
distances.
Lot-Land:
An area of land with fixed boundaries.
Market Analysis:
A report comparing your property to others in your market that were recently
sold.
Market Value:
The probable price property would bring in an arm's-length transaction under
normal conditions in an open forum.
Marketable Title:
Clear or good title, reasonably free from the risk of litigation over possible
defects.
MIP:
The amount paid by a mortgagor for mortgage insurance, to a government agency
such as the Federal Housing Administration (FHA) or to a private Mortgage
Insurance (MI) company. An acronym for Mortgage Insurance Premium.
MLS:
An acronym for Multiple Listing Service. Data that combines the listings for
all available homes in an area, except FSBOs (For Sale By Owner), in one
directory or database.
MLS Number:
A series of unique numerals used to describe an individual property in the
Multiple Listing Service (MLS).
Mortgage:
A temporary, conditional pledge of property to a creditor as security for performance
of an obligation or repayment of a debt.
Mortgage Broker:
An individual or company that typically requires a fee or commission for the
service of bringing borrowers and lenders together for the purpose of loan
origination. See also, Broker and Real Estate Broker.
Mortgage Commitment:
A written notice from the bank or other lending institution saying it will
advance mortgage funds in a specified amount to enable a buyer to purchase
real property.
Mortgage Company:
A firm that is in the business of originating, servicing and selling loans
to investors.
Mortgage Insurance:
A contract that insures the lender against loss caused by a borrower's or mortgagor's
default on a government or conventional mortgage loan. The contract can be
issued by a private company or by a government agency such as the Federal
Housing Administration (FHA). Depending on the type of mortgage insurance,
the insurance may cover all or part of the mortgage loan.
Mortgage Insurance Premium (MIP):
The amount paid by a mortgagor for mortgage insurance, either to a government
agency such as the Federal Housing Administration (FHA) or to a private mortgage
insurance (MI) company. Also referred to by the acronym MIP.
Mortgage Note:
A written agreement to repay a loan that serves as proof of indebtedness and
states the manner in which it shall be paid. The agreement includes the actual
amount of the debt and renders the mortgagor personally responsible for repayment.
Mortgage Product:
Various types of mortgages.
Mortgage Provider:
A company or person who supplies loan products. See also Mortgage Company.
Mortgagee:
A lender in a mortgage loan transaction.
Mortgagor:
A borrower in a mortgage loan transaction.
Multi-Family:
Residential structure with more than one dwelling.
Multiple Listing Service:
The means by which members of a Board of REALTORS® share listing information
and property details about a property with other members.
Natural Hazard Disclosure:
Report provided to the buyer from the seller which discloses whether the property
is located in any areas that are at risk to natural hazards, such as flood,
earthquake or forest fire.
New Homes:
Newly constructed homes that have not been previously owned.
No or Low Down Mortgages:
Mortgages that require little or no cash down payment.
Offer Price:
Price offered to the seller at the start of a negotiation.
Offer to Purchase:
A preliminary agreement, frequently secured by the payment of earnest money,
between a buyer and seller that serves as an offer to purchase real estate.
The agreement secures the right to purchase real estate upon agreed terms
for a specific period. The earnest money is usually forfeited if the buyer's
situation changes or is unable to purchase, unless the agreement specifically
provides that the money is to be refunded. Also known as a Binder.
Origination Fee:
Percentage (usually 1%) of the buyer's loan paid by the buyer in cash at closing.
PITI:
Real estate industry jargon, an acronym for Principal, Interest, Taxes, and
Insurance.
Plat:
A map showing actual or planned features, such as streets and individual building
lots.
PMI:
Acronym for Private Mortgage Insurance. PMI is the amount paid by a mortgagor
for mortgage insurance, to a government agency such as the Federal Housing
Administration (FHA) or to a private Mortgage Insurance (MI) company.
Points:
A one-time charge by the lender for originating a loan. A point is one percent
(1%) of the amount of the mortgage.
Pre-Approval:
Preliminary recommendation by a lender for a borrower's mortgage application
at a certain maximum amount and rate.
Pre-Approved for Financing:
Preliminary recommendation by a lender for a borrower's mortgage application
at a certain maximum amount and rate.
Prepaid Interest:
Interest collected at closing due from the day of closing until the first of
the month.
Prepaid Items:
Charges paid on behalf of the buyer at the time of closing that will be due
later. These include homeowner's association dues, insurance and tax reserves,
prepaid interest, and more.
Prepayment:
Any amount paid to reduce the principal balance of a loan before the due date.
Payment in full on a mortgage that may result from the owner's decision to
pay off the loan in full, a sale of the property or a foreclosure. In each
case, payment occurs before the loan is fully amortized.
Pre-Qualification:
Preliminary recommendation by a lender that a buyer will qualify for a specific
mortgage amount based on information provided by the buyer alone and not
verified through other sources.
Principal:
The mortgage loan amount borrowed or remaining unpaid. The part of the monthly
payment that reduces the remaining balance of a mortgage loan.
Private Mortgage Insurance:
The amount paid by a mortgagor for mortgage insurance, to a government agency
such as the Federal Housing Administration (FHA) or to a private Mortgage
Insurance (MI) company.
Property Inspection:
Refers to an inspection of property performed by certified property inspectors
at the buyer's request. Typically, this inspection is done right after the
property goes under contract.
Property Taxes:
Fees levied against the owner of real property.
Property Type:
A type of particular real estate or land. For example, single family, condominium,
vacant land, and townhouse.
Purchase Agreement:
A contract in which a seller agrees to sell and a buyer agrees to buy, under
specific terms and conditions specified in writing and signed by both parties.
Also known as an Agreement of Purchase, Contract of Purchase, or Sales Agreement
according to location or jurisdiction.
Quitclaim Deed:
A deed that transfers without warranty whatever interest or title a grantor
may have at the time the conveyance is made.
REALTOR®:
A real estate sales professional who abides by a strict code of ethics as a
member of the local and state boards and the National Association of REALTORS® (NAR).
Refinancing:
The process of the same mortgagor paying off one loan with the proceeds from
another loan.
Resale:
Home that has had at least one owner.
Residential Lots:
A piece of land or real estate used for private housing.
Residential Service Contracts:
An insurance policy that covers repairs to specified parts of a house for a
specific period. Also known as a Home Warranty.
Sales Agreement:
A contract in which a seller agrees to sell and a buyer agrees to buy, under
specific terms and conditions specified in writing and signed by both parties.
Also known as an Agreement of Sale, Contract of Purchase, or Purchase Agreement
according to location or jurisdiction.
Seller Disclosure:
A document that includes all pertinent information about the physical characteristics,
conditions and other factors about the property that influence a buyer's
decision.
Seller Representation:
A sales professional agrees to place a seller's interests above all others
in the transaction.
Seller's Agent:
A licensed real estate sales professional who represents the seller of real
estate.
Seller's Disclosure:
A document that includes all pertinent information about the physical characteristics,
conditions and other factors about the property that influence a buyer's
decision.
Seller's Market:
Market economy to the seller's advantage. There is a greater supply of buyers
than there are home for them to purchase.
Service Provider:
A firm or company that provides one or more settlement services associated
with buying or selling real property.
Settlement:
A meeting where the sale of a property is finalized by the buyers and sellers
signing certain documents to transfer the title of the property and paying
closing costs. Also known as Closing or Closing Day.
Settlement Fee:
Administrative fee charged by the person and/or company that closes the transaction.
Single-Family:
Residential structure intended for use by one family.
Special Assessments:
A tax or levy customarily imposed against only those specific parcels of real
estate that benefit from a proposed public improvement like a street or sewer
line.
State Tax Stamp:
Tax charged when title passes from the seller to the buyer.
Status:
A property stage subject to change.
Status Change:
A property stage that has become different. For example, an Active Available
property may have a status change to Pending after an offer to purchase is
accepted by the buyer and seller.
Survey:
A drawing or map of a property that shows the precise legal boundaries, location
of improvements, rights of way, easements and other physical features.
Surveyor:
Professional who performs a survey that determines the location, form and boundaries
of property.
Tax:
A contribution for the support of a local, state or federal government required
of persons, groups or businesses within the domain of that government.
Tax Certificates:
Statements provided by a taxing authority showing that current taxes are paid.
Terms:
Specific conditions associated with an agreement between parties. Mortgage
terms deal with payment amounts, payment intervals, length of the loan, how
the loan is amortized and more. Real estate contract terms deal with down
payment, loan amount, total sales price and other conditions of the sale.
Title:
A legal document that provides evidence of a person's right to or ownership
of a property.
Title Company:
A company that examines and insures titles to real estate.
Title Insurance:
A policy that protects the lender (lender's policy) or the buyer (owner's policy)
against loss arising from disputes over ownership of real property.
Title Search or Examination:
A check of title records to ensure that the seller is the legal owner of the
property and that there are no liens or other claims outstanding.
Townhouse:
Typically a dwelling unit with two or more floors that is attached to other
walls.
Transfer and Recordation Taxes:
Taxes charged when title passes from seller to buyer.
Transfer Tax Stamps:
Taxes charged when title passes from the seller to the buyer usually levied
by the state and the county.
Trustee:
A fiduciary that controls or holds real property for the benefit of another.
Underwriter:
Person or entity responsible for approving a borrower for a mortgage based
on the assessment of the buyer's creditworthiness and risk for the lender.
VA Loan:
A mortgage given to a veteran where the lender is insured against loss by the
Veteran's Administration (VA).
Variable Rate Mortgage:
A mortgage with an interest rate that is periodically adjusted by the lender
based on a specified index. Also known as a Adjustable Rate Mortgage. Typically,
these mortgage products start with a lower interest rate, then the interest
rate may move up or down as market conditions and the index change.
Virtual Tours:
An interactive photographic display of select interior and/or exterior views
associated with real property that you can view using this website.
W2:
Internal Revenue Service form where an employer reports income and taxes paid
for an employee in a given year.
Walk-Through:
Buyer inspection of the property before closing.
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