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BayView Real Estate Dictionary
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Acceleration Clause
A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed. The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.
Acceptance
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
Accrued Interest
Interest that has accumulated between the most recent payment and the sale of a bond or other fixed income security. Accrued interest is calculated by multiplying the rate by the number of days that have elapsed since last payment.
Acre
A measure of land equal to 43,560 square feet.
Actual Eviction
The legal process that results in the tenants being physically removed from the leased premises.
Ad Valorem Tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
Additional Principal Payment
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Adjustable Rate Mortgage (ARM)
A loan characterized by fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index. A mortgage that permits the lender to adjust the mortgage's interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.
Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).
Adjustment Period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).
Agent
A licensed individual capable of selling property.
Alien
To transfer (lands, title) to another.
Alienation
A transfer of title or property to another.
Alienation Clause
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect this clause prevents the borrower from assigning the debt without the lender's approval.
Amenity
A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
Amortization
The gradual repayment of a mortgage loan by installments.
Amortization Schedule
An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.
Amortization Term
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
Amortize
To repay a mortgage with regular payments that cover both principal and interest.
Amortized Loan
A loan in which the principal as well as the interest payable in monthly or other periodic installments over the term of the loan.
Annual Mortgagor Statement
A report sent to the mortgagor (the borrower) each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points). The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending act. The yearly interest percentage as expressed by the actual rate of interest paid. For example: 6% add on interest would be much more than 6% simple interest.
Appraisal
A written analysis of the estimated value of a property prepared by a qualified appraiser.
Appraised Value
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
Appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation. An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanently opposite of depreciation.
Assessed Value
The valuation placed on property by a public tax assessor for purposes of taxation. Value placed upon property for property tax purposes.
Assessment
The imposition of a tax, charge or levy, usually according to established rates. The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.
Assessor
A public official who establishes the value of a property for taxation purposes.
Asset
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
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Balloon
(1) A final payment of a balloon note. (2) A landlocked parcel of land.
Balloon Mortgage
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term. The principal and interest on the loan are amortized over a longer period than the actual term of the mortgage.
Balloon Note
A note calling for periodic payments which are insufficient to fully amortize the face amount of the note prior to maturity, so that a principal sum known as a "balloon" is due at maturity.
Balloon Payment
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized. The final lump sum payment that is made at the maturity date of a balloon mortgage.
Bill of Sale
A written document that transfers title to personal property.
Blanket Insurance Policy
A single policy that covers more than one piece of property (or more than one person).
Broker
One who acts as an intermediary on behalf of others for a fee or commission. A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.
Brokerage
The bringing together of parties interested in making a real estate transaction
Buyer-Agency Agreement
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
Buyer's Agent
A licensed individual working on behalf of the buyer in a real estate transaction.
Buyer's Broker
A residential real estate broker who represents prospective buyers exclusively, as they buyer's agent, the broker owes the buyer/principal the common-law statutory agency duties.
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Cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.
Capital Gain
Profit earned from the sale of an asset.
Closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement." At this meeting, ownership of the property is transferred from the seller to the buyer.
Closing Costs
Expenses incidental to a sale of real estate, such as loan fees, title fees, appraisal fees, etc. Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or Realtors® often provide estimates of closing costs to prospective homebuyers.
Collateral
Property put up by someone getting a loan. If they fail to repay the loan, the property goes to the person granting the loan. An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
Commission
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan. Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Competitive Market Analysis (CMA)
A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style and amenities.
Contingency
A provision in a contact that required a certain act to be done or a certain event to occur before the contract becomes binding. A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Convertibility Clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.
Convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.
Counteroffer
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which can not be accepted thereafter unless revived by the offeror.
Covenant
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.
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Deed
The legal document conveying title to a property. A document giving the holder the title to property. More generally, any document sealing an agreement, contract, etc. The most common types of deeds Bargain and Sale, Quitclaim, and Warranty. A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
Deed In Lieu Of Foreclosure
A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the term of the mortgage. This is a way for the mortgagor to avoid foreclosure.
Default
Failure to make required debt payments on a timely basis or to comply with other conditions of an obligation or agreement.
Deed In Trust
An instrument that grants trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement. A transfer of property to someone to be held in trust for another. See trust. More specifically, however, deeds of trust are used in a number of states instead of a mortgage to secure a loan. The deed of trust names the trustees in whom title is placed as security against failure to meet the terms of the loan.
Deed Of Restrictions
Clause in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions-for example, they may limit the density of buildings, dictate the types of structure from being used in specific purposes or even from being used at all.
Delinquency
Failure to make mortgage payments when mortgage payments are due.
Depreciation
(1) In appraisal, a loss of value in property due to physical deterioration, functional obsolescence and external obsolescence. (2) In real estate investment, and expense deduction for tax purposes taken over the period of ownership of income property. A decline in the value of property; the opposite of appreciation.
Down Payment
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage. Cash portion paid by a buyer from his own funds as opposed to that portion of the purchase price which is financed.
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Earnest Money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyers defaults but applied to the purchase price if the sale is closed.
Earnest Money Deposit
A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Escrow
Delivery of a deed by a grantor to a third party for delivery to the grantee upon the happening of a contingent event. Modernly, in some states, all instruments necessary to the sale (including funds) are delivered to a third (neutral) party, with instructions as to their use. An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.
Escrow Account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the brokers principal or some other person until the consummation or termination of transaction. The account in which a mortgage servicer holds the borrower’s escrow payments prior to paying property expenses.
Escrow Collections
Funds collected by the servicer and set aside in an escrow account to pay the borrower’s property taxes, mortgage insurance, and hazard insurance.
Escrow Disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
Escrow Payment
The portion of a mortgagor’s monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Known as "impounds" or "reserves" in some states.
Estate
A property right held by someone. There can be many estates held on a single piece of property, for example, relating to specific uses of the property. Mineral rights, water rights, and so on are examples. Estates can be subordinate (lower in rank) to other estates. The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.
Eviction
A legal process to oust a person from possession of real estate. The lawful expulsion of an occupant from real property.
Exclusive Listing
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.
Exclusive-Agency Listing
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to see the property, on the owner's stated term, for commission. The owner reserves the right to sell with out paying anyone a commission is he or she sells to a prospect who has not been introduced or claimed by the broker.
Exclusive-Right-To-Sell Listing
A losing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, to sell the property on the owner's stated terms, and agrees to pay the broker commission when the property is sold, whether by the broker, the owner or another broker.
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Fair Market Value
The highest price estimated in terms of money that a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used. It is often referred to as the price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure. The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Fannie Mae
A New York Stock Exchange company and the largest non-bank financial services company in the world. It operates pursuant to a federal charter and is the nation's largest source of financing for home mortgages. A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
Fannie Mae Properties
Fannie Mae owns, manages, and has available for sale, single-family detached homes, two- to four-unit properties, condominiums, and townhouses in a variety of neighborhoods. The number, type, and sales price may vary substantially. The homes vary in age and may require repairs. Fannie Mae homes are sold through local real estate brokers whose contact information is provided in the Fannie Mae Properties for Sale search results on homepath.com.
Finder's Fee
A fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower.
Fixed Rate Mortgage
A mortgage having a rate of interest which remains the same for the life of the mortgage. A mortgage in which the interest rate does not change during the entire term of the loan.
Foreclosure
The legal process by which an owner's right to a property is terminated, usually due to default.
Freddie Mac
A corporation established to purchase primarily conventional mortgages loans in the secondary mortgages market.
Fully Amortized ARM
An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term.
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Graduated-Payment Mortgage (GPM)
A loan in which the monthly principal and interest payments increase by a certain number of percentage each year for a certain number of years and then level off for the remaining loan term.
Growing-Equity Mortgage (GEM)
A loan in which the monthly payments increase annually, with the increased amount being used to directly reduce the principal balance outstanding and thus shorten the overall term of the loan.
Guarantee Mortgage
A mortgage that is guaranteed by a third party.
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Mortgage
A legal document by which real property is pledged as security for the repayment of a loan; the pledge is canceled when the debt is paid in full.
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Pre-Qualification
The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.
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REO (Real Estate Owned)
Property which is in the possession of a lender as a result of foreclosure or forfeiture.
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Seller's Concession
The seller allows for the mark-up in the sales price for closing costs. This is typically done in a zero down purchase.
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Zero Down Purchase
Purchasing a home with no money down. This is done by including the closing costs in the purchase price.

 

 

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