Agent 

A person who acts on behalf of another.  In real estate, an agent will specific responsibilities with respect to either a buyer or a seller.  An agent cannot represent both sides of a property transaction without the formal written consent of both parties.

Agreement of Sale

A written contract for transfer of a property under certain conditions.

Amenities

Features that add to the desirability of real estate and usually add to the market value of a property.

Amortization

The reduction of debt over time.  While the payments may remain constant, the amount that is interest versus the amount that is principal may change over the duration of the loan.

Appraisal

A process which determines the estimated value of a property.  An appraisal is only valid when completed by a qualified professional.  

APR – Annual Percentage Rate

The actual interest rate which will be paid on a loan, as differentiated from any special introductory rates offered by a lender.

Assessment

Local taxes collected for a specific purpose such as road or utility improvements.

Assumption

An agreement between a property’s buyer and seller in which a buyer “assumes” the seller’s existing mortgage.  The buyer takes over the seller’s payments as is.

Balloon Mortgage

A loan in which a large payment is required at the end of the term.

Breach

Failure to comply with the obligations of a contract.

Bridge Loan

A short term loan that covers the costs of purchasing a new home before the buyer’s old home is sold.  The loan is paid off when the old home is sold.

Building Code

Laws governing the design and construction of buildings.

Buyers Market

A situation in which there are more homes available than there are interested buyers.  This market condition is favorable to the buyer because sellers may have to be more negotiable in order to secure the sale.

Certificate of Eligibility

A document which provide proof of guaranteed loan.

Closing

The act of giving a property’s title to the buyer in exchange for payment.

Closing Costs

Expenses that must be paid at the time of a property’s closing.  Closing costs vary depending on many factors, including but not limited to:  mortgage lender fees, title charges, document preparation fees, property taxes, deed recording and insurance expenses.

Commission

The amount paid to a real estate agent by the seller.  The commission is usually a percentage of the sales price and covers the agent’s time and marketing expenses.

Construction Loan

Short term loan which provides periodic payments to a builder as progress is made on a building project.

Contingency

Any condition that must be met in a contract.  Contingencies may be built into a contract by either the buyer or a seller.  For example, the buyer may need to sell their house first or may want an appraisal and inspections done.  A seller may want to secure a new home before the sales transaction occurs.  Under a contingency situation, the contract does not become binding until the specified condition is met.

Conveyance

Transfer of a land title.

Covenants

Restrictions that are built into the deed of a specific property.  Most commonly, covenants have been created by subdivision or neighborhood associations in order to maintain control over property appearance.  However, covenants may also be private agreements between an individual seller and buyer.

Deed

Legal document which transfers property ownership.

Depreciation

A decline in the value of a home.  Age, inadequate maintenance and market trends may contribute to depreciation.

Down Payment

The amount that must be paid by a buyer in cash when purchasing a property.

Dual Agency

An agent who represents both the buyer and seller.  This relationship requires written consent by both parties. 

Earnest Money

Money that is provided by a buyer as a deposit toward purchase of the home.  This money is held until closing and then becomes part of the down payment.

Easement Rights

The granting of special access to a property. 

Encroachment

An intrusion beyond the legal property line.

Equal Credit Opportunity Act

Federal law requiring credit to be made available regardless of race, color religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

Equity

The value of a home above and beyond what is owed to a lender.

Escrow

Money held by a third party for a specific purpose.  Earnest money is often held in escrow by a broker until closing.  Lenders may hold money in escrow for payment of property taxes and insurance.

Exclusive Agency Listing

A written agreement which gives an agent the right to market a property but also allows the owner to sell the property during that period without paying a commission.

Exclusive Right to Sell

A written agreement which gives an agent full responsibility for sale of a home.  The agent’s commission is paid if the home is sold during the agreement timeframe.

Fair Market Value

The price that a home should sell for given the existing market conditions.

Fannie Mae

A nickname for the Federal National Mortgage Association (FNMA).  The program was originally established by the federal government, but is now a private corporation which purchases mortgage loans.

FHA

Acronym for the Federal Housing Authority, a branch of the U.S. Department of Housing and Urban Development (HUD).  Originally established to encourage imporvemnet in housing standards, the FHA now insures mortgage loans.

Freddie Mac

A nickname for the Federal Home Loan Mortgage Corporation (FHLMC).  This is another agency that may purchase mortgages from conventional lenders.

Functional Obsolescence

Loss of value due to the existence of newer designs or structural technology.

Ginnie Mae

A nickname for the Government National Mortgage Association (GNMA).

Grantee

Generally used in association with a deed, refers to the buyer of a property.

Grantor

Generally used in association with a deed, refers to the seller of a property.

Home Inspection

An independent analysis of a home’s structure including plumbing, electrical and heating systems, and overall maintenance.

Homeowners Insurance

A policy which protects a homeowner against damage to the home or personal property.  Insurance is usually required by a lender and may be included in a mortgage payment.

Home Owners Association

A group established by local homeowners to maintain the quality of a community.  When purchasing a property, Home Owners Association fees and covenants may apply.

HUD

Acronym for the US Department of Housing and Urban Development.  HUD is a government agency which engages in community planning and provides housing opportunities for low to moderate income families.

Interest

A fee paid to a lender for borrowing money.

Legal Description

The geographic position of a property.

Lien

An existing hold on a property to satisfy a debt.

Listing Contract

An agreement which allows an agent to market a home during a given time period.

Loan Origination Fee

Lender’s fee for evaluating and preparing a mortgage loan.

Lock-in Rate

The interest rate on a loan as committed to by the lender.

Mortgage

A lien on a property while the buyer repays a lender.

Mortgage Broker

An individual or company that works with many lending institutions to secure funding for home loans.

Mortgage Insurance

A policy that protects the lender in the event that the borrower cannot repay the loan.

Multiple Listing

A combined resource providing information on homes for sale in the area.  MLS listing provides additional visibility and marketing for a home seller.

NAR

Acronym for the National Association of Realtors, a trade association with over 700,000 members. 

Offer

A buyer’s proposal to purchase a property from a seller.  The seller may respond with a counter-offer.

PITI

Acronym for Principal, Interest, Taxes and Insurance, a lump sum payment to a lender which covers all of these costs.

Plat

A property map.

Point

A supplemental fee which can be paid to decrease the overall interest rate on a mortgage.  1 point = 1% of a loan amount. 

PMI

Acronym for Private Mortgage Insurance, often required by lenders when borrowers do not have a 20% down payment.  The premium fees are charged to the borrower until sufficient payment has been achieved.

Pre-qualification / Pre-approval

The process of determining with a lender how much house a buyer can afford.  Pre-qualification is generally free. 

Pre-approval is a more formal process, involving actual completion of the loan paperwork.  A lender will usually provide a written letter stating the maximum amount which would be loaned to the buyer.

Real Estate Agent

A licensed real estate professional who works under the direction of a broker.

Realtor

A licensed real estate professional who is a member of the National Association of Realtors.

Recision

Cancellation of a contract.

RESPA

Acronym for Real Estate Settlement Procedures Act, a law which provides consumers with the ability to review settlement costs.

Sellers Market

A condition that exists when there are more buyers than there are available homes.  This situation is conducive to the seller because fewer concessions may be required to secure the sale.

Title

Property ownership, transferred via a deed.

Title Insurance

A policy which protects the lender and homeowner in event of claims against a property’s title.

Title Search

Research completed by a title company to determine a property’s legal ownership. 

Truth-in-Lending

Federal law requiring timely disclosure of the annual percentage rate to buyers.

Underwriting

Decision-making process for a loan.

Zoning Ordinances

Local laws governing building codes and property usage.