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Glossary of Real Estate Terms

Here are some common (and a few not-so-common) real estate terms.

  

Abstract of Title: A summary of all conveyances, transfers, and other facts (of record) as evidence of title or that which would impair title of real property.

Adjustable Rate Mortgage: Any real estate loan in which the interest rate varies over time according to a prescribed formula or set of conditions, usually changes in economic conditions. (Also known as a variable rate mortgage).

Addendum: An addition or change to a contract.

Ad valorem tax: Tax based on assessed property value.

Adverse possession: The acquisition of title to property through possession without the owner's consent for a certain period of time.

Agency: The relationship of trust that exists between sellers and buyers and their agents. The agency is usually formed through a written contract.

Agency Disclosure: Laws in most states require agents who act for buyers or sellers to disclose who represents whom in a real estate transaction. Laws vary widely by state but in Texas it is required at the first meeting when substantive matters about real estate are discussed.

Allowance for Repairs: An amount negotiated within a contract that the seller agrees to pay toward buyer designated repairs.

Amortization: The process of paying the principal and interest on a loan through regularly scheduled installments. Initially, most of each payment is applied toward interest owed, and later in the loan term increasingly applied toward principal.

Amortization Schedule: Schedule showing principal and interest payments throughout the life of the loan.

Annual Percentage Rate (APR): A measure of interest rate that expresses the cost of a mortgage as a yearly rate on the loan balance. The APR assumes the loan is held for its full term. For adjustable-rate loans, the APR assumes the loan's index doesn't change from its initial value.

Appraisal: An opinion or statement (written or oral) of the value of the property.

Appraisal Fee: Charged by an appraiser to give an opinion or statement (written or oral) of the value of property.

Arbitration: A method of resolving a dispute in which a third party renders a decision.

Assessed Value: Value of property for taxation purposes as determined by the tax assessor.

Assumption of Loan, Mortgage or Deed of Trust: An agreement wherein the buyer assumes or takes responsibility (becomes liable) for payment of an existing note secured by a mortgage or deed of trust.

Assumption Transfer Fee: Charged by existing mortgage company to process existing loan.

Attorney Document Preparation Fee: Charged by attorney for preparing legal documents for the transaction.

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Back-end ratio: A lender calculation that compares a borrower's total debt (principal, interest, property taxes, and insurance, plus other monthly debt payments) to gross monthly income.

Backup offer: A secondary bid for a property that the seller will accept if the first offer fails.

Balloon Payment: Any payment that is greater than twice the amount of the normal and periodic payment. Generally used to refer to the final payment of a note with an advanced due date.

Basis point: A basis point is one one-hundredth of one percentage point. For example, the difference between a loan at 8.25 percent and a mortgage at 8.37 percent is 12 basis points.

Breach of contract: The failure to perform provisions of a contract without a legal excuse.

Bridge loan: A short-term loan for borrowers who need more time to find permanent financing.

Broker: A person who brings parties together and assists in negotiating contracts between them for a commission or fee.

Builder upgrades: Extra features or better finishing materials offered by a builder.

Building code: A comprehensive set of laws that controls the construction or remodeling of a home or other structure.

Building line or setback: Guidelines that limit how close an owner can build to the street or an adjacent property.

Building permit: A permit issued by a local government agency that allows the construction or renovation of a house.

Building restrictions: Regulations that limit the manner in which property can be used.

Built-ins: Appliances or other items that are framed into a home or permanently attached.

Bundle of rights: The various interests or rights an owner has in a property.

Buyer's agent: An agent representing a buyer in a home purchase, either as a single agent or as an exclusive buyer's broker.

Buyer's market: A slow real estate market in which buyers have the advantage.

Bylaws: The rules and regulations that a homeowners association or corporation adopts to govern activities.

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Chain of Title: The chronological list of recorded documents affecting title to a specific parcel of real property.

Clear Title: A title that is free from any encumbrance, obstruction or limitation that would "cloud the title".

Closing: Closing of escrow; the final act of a transaction wherein papers are signed, monies are exchanged and title is transferred.

Closing Costs: The expenses incurred in a real estate transaction including costs of title examination, title insurance, attorney's fees, lender's service charges, documentary transfer tax, etc.

Cloud of Title: An outstanding claim of title that has yet to be proven invalid.

Commitment: A title insurer's contractual obligation to insure title to real property.

Common area: An area inside a housing development that is owned by all residents.

Community property: Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states, including Texas.

Comparables: Properties used as comparisons to determine the value of a certain property.

Comparative market analysis: An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

Condominium: Fee ownership of an individual unit (within the confines of the perimeter walls) and tenants-in-common ownership in all the underlying fees and in the common buildings and grounds designated for all the unit owners.

Contingency: An item in a contract dependent on a specific condition for its fulfillment.

Construction loan: A short-term loan for home or building construction. The lender disburses the funds in stages.

Construction-to-permanent loan: A construction loan that is converted to a longer-term traditional mortgage after construction has been completed.

Convertible adjustable-rate mortgage: A mortgage which starts as an adjustable rate loan, but allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.

Conveyance: The transfer of title of property.

Conveyance tax: A tax imposed on the transfer of real property.

Cooperating broker: A real estate broker who finds a buyer for a property listed by another broker.

Cost-plus contract: A construction contract that determines the builder's profit based on a percentage of the cost of labor and materials.

Counter-offer: A new offer as to price, terms and/or conditions made in reply to and superseding a prior offer.

Courier Fees: Charged by courier to deliver documents to and from participants throughout the transaction.

Covenants, conditions, and restrictions (CC&Rs): Rules and regulations for a development, such as those pertaining to acceptable landscaping or improvements that can be made to individual units.

Credit history: A record of an individual's current and past debt payments.

Credit rating: The degree of creditworthiness assigned to a person based on credit history and financial status.

Credit Report: Lender run comprehensive buyer credit report.

Cul-de-sac: A street or alley that is closed at one end.

Curable defect: A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.

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Decorating allowance: An amount of money supplied by the seller and held in escrow for the buyer, to be applied toward negotiated decorating changes.

Deed: A written document that transfers the interest in property from one person to another.

Deed of Trust: A security document used to transfer "bare legal" title from the trustor (borrower) to the trustee (a neutral party) to be held in trust for the benefit of the beneficiary (lender) until the trustor completes performance of an obligation (monetary or otherwise).

Deed Restrictions: Limitations on the use of real estate written into the deed.

Default: The failure to fulfill a duty or discharge an obligation, such as making monthly mortgage payments.

Discount Points: Points a lender charges to reduce interest rate; may be paid by either buyer or seller on conventional loans; one point is equal to 1 percent of the loan value.

Disclosure: A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.

Documentation preparation fee: A fee charged by the settlement agent (escrow company or attorney) to ready the necessary paperwork for closing.

Down Payment: The portion of the purchase price of a home that the buyer pays in cash and does not finance.

Due-on-Sale Clause: A provision in a security document calling for the automatic maturity (note is all due and payable) in the event of sale or transfer of title.

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Earnest Money: Something of value given as part of the purchase price to show "good faith" and to secure an agreement.

Easement: A limited right or interest in the land of another entitling the holder to use, privilege or benefit.

Eminent Domain: The legal right and procedures for a municipality to take title and possession of private property for public use.

Encroachment: Fences or other structures that extend into the property of another owner.

Encumbrance: A claim or lien on a property which complicates the title process.

Encumbrance: Any right or interest in property interfering with its use or transfer.

Equity: The difference between the value of property and the amount owed on the property.

Escrow: A transaction wherein an impartial third party (escrow agent) acts as agent to both parties (seller/buyer-lender/borrower, etc.) acting only under instructions in delivering papers, drawing and/or recording documents and disbursing funds.

Escrow Fee: Charged by title company to service transaction and to escrow money and documents; amount varies with company.

Estimated closing costs: An estimate of expenses incidental to the sale of real estate, including loan, title, and appraisal fees. These costs are in addition to the price of the property, and are prepaid at closing. Some are one-time expenses and some are recurring.

Examination of title: An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Exclusive agency: An agreement to employ a particular broker. If another broker makes the sale, both are entitled to commissions.

Exclusive listing: A contract that gives an agent the exclusive right to market a property for a specific period of time.

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Fair Housing Act: Landmark federal law that makes it illegal to refuse to rent or sell to anyone based on race, color, religion, sex, or national origin. The 1988 amendments to the act expanded the protections to include family status and disability.

Fannie Mae: The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Federal Housing Administration (FHA): A federal agency that sets guidelines and insures loans on residential housing.

Fee Simple: Absolute ownership without limitations, conditions or restrictions burdening particular heirs.

FHA loans: Mortgages that are insured by the Federal Housing Administration (FHA). The FHA operates loan plans for investors and purchasers of rural property, and provides low-rate mortgages to buyers who make a down payment as small as 3 percent.

Fiduciary duty: The relationship of trust that buyers and sellers expect from a real estate agent. The term also applies to legal and business relationships.

Filing Fee: Fee charged for note filed with the county to process a lien.

Financed closing costs: Closing costs that are added to the loan amount. This practice saves the borrower cash up front, but increases the borrower's monthly payment.

First mortgage: The primary mortgage on a property. The first mortgage takes priority over all other voluntary liens.

Fixed-Rate Mortgage: A mortgage in which the interest rate does not change during the term of the loan.

Flood certification: The process of determining whether a property is located within a known flood zone. If the property is in a flood zone, the lender will probably require federally provided flood insurance.

Flood Insurance: Required by lender if property is situated in 100-year flood plain.

Foreclosure: Legal process by which a lender ends the borrower's interest in a property after a loan is defaulted. The lender may sell the property and keep the proceeds for mortgage and legal costs, using excess proceeds to satisfy other liens or return to the borrower

Freddie Mac: The common name for the Federal Home Loan Mortgage Corporation (FHLMC), a congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Front-end ratio: A lender calculation that compares a borrower's monthly housing expense (principal, interest, taxes, and insurance) to gross monthly income.

Funding Fee: May be charged by a lender to initiate a loan.

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Good-faith estimate: An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.

Government National Mortgage Association (GNMA): Commonly known as Ginnie Mae, this agency buys home loans from lenders, pools them with other loans and sells shares to investors. Unlike similar agencies Fannie Mae and Freddie Mac, Ginnie Mae only purchases loans backed by the federal government.

GPM (graduated-payment mortgage): A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until year three or five, then remains fixed.

Grantee: A person to whom an interest in a piece of property is conveyed.

Greenbelt: Any stretch of park, open space or other natural setting in a community.

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Hazard insurance: Also known as homeowner's insurance or fire insurance, hazard insurance covers physical risks such as fire and wind damage. Lenders usually require coverage for at least the replacement value of the home.

Home inspection: An examination of a home's construction, condition, and internal systems by an inspector or contractor prior to purchase.

Homeowner's Dues: Any money required by a Homeowners Association.

Homestead: The primary residence of a declarant who has filed a Declaration of Homestead, which offers protection (within specific guidelines) against a forced sale.

Home Warranty Program: See Residential Service Contract.

HUD: Abbreviation of (the U.S. Department of) Housing and Urban Development, a federal agency that oversees the Federal Housing Administration (FHA) and a variety of housing and community development programs.

HUD-1 Uniform Settlement Statement: A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.

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Independent contractor: A person hired to do a particular job, subject to the direction of a supervisor. An independent contractor pays for his or her own expenses and taxes, and receives no employee benefits. Most real estate agents are independent contractors.

Inspections: Examinations of property for various reasons such as termite inspections, inspection to see if required repairs were made before funds are received, etc.

Inspection report: An examination of a home's exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathroom, roof, and interior.

Insurable title: Title to property that a company agrees to insure against defects and disputes.

Installment Loan: A loan that requires periodic payment until both principal and interest are completely paid.

Interest: A share of, a right to, or a concern with something of value; also, the premium paid for the use of money (based on an annual rate).

Interest-only loan: The borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment.

Interim financing: Short-term financing used by sellers to bridge the gap between the sale of one house and the purchase of another (also known as bridge or swing loans). A construction loan is also a form of interim financing.

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Jack and Jill Bathroom: A bathroom shared between two bedrooms, where each bedroom has its own door into the bathroom.

Joint tenancy: A form of ownership where each party owns the whole property and ownership is not separate. If one party dies, the survivor owns the property.

Judgment: (or Judgement) A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property.

Judicial foreclosure: A foreclosure proceeding used in some states that is handled as a civil lawsuit and conducted entirely under the auspices of a court. Some states use non-judicial foreclosure.

Jumbo loan: A loan greater than Fannie Mae's and Freddie Mac's loan limits. Sometimes called a nonconforming loan.

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Legal description: A specific way of identifying and locating a piece of real estate that is acceptable to a court.

Lien: A charge, hold or claim of another for the purpose of securing a debt or obligation.

Listing: A written contract between an owner (principal) and an agent (broker) authorizing the agent to sell, lease or rent the owner's property in exchange for a compensation.

Loan application: The first step toward submitting a home loan requires the borrower to itemize basic financial information.

Loan Discount Points: Points a lender charges to reduce interest rate; may be paid by either buyer or seller; one point is equal to 1 percent of the loan value.

Loan origination fee: The lender requires a loan origination fee (or points) to cover the direct costs of arranging the loan.

Loan term: The time set by a lender for a buyer to pay a mortgage. Most conforming loans have 30-year or 15-year terms. In the case of balloon loans, payments are based on the amortization period and a final payment due at term.

Loan to Value (LTV): The ratio of the amount borrowed to the property's appraised value or selling price.

Lock-in: A lender's commitment to a borrower to guarantee (or "lock in") a specific interest rate for a limited amount of time.

Lock-in period: A period of time during which the borrower is guaranteed an agreed-upon interest rate, even if market rates rise. The longer the period, the higher the cost (in points) to the borrower.

Low density: A low concentration of housing units in a specific area.

Low-emissivity: A coating or film applied between panes of glass in high-efficiency glazing; abbreviated "low-E."

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Market Value: The price for a property that a willing buyer and a willing seller would agree upon when neither is under abnormal pressure.

Master-planned community: A suburban plan that includes homes and commercial, work, educational, and community facilities.

Material defect: Any defect in a specific property that could either affect a buyer's decision to purchase it or affect the property's value, such as a cracked foundation.

Material fact: Any information about a specific property that could affect a buyer's decision to purchase it, such as an upcoming zoning change in the neighborhood.

Mechanic's Lien: A statuary lien to secure payment for persons contributing labor and/or material toward improvement upon real property when the compensation was not paid in a timely manner.

Mechanical systems: A home's plumbing, wiring, heating, and cooling systems.

Mediation: A dispute-resolution process in which a neutral party works to resolve contract differences.

Metes and Bounds: A time-honored land surveying method of describing land in terms of shape and boundary dimensions.

MLS (multiple listing service): The service combines the listings for all available homes in an area, except For Sale By Owner (FSBO) properties, in one directory or database.

Monthly association dues: A payment due monthly to a homeowners' association, to be used for maintenance and communal expenses. Condominiums, townhouse complexes, and planned unit developments (PUDs) may require monthly homeowners' association dues.

Mortgage: In casual use, a sum of money borrowed to purchase a home at a certain interest rate using the property as collateral. In formal use, a mortgage is the legal document that pledges property as collateral for a loan.

Mortgage banker: A company that provides home loans using its own money. The loans are usually sold to investors such as insurance companies and Fannie Mae.

Mortgage broker: A company that matches lenders with prospective borrowers who meet the lender's criteria. The mortgage broker does not make the loan, but receives payment from the lender for services.

Mortgage insurance: Required by lenders on some loans to protect lenders from a possible default. Most conventional loans with down payments or home equity percentages that are less than 20 percent of the home value require private mortgage insurance (PMI).

Mortgage Insurance Premium (MIP): Charged on a FHA loan; insurance that is paid for by the borrower, for the life of the loan, to insure lender against default by the borrower.

Mortgagee: A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.

Mortagee Title Policy: An insurance policy or contract indemnifying against loss resulting from a defect in the title to the interest, or lien, in the real property thus insured.

Mortgagor: The person who borrows money to purchase a house. The lender is called the mortgagee.

Multiple offers: More than one purchase offer made on a property. Multiple offers commonly occur in seller's markets or hot neighborhoods.

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NAR (National Association of REALTORS®): A trade organization for real estate agents and brokers who become members by agreeing to abide by the organization's code of ethics. Members may call themselves REALTORS®.

NAR Code of Ethics: A formal code of ethics and standards of practice established by the National Association of REALTORS® (NAR) and by which its members must abide.

Negative amortization: Occurs when a borrower's monthly payment is too small to cover both the principal and interest of a loan, so the outstanding balance of the loan actually grows larger with each payment. Many adjustable rate mortgages are susceptible to this.

Negotiation: The process of creating a meeting of the minds between two or more parties in order to reach an agreement.

Non-conforming loan: A non-conforming loan is any loan that doesn't meet the qualifications or is too large to be purchased by Fannie Mae or Freddie Mac.

Nonrecurring closing costs: One-time-only fees for items including an appraisal, loan points, credit report, title insurance, and home inspection.

Notary Public: A public officer authorized to administer oaths to attest or certify types of documents, to take depositions and to perform certain other civil functions.

Note: A legal document that requires a borrower to repay a mortgage at a certain interest rate over a specified period of time.

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Open-End Mortgage: Provision that allows for additional loan advances to be funded to the borrower, while keeping the same security and security documents.

Origination fee: A fee charged by most lenders to cover the direct costs of arranging the loan; also called points. A point is 1 percent of the total loan amount.

Owner's Title Policy: A policy insuring the title of the owner of the property.

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Pay-off Penalty: Charged by lender for premature payment of conventional loan balance.

Personal property: Any movable property in a house such as furniture or appliances.

Pest-control inspection: A common pest-control inspection is a termite inspection, which is required in some states, such as California.

Photo Fees: Charged by lender for photographing property.

PITI (principal, interest, taxes, and insurance): A payment amount calculated by the lender to include the principal, interest, taxes, and insurance on an amortizing loan. The figure is designed to represent the borrower's actual monthly mortgage-related expenses.

Planned community: A concept dating back to the 19th century that describes any town or neighborhood built with certain guidelines or goals in mind.

Planned unit development (PUD): A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.

Plat book: A public record containing maps showing the division of streets, blocks, and lots, and indicating the measurements of the individual parcels.

Policy of Title Insurance: A contract indemnifying against loss resulting from a defect in title or outstanding liens on the real property insured.

Point: An amount equal to 1 percent of the loan amount. Points may be paid by the borrower at the time the loan is made to get a lower interest rate. Lenders offer various rate/point combinations.

Porte-cochere: A roofed structure extending from the side or front entrance of a home over an adjacent driveway providing shelter for those getting in or out of a vehicle.

Power of Attorney: A document authorizing a person (the attorney-in-fact) to act on behalf of another (the principal); to be directive in real estate, the power of attorney must be recorded.

Pre-approval: A thorough assessment made by a lender of a potential borrower's ability to pay for a home, and a confirmation of the amount to be borrowed. The completion of a loan application is necessary to close the loan.

Prepaid expenses: Expenses including taxes, insurance, and assessments that are paid before the due date.

Prepaid fees: Funds collected by the lender from the borrower to pay certain recurring items in advance, including interest, property taxes, hazard insurance, and, if applicable, private mortgage insurance (PMI).

Prepaid interest: Interest paid before it is due. For example, at the close of a real estate transaction the borrower may prepay interest that will accrue between closing and the first monthly payment.

Pre-Payment Penalty: A provision inserted in a note whereby a penalty is to be paid by the borrower in the event the note is paid off before the due date (or, usually, more than 20 percent in any one year).

Prequalification: A lender's preliminary assessment of a buyer's ability to pay for a home, and an estimate of how much the buyer may borrow.

Prime lending rate: The minimum short-term interest rate charged by commercial banks to their most creditworthy clients. Home loan rates typically are several points above the prime rate, which is also used as the basis for mortgages, business loans, and personal loans.

Principal: The amount of money originally borrowed in a mortgage, minus any payments made subsequently.

Principal: One who has permitted or directed another to act for his or her benefit and subject to his or her direction or control.

Principle of conformity: The idea that a house will more likely appreciate in value if its size, age, condition, and style are similar to (or conform to) other houses in the neighborhood.

Principle of progression: An appraisal term which states that real estate of lower value is enhanced by the proximity of higher-end properties.

Principle of regression: An appraisal term which states that the value of higher-end real estate can be brought down by the proximity of lower-end properties.

Private Mortgage Insurance (PMI): Charged on a Conventional loan; insurance that is paid for by the borrower to insure lender against default by borrower.

Processing: The preparation of a mortgage loan application and supporting documentation for consideration by a lender or insurer.

Processing Fee: May be charged by a lender to initiate a loan.

Professional Service Fees: An amount paid to real estate broker as compensation for REALTOR® services.

Procuring cause: Legal term used to determine whether a broker is entitled to a commission.

Property line: The official dividing line between properties.

Property value: The value of a piece of property, based on the price a buyer will pay at a given time.

Prorate: To allocate percentages of certain expenses to be paid by the buyer and seller at the time of closing.

Punch list: A list compiled by a buyer prior to a sale detailing items to be fixed before closing.

Purchase contract: A legal document that binds a buyer to purchase a piece of property for a set price, and also binds the seller to sell that property to the buyer.

Purchase Offer: A written document used to secure a firm offer to purchase property and provide a receipt for the buyer's earnest money. (Also known as a purchase agreement or deposit).

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Qualifying ratio: A ratio calculated by a lender to determine how much a potential buyer can borrow.

Quitclaim Deed: A deed that transfers the grantor's right and interest in property without any warranty or covenants of title.

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R-value: A measure of a material's resistance to heat loss, usually applied to insulation products. The higher the R-value, the slower the rate of heat loss.

Real estate: Land and anything permanently affixed to it, including buildings.

Real estate agent: A person licensed by a state to represent a buyer or a seller in a real estate transaction in exchange for a commission. Unless they are also brokers, agents must work in association with a real estate broker or brokerage company.

Real estate broker: A person, corporation, or partnership licensed by a state to represent a buyer or seller in a real estate transaction in exchange for a commission. Brokers supervise licensed sales agents, who then act for the broker (who is legally the principal agent in any transaction).

Real Estate Settlement Procedures Act (RESPA): A federal law that requires lenders to give borrowers advance notice of closing costs.

REALTOR®: A real estate licensee who is a member of the National Association of REALTORS® and who has agreed to abide by the ethics and standards of the organization.

Realtor Fees: An amount paid to real estate broker as compensation for REALTOR® services.

Record: To give public notice of a document by placing the document on file with the county recorder.

Recording fee: A fee charged by real estate agents for conveying the sale of a piece of property into the public record.

Refinancing: The process of taking out a new loan on property already owned; paying off the existing financing and retaining the cash balance, if one exists.

Regression: The principle that the value of a better-quality property is adversely affected by the proximity of a lesser-quality property.

Regulation Z: A federal code issued under the Truth in Lending Act that requires that a borrower be advised in writing of all costs associated with the credit portion of a financial transaction.

Release Filing Fee: Fee charged for note filed with the county to process the release of lien for the seller.

Repair Allowance: An amount negotiated within a contract that the seller agrees to pay toward buyer designated repairs.

Replacement cost: The current cost of rebuilding a structure to its original specifications.

Resale value: A property's future value, which can be affected by many factors including the surrounding neighborhood, school district scores, and economic and housing market conditions.

Residential Service Contract: Optional warranty offered by private companies that protects the buyer for one year from the close date.

RESPA (Real Estate Settlement Procedures Act): A federal law designed to make sellers and buyers aware of settlement fees and other transaction-related costs. RESPA also outlaws kickbacks in the real estate business.

Reverse mortgage: A special type of loan available to equity-rich, older owners. Repayment is not necessary until the borrower sells the property.

Restrictions: Certified copy of deed restrictions required by lender.

Right of way: The right to pass over or use another's land.

Riparian rights: An owner's right to use a river, stream, or lake bordering the owner's property.

Rollback: A limitation on annual assessed value increases or a reduction in the amount of property tax paid.

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Sales concession: A cost paid by the seller, even though the cost is customarily paid by the buyer.

Second Lien: A second loan placed upon a piece of property.

Seller's market: A hot real estate market in which sellers have the advantage and multiple offers are common.

Selling agent: A real estate broker or salesperson who writes the purchase offer for a buyer in a real estate transaction, but may not actually represent the buyer.

Setback Line: A line established by a zoning regulation prohibiting any building beyond a prescribed distance from the edge of the property.

Settlement or closing fees: Fees paid to the escrow agent (and often a title insurance company) for carrying out the written instructions of the agreement between buyer and seller and/or borrower and lender.

Slab foundation: A foundation built directly on soil with no basement or crawl space.

Solid-core door: A door with a solid interior.

Special assessment: An amount of money levied upon owners in a homeowners' association for the purpose of public improvements.

Specific Performance: A sale of real property that fulfills the terms agreed upon.

Step-rate mortgage: A loan that allows a gradual increase in the interest rate during the first few years of the loan.

Subdivision: The division of a single parcel of land into four or more separate parcels.

Survey: The measurement of land and the establishing, or the ascertaining, of its area and boundaries.

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Tax Certificate: Certificate issued by taxing authorities showing the current year's taxes and the last year that taxes were paid.

Tax Certificate Fee: A charge for tax certificate.

Tax Lien: A statutory lien, in favor of the state or municipality, upon the land of a person charged with unpaid personal or real property taxes.

Tax Proration: Seller pays buyer taxes from January 1st to closing.

Tax Servicing Charge: May be charged by lender to initiate a loan.

Taxes: Charges assessed against the value of real property to pay the cost of governmental services.

Time is of the Essence: A standard clause in real property contracts that indicate that punctual compliance is required.

Title: The basic rights of enjoyment and possession or interest in property; also used to describe a document that furnishes proof of ownership.

Title company: A firm that ensures that the property title is clear and provides title insurance.

Title examination: An examination of the public record to determine that the seller is the legal owner and there are no encumbrances (such as claims or liens) affecting the property.

Title Insurance: Indemnification for loss occasioned by defects in the title to real property or to an interest in real property.

Title Policy: An insurance policy or contract indemnifying against loss resulting from a defect in the title to the interest, or lien, in the real property thus insured.

Title search: The process of reviewing all recorded transactions in the public record to determine whether any title defects exist that could interfere with the clear transfer of ownership of the property.

Total expense ratio: The percentage of monthly debt obligations relative to gross monthly income.

Total lender fees: Fees required by the lender to obtain the loan, apart from other fees associated with transferring a property between buyer and seller. Also known as finance charges.

Total monthly housing costs: The sum of principal, interest, property taxes, and if applicable, private mortgage insurance (PMI) and either hazard insurance or homeowners' association dues.

Townhouse: An attached home that is not a condominium.

Transaction broker: A real estate professional who is hired to help a buyer and seller reach an agreement. The transaction broker does not represent either the buyer or the seller.

Transfer tax: An assessment by state or local authorities at the time a piece of property changes hands.

Trustee: A legally empowered person who holds or controls a piece of property for another person.

Truth in Lending Act: A federal law that allows a consumer to cancel a home-improvement loan, second mortgage, or other loan until midnight of the third business day after a contract is signed, if the home was pledged as security (except for a first mortgage or first trust deed).

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Underwriting: The process in which lenders evaluate the risks posed by a particular borrower and set appropriate conditions for the loan.

Uunderwriting fee: A fee charged by the lender to verify information on the loan application, authenticate the property's worth as collateral, and make a final determination about whether to grant a loan to the applicant.

U.S. Department of Housing and Urban Development: Also known as HUD. A federal agency that oversees the Federal Housing Administration and a variety of housing and community development programs..

Upgrades: Options offered to buyers in a new-home project that go beyond the standard carpeting, lighting, finish carpentry, and other amenities.

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VA: The U.S. Veterans Administration.

VA loan: A loan through the Veterans Administration program, which allows most veterans to purchase a house without a down payment.

Variable-Rate Mortgage: Any real estate loan in which the interest rate varies over time according to a prescribed formula or set of conditions; usually changes in economic conditions. (Also known as an adjustable-rate mortgage).

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Walk-through: A buyer's final inspection of the home to determine if conditions in the purchase agreement have been satisfied.

Warehouse Fee: May be charged by a lender to initiate a loan.

Warranty Deed: A deed in which express covenants of good title and the right of possession are detailed and guaranteed.

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Zero-lot line: The positioning of a house near or on top of the lot boundary, resulting in little or no space between houses.

Zoning: Regulations that control the use of land within a jurisdiction.

Zoning variance: A one-time modification of existing zoning law.

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