The ratio of the number of properties in an area that have been
sold against the number available. Used to show the volatility of a
This method of estimating the value of property uses similar
properties available in the same market to extract the value of a
parcel of land.
A provision in a mortgage that gives the lender the right to demand
immediate payment of the outstanding loan balance under certain
circumstances. Usually when the borrower defaults on the loan.
A building separate from the main structure on a property. Often
used for a specific purpose, such as a workshop, storage shed or
The natural growth of a piece of land resulting from forces of
43,560 square feet. A measurement of area.
The amount of time that has passed since a building or other
structure was built. See also: EFFECTIVE AGE
The date the interest rate changes on an adjustable rate
AD VAL OREM TAX
Taxes assessed based on the value of the land and improvements
A supplement to any document that contains additional information
pertinent to the subject. Appraisers use an addendum to further
explain items for which there was inadequate space on the standard
ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based on a
particular index, normally the prime lending rate.
The value of an asset (property or otherwise) that includes the
original price plus the value of any improvement, and less any
ADJUSTED SALES PRICE
An opinion of a property's sales price, after adjustments have been
made to account for differences between it and another comparable
The additional value a property enjoys based on subjective criteria
such as look or appeal.
A declaration that a certain set of facts are truthful.
A calculation used to determine an individual's likelihood of being
able to meet the obligations of a mortgage for a particular
property. Takes into account the down payment, closing costs and
on-going mortgage payments.
A person who has been appointed to act on behalf of another for a
Any feature of a property that increases its value or desirability.
These might include natural amenities such as location or proximity
to mountains, or man-made amenities like swimming pools, parks or
AMERICAN SOCIETY OF
An organization of appraisal professionals and others interested in
the appraisal profession.
The repayment of a loan through regular periodic payment.
The breakdown of individual payments throughout the life of an
amortized loan, showing both principal contribution and debt
service (interest) fees.
The length of time over which an amortized loan is repaid.
Mortgages are commonly amortized over 15 or 30 years.
A measure of electric current describing the magnitude.
ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.
A sum of money paid at regular intervals, often annually.
A form used to apply for a mortgage loan that details a potential
borrower's income, debt, savings and other information used to
determine credit worthiness.
A ''defensible'' and carefully documented opinion of value. Most
commonly derived using recent sales of comparable properties by a
licensed, professional appraiser.
A not-for-profit educational organization established by the
appraisal profession in the United States in 1987. It is dedicated
to the advancement of professional valuation and responsible for
establishing, improving, and promoting the Uniform Standards of
Professional Appraisal Practice (USPAP).
A world-wide organization dedicated to real estate appraisal
education, publication and advocacy.
The basic building blocks of the property valuation process,
including property inspection, market analysis and basic
The end result of the appraisal process usually consists of one
major standardized form such as, the Uniform Residential Appraisal
Report form 1004, as well as all supporting documentation and
additional detail information. The purpose of the report is to
convey the opinion of value of the subject property and support
that opinion with corroborating information.
APPRAISAL STANDARDS BOARD
An independent board of the APPRAISAL FOUNDATION, which writes,
amends, and interprets USPAP. The ASB is composed of up to seven
appraisers appointed by the Foundation's Board of Trustees. The ASB
holds public meetings throughout the year to interpret and amend
An opinion of the fair market value of a property as developed by a
licensed, certified appraiser following accepted appraisal
An educated, certified professional with extensive knowledge of
real estate markets, values and practices. The appraiser is often
the only independent voice in any real estate transaction with no
vested interest in the ultimate value or sales price of the
The natural rise in property value due to market forces.
ARMS LENGTH TRANSACTION
Any transaction in which the two parties are unconnected and have
no overt common interests. Such a transaction most often reflects
the true market value of a property.
The value of a property according to jurisdictional tax
The function of assigning a value to a property for the purpose of
The comparative relationship of a property's assessed value to its
The jurisdictional official who performs the assessment and assigns
the value of a property.
Any item of value which a person owns.
Transfer of ownership of a mortgage usually when the loan is sold
to another company.
A mortgage that can be taken over by the buyer when a home is
When a buyer takes over, or "assumes" the sellers mortgage.
Any number of houses or other dwellings which are physically
attached to one another, but are occupied by a number of different
people. The individual houses may or may not be owned by separate
people as well.
The slope of the ground around a house.
BALL COCK VALVE
The valve inside a toilet tank that controls the filling of the
A mortgage loan in which the monthly payments are not large enough
to repay the loan by the end of the term. So at the end of the
term, the remaining balance comes due in a single large
The final large payment at the end of a balloon mortgage term.
When a person or business is unable to pay their debts and seeks
protection of the state against creditors. Bankruptcies remain on
credit records for up to ten years and can prevent a person from
being able to get a loan.
A structural supporting member.
BILL OF SALE
A physical receipt indicating the sale of property.
A mortgage where you make "half payments" every two weeks, rather
than one payment per month. This results in making the equivalent
of 13 monthly payments per year, rather than 12, significantly
reducing the time it takes to pay off a thirty year mortgage.
Any region of a city or town that has fallen into disrepair or
otherwise has become undesirable.
Any genuine offer, made without intent to defraud or deceive.
An interim loan made to facilitate the purchase of a new home
before the buyer's current residence sells and its equity is
available to fund the new purchase.
Structural members used between beams to strengthen the
An individual who facilitates the purchase of property by bringing
together a buyer and a seller.
British Thermal Unit. A unit of measurement used to describe
heating or cooling capacity.
A segment of land between two disparate municipal zones which acts
as a shield to keep one zone from encroaching upon the other. Often
used to separate residential districts from commercial areas.
Regulations that ensure the safety and material compliance of new
construction within a municipality. Building codes are localized to
ensure they are adequate to meet the risk of common hazards.
BUILDING LINE OR SETBACK
The statutory distance between buildings and the property line,
imposed by municipalities, home associations, or other
Specific items of personal property which are installed in a real
estate improvement such that they become part of the building.
Built-in microwave ovens and dishwashers are common examples.
A one-story, home-style dating from the early twentieth century.
Often characterized by a low-pitched roof.
Extra money paid in a lump sum to reduce the interest rate of a
fixed rate mortgage for a period of time. The extra money may be
paid by the borrower, in order to have a lower payment at the
beginning of the mortgage. Or paid by the seller, or lender, as
incentive to buy the property or take on the mortgage.
Electrical cable shrouded in a galvanized steel outer cover.
A clause in a mortgage which allows the lender to demand payment of
the outstanding balance at a specific time.
Associated with Adjustable Rate Mortgages. A limit on how high
monthly payments or how much interest rates may change within a
certain time period or the life of the mortgage.
CAPE COD COLONIAL
A single-story house style made popular in New England. Often
characterized by a steep roof with gables.
Accumulated goods and money which is most often used to generate
An outlay of funds designed to improve the income-producing
capabilities of an asset or to extend its economic life.
Refinancing a mortgage at a higher amount than the current balance
in order to transform a portion of the equity into cash.
A pliable material used to seal cracks or openings such as around
Literally translated: ''Let the buyer beware.'' A common business
tenet whereby the buyer is responsible for verifying any and all
claims by the seller of property.
CERTIFICATE OF DEPOSIT
A document showing that the bearer has a certain amount of money,
at a particular amount interest, on deposit with a financial
CERTIFICATE OF DEPOSIT INDEX
An index based on the interest rate of six month CD's. Used to set
interest rates on some Adjustable Rate Mortgages.
CERTIFICATE OF ELIGIBILITY
A document issued by the Veterans Administration that certifies
eligibility for a VA loan.
CERTIFICATE OF OCCUPANCY
Issued by an appropriate jurisdictional entity, this document
certifies that a building complies with all building codes and is
safe for use or habitation.
CERTIFICATE OF REASONABLE VALUE
Usually based on an independent appraisal, a CRV for a particular
property establishes the maximum amount which can be secured by a
CERTIFICATE OF TITLE
A document designating the legal owner of a parcel of real estate.
Usually provided by a title or abstract company.
Generally, any professional who has met the local or state
requirements, and passed the appropriate certification exam, and is
capable of appraising any type of property.
A sub-classification of appraiser who is only licensed to appraise
residential property, usually up to four units.
CHAIN OF TITLE
The complete history of ownership of a piece of property.
Any personal property which is not attached to or an integral part
of a property. Chattel is not commonly taken into consideration
when appraising the value of real property.
Electrical devices which automatically open electrical circuits if
they are overloaded.
Ownership of property that is not encumbered by any counter-claim
A torturous process designed to induce cramping in a home buyer's
hands by requiring signature on countless pieces of documentation
that nobody has ever read. Or, the process whereby the sale of a
property is consummated with the buyer completing all applicable
documentation, including signing the mortgage obligation and paying
all appropriate costs associated with the sale (CLOSING COSTS).
All appropriate costs generated by the sale of property which the
parties must pay to complete the transaction. Costs may include
appraisal fees, origination fees, title insurance, taxes and any
points negotiated in the deal.
The document detailing the final financial arrangement between a
buyer and seller and the costs paid by each.
A second person sharing obligation on the loan and title on the
An asset which is placed at risk to secure the repayment of a
The process a lender takes to pursue a borrower who is delinquent
on his payments in order to bring the mortgage current again.
Includes documentation that may be used in foreclosure.
A second party who signs a loan, along with the borrower, and
becomes liable for the debt should the borrower default.
As opposed to statute law. Laws that have been established by
custom, usage and courts over many years.
A percentage of the sales price or a fixed fee negotiated by an
agent to compensate for the effort expended to sell or purchase
COMMON AREA ASSESSMENTS
Fees which are charged to the tenets or owners of properties to
cover the costs of maintaining areas shared with other tenets or
owners. Commonly found in condominium, PUD or office spaces.
Any areas, such as entryways, foyers, pools, recreational
facilities or the like, which are shared by the tenets or owners of
property near by. Commonly found in condominium, PUD or office
In many jurisdictions, any property which has been acquired by a
married couple. The ownership of the property is considered equal
unless stipulated otherwise by both parties.
An abbreviated term used by appraisers to describe properties which
are similar in size, condition, location and amenities to a subject
property whose value is being determined. The Uniform
Standards of Professional Appraisal Practice (USPAP) establish
clear guidelines for determining a comparable property.
Interest paid on the principal amount, as well as any accumulated
Additional value granted by a buyer or seller to entice another
party to complete a deal.
The official process by which a property is deemed to be
uninhabitable or unusable due to internal damage or other external
The transition of water vapor to liquid. Typically forms in areas
of high humidity.
A development where individual units are owned, but common areas
and amenities are shared equally by all owners.
Commonly, the conversion of a rental property such as an apartment
complex into a CONDOMINIUM-style complex where each unit is owned
rather than leased.
The pipe through which electric wiring is run.
A loan made to a builder or home owner that finances the initial
construction of a property, but is replaced by a traditional
mortgage one the property is completed.
Connected to or touching along an unbroken boundary.
Something that must occur before something else happens. Often used
in real estate sales when a buyer must sell a current home before
purchasing a new one. Or, when a buyer makes an offer that requires
a complete home inspection before it becomes official.
A legally binding agreement, oral or written, between two
A traditional, real estate financing mechanism that is not backed
by any government or other agency (FHA, VA, etc.).
A mortgage that begins as and adjustable, that allows the borrower
to convert the loan to a fixed rate within a specific
A form of ownership where each resident of a multiunit property
owns a share in a cooperative corporation that owns the building.
With each resident having rights to a specific unit within the
A situation where a person's employer pays all or some of the
expenses associated with moving from one location to another,
usually over a substantial distance. Relocation expenses often
include the amounts, such as brokerage fees, incurred in the
selling and buying of the employee's primary residence.
COST OF FUNDS INDEX (COFI)
An index of financial institutions costs used to set interest rates
for some Adjustable Rate Mortgages.
A stipulation in any mortgage that, if not met, can be cause for
the lender to foreclose.
A loan of money for the purchase of property, real or personal.
Credit is either secured by an asset, such as a home, or
A record of debt payments, past and present. Used by mortgage
lenders in determining credit worthiness of individuals.
A person to whom money is owed.
A detailed report of an individuals credit, employment and
residence history prepared by a credit bureau. Used by lenders to
determine credit worthiness of individuals.
Large companies that gather and store financial and credit
information about individuals who apply for credit.
A dead-end street. One with only one entrance/exit.
DATE OF APPRAISAL
The specific point in time as of which an appraiser designates the
value of a home. Often stipulated as the date of inspection.
An obligation to repay some amount owed. This may or may not be
DEBT EQUITY RATIO
The ratio of the amount a mortgagor still owes on a property to the
amount of equity they have in the home. Equity is calculated at the
fair-market value of the home, less any outstanding mortgage
A document indicating the ownership of a property.
A document given by a borrower to a lender, transferring title of
the property. Often used to avoid credit-damaging foreclosure
DEED OF TRUST
A document which transfers title in a property to a
trustee, whose obligations and powers are stipulated. Often
used in mortgage transactions.
DEED OF RECONVEYANCE
A document which transfers ownership of a property from a Trustee
back to a borrower who has fulfilled the obligations of a
DEED OF RELEASE
A document which dismisses a lien or other claim on a property.
DEED OF SURRENDER
A document used to surrender any claim a person has to a
The condition in which a borrower has failed to meet the
obligations of a loan or mortgage.
The state in which a borrow has failed to meet payment obligations
Cash given along with an offer to purchase property, Also called
The natural decline in property value due to market forces or
depletion of resources.
A single building improvement intended to serve as a home for one
Points paid in addition to the loan origination fee to get a lower
interest rate. One point is equal to one percent of the loan
A mortgaged property which has been foreclosed on.
The pipe that water moves through to reach the ground from the rain
A clause in a mortgage giving the lender the right to demand
payment of the full balance when the borrower sells the
A single-building improvement which is divided and provides two
units which serve as homes to two families.
A house or other building which serves as a home.
An amount paid in cash for a property, with the intent to mortgage
the remaining amount due.
EARNEST MONEY DEPOSIT
A cash deposit made to a home seller to secure an offer to buy the
property. This amount is often forfeited if the buyer decides to
withdraw his offer.
The right of a non-owner of property to exert control over a
portion or all of the property. For example, power companies often
own an easement over residential properties for access to their
The part of the roof that extends beyond the exterior wall.
The decline in property value caused by external forces, such as
neighborhood blight or adverse development.
The amount of time which any income-producing property is able to
provide benefits to its owner.
The subjective, estimated age of a property based on its condition,
rather than the actual time since it was built. Excessive wear and
tear can cause a property's effective age to be greater than its
The legal process whereby a government can take ownership of a
piece of property in order to convert it to public use. Often, the
property owner is paid fair-market value for the property.
A building or other improvement on one property which invades
another property or restricts its usage.
A claim against a property. Examples are mortgages, liens and
ENERGY EFFICIENCY RATIO
An efficiency rating system for air conditioning units that
corresponds to the number of BTU's output per watt of electricity
EQUAL CREDIT OPPORTUNITY ACT
U.S. federal law requiring that lenders afford people equal chance
of getting credit without discrimination based on race, religion,
age, sex etc
The difference between the fair market value of a property and that
amount an owner owes on any mortgages or loans secured by the
The natural increase in the amount of equity an owner has in a
property, accumulated through market appreciation and debt
ERRORS AND OMISSIONS
An insurance policy taken out by appraisers to cover their
liability for any mistakes made during the appraisal process.
An amount retained by a third party in a trust to meet a future
obligation. Often used in the payment of annual taxes or insurance
for real property.
An account setup by a mortgage servicing company to hold funds with
which to pay expenses such as homeowners insurance and property
taxes. An extra amount is paid with regular principal and interest
payments that go into the escrow account each month.
An analysis performed by the lender usually once each year to see
that the amount of money going into the escrow account each month
is correct for the forecasted expenses.
The payout of funds from an escrow account to pay property expenses
such as taxes and insurance.
The total of all property and assets owned by an individual.
EXAMINATION OF TITLE
The report on the title of a property from the public records or an
abstract of the title.
An agreement between the owner of a property and a real estate
agent giving the agent exclusive right to sell the property.
The person named in a will to administer the estate.
The front exposure of any building. Often used to describe an
artificial or false front which is not consistent with the
construction of the rest of the building.
FAIR CREDIT REPORTING ACT
A federal law regulating the way credit agencies disclose consumer
credit reports and the remedies available to consumers for
disputing and correcting mistakes on their credit history.
FAIR MARKET VALUE
The price at which two unrelated parties, under no duress, are
willing to transact business.
A private, shareholder-owned company that works to make sure
mortgage money is available for people to purchase homes. Created
by Congress in 1938, Fannie Mae is the nation's largest source of
financing for home mortgages.
The boards that enclose the eaves.
FEDERAL DEPOSIT INSURANCE CORPORATION
The U.S. Government agency created in 1933 which maintains the
stability of and public confidence in the nation's financial system
by insuring deposits and promoting safe and sound banking
FEDERAL HOUSING ADMINISTRATION
A sub-agency of the U.S. Department of Housing and Urban
Development created in the 1930's to facilitate the purchase of
homes by low-income, first-time home buyers. It currently provides
federally-subsidized mortgage insurance for private lenders.
A certified, professional appraiser who forms an opinion of the
fair market value of property and receives a set fee in
A complete, unencumbered ownership right in a piece of
FEE SIMPLE ESTATE
A form or ownership, or holding title to real estate. It is the
most complete form of title, having an unconditional and unlimited
interest of perpetual duration.
A mortgage that is insured by the Federal Housing Administration
FINAL VALUE ESTIMATE
The opinion of value of a piece of property resulting from an
appraisal following the USPAP guidelines.
The primary loan or mortgage secured by a piece of property.
A mortgage which has a fixed rate of interest over the life of the
Any piece of personal property which becomes permanently affixed to
a piece of real property.
The metal used around the base of roof mounted equipment, or at the
junction of angles used to prevent leaking.
Supplemental insurance which covers a home owner for any loss due
to water damage from a flood. Often required by lenders for homes
located in FEMA-designated flood zones.
The representation of a building which shows the basic outline of
the structure, as well as detailed information about the
positioning of rooms, hallways, doors, stairs and other features.
Often includes detailed information about other fixtures and
The furnace exhaust pipe, usually going through the roof.
The valve between the toilet bowl and the tank.
The partially buried support for a vertical structural member such
as a post.
The process whereby a lender can claim the property used by a
borrower to secure a mortgage and sell the property to meet the
obligations of the loan.
The loss of property or money due to the failure to meet the
obligations of a mortgage or loan secured by that property.
The solid structural element upon which a structure is built.
The segment of a property that runs along a point of access, such
as a street or water front.
A decrease in the value of property due to a feature or lack
thereof which renders the property undesirable. Functional
obsolescence can also occur when the surrounding area changes,
rendering the property unusable for its originally intended
A steeply angled, triangular roof.
Iron pipe with a galvanized (zinc) coating.
A ''barn-like'' roof, where the upper portion of the roof is
less-steeply angled than the lower part.
A broad-based claim against several properties owned by a
A classic, English-style hose characterized by simple rectangular
shape and multiple stories.
Ground Fault Interrupter. A type of circuit breaker required in
areas where water is present.
A wholly owned corporation created in 1968 within the U.S.
Department of Housing and Urban Development to serve low-to
A main supporting beam.
Any mortgage insured by a government agency, such as the FHA or
The slope of land around a building. Also ground level.
Any person who is given ownership of a piece of property.
Any person who gives away ownership of a piece of property.
The sum total of all floor space, including areas such as stairways
and closet space. Often measured based on external wall
Material used around ceramic tile.
The trough around the edge of the roof that catches and diverts
Insurance covering damage to a property caused by hazards such as
fire, wind and accident.
The framing elements above an opening such as a window or door.
The floor of a fireplace or the area immediately in front of
A municipal restriction on the maximum height of any building or
Assets of a property which contribute to its value, but are not
readily apparent. Examples might include upgraded or premium
HIGHEST AND BEST USE
The most profitable and likely use of a property. Selected from
reasonably probable and legal alternative uses, which are found to
be physically possible, appropriately supported and financially
feasible to result in the highest possible land value.
HOME EQUITY CONVERSION MORTGAGE
Also known as a reverse annuity mortgage. It allows home owners
(usually older) to convert equity in the home into cash. Normally
paid by the lender in monthly payments. HECM's typically do
not have to be repaid until the borrower is no longer
occupying the home.
HOME EQUITY LINE OF CREDIT
A type of mortgage loan that allows the borrower to draw cash
against the equity in his home.
A complete examination of a building to determine its structural
integrity and uncover any defects in materials or workmanship which
may adversely affect the property or decrease its value.
A person who performs professional home inspections. Usually, with
an extensive knowledge of house construction methods, common house
problems, how to identify those problems and how to correct
An organization of home owners in a particular neighborhood or
development formed to facilitate the maintenance of common areas
and to enforce any building restrictions or covenants.
A policy which covers a home owner for any loss of property due to
accident, intrusion or hazard.
An insurance policy covering the repair of systems and appliances
within the home for the coverage period.
HUD MEDIAN INCOME
Median family income for a particular county or metropolitan
statistical area (MSA), as estimated by the Department of Housing
and Urban Development (HUD).
A standardized, itemized list, published by the U.S. Department of
Housing and Urban Development (HUD), of all anticipated CLOSING
COSTS connected with a particular property purchase.
Any parcel of land which has been changed from its natural state
through the creation of roads, buildings or other structures.
Any item added to vacant land with the intent of increasing its
value or usability.
The comparative value of an improved piece of land to its natural,
The process of estimating the value of property by considering the
present value of a stream of income generated by the property.
A piece of property whose highest and best use is the generation of
income through rents or other sources.
An estimation of value created by a professional, certified
appraiser with no vested interest in the value of the property.
The examination of a piece of property, its buildings or other
The title to property which has been sufficiently reviewed by a
title insurance company, such that they are willing to insure it as
free and clear.
A percentage of a loan or mortgage value that is paid to the lender
as compensation for loaning funds.
Any piece of property that is expected to generate a financial
return. This may come as the result of periodic rents or through
appreciation of the property value over time.
The side of a door frame.
A situation where two or more parties own a piece of property
together. Each of the owners has an equal share, and may not
dispose of or alter that share without the consent of the other
Horizontal beams laid on edge to support flooring or a ceiling.
An official court decision. If the judgment requires payment from
one party to another, the court may put a lien against the payee's
property as collateral.
A type of foreclosure conducted as a civil suit in a court of
A mortgage loan for an amount greater than the limits set by Fannie
Mae and Freddie Mac. Often called non-conforming loans.
A concrete filled steel pipe used to support beams.
An extra charge, or penalty added to a regular mortgage payment
when the payment is made late by an amount of time specified in the
original loan document.
Any defect in a piece of property which is not readily apparent,
but which has an impact of the value. Structural damage or termite
infestation would be examples of latent defects.
A contract between a property owner and a tenant specifying the
payment amount, terms and conditions, as well as the length of time
the contract will be in force.
A type of property ''ownership'' where the buyer actually has a
long-term lease on the property.
A lease agreement that gives the tenant an option to buy the
property. Usually, a portion of the regular monthly rent payment
will be applied towards the down payment.
The description of a piece of property, identifying its specific
location in terms established by the municipality or other
jurisdiction in which the property resides. Often related in
specific distances from a known landmark or intersection.
The person or entity who loans funds to a buyer. In return, the
lender will receive periodic payments, including principal and
A person's outstanding debt obligations.
Insurance that covers against potential lawsuit brought against a
property owner for alleged negligence resulting in damage to
Any claim against a piece of property resulting from a debt or
A limit on how far the interest rate can move for an Adjustable
Any property which is substantially similar to another
LINE OF CREDIT
An extension of credit for a certain amount for a specific amount
of time. To be used by the borrower at his discretion.
Any asset which can be quickly converted into cash at little or no
cost, or cash itself.
Money borrowed, to be repaid with interest, according to the
specific terms and conditions of the loan.
A person that "sells" loans, representing the lender to the
borrower, and the borrower to the lender.
How a lender refers to the process of writing new loans.
The processing of payments, mailing of monthly statements,
management and disbursement of escrow funds etc Typically carried
out by the company you make payments to.
LOAN-TO-VALUE RATIO (LTV)
The comparison of the amount owed on a mortgaged property to its
fair market value.
An agreement between a lender and a borrower, guaranteeing an
interest rate for a loan if the loan is closed within a certain
amount of time.
The amount of time the lender has guaranteed an interest rate to a
A deficiency that strongly impacts the usability and habitability
of a house. Or a deficiency that may be very expensive to
Once known as ''mobile homes,'' manufactured housing is any
building which has been constructed off site, then moved onto a
piece of real property.
The difference between the interest rate and the index on an
adjustable rate mortgage.
Land whose value has been diminished due to some internal defect or
external condition. In most cases, the cost to correct the flaw or
condition is as much or more than the expected return from the
An umbrella organization that is made up of multiple, smaller home
owner's associations. Often found in very large developments or
The date on which the principal balance of a financial instrument
becomes due and payable.
MERGED CREDIT REPORT
A credit report derived from data obtained from multiple credit
METES AND BOUNDS
A traditional way of describing property, generally expressed in
terms of distance from a known landmark or intersection, and then
following the boundaries of the property back to its origin.
The accumulated land in and around a city or other municipality
which falls under the political and economic influence of that
The legal right to exploit and enjoy the benefits of any minerals
located below the surface of a parcel of land.
A statement by one party in a transaction that is incorrect or
misleading. Most misrepresentations are deemed to be intentional
and thus may constitute fraud. Others, however, some are rendered
through simple mistakes, oversights or negligence.
A financial arrangement wherein an individual borrows money to
purchase real property and secures the loan with the property as
A financial institution that provides primary and secondary
mortgages to home buyers.
A person or organization that serves as a middleman to facilitate
the mortgage process. Brokers often represent multiple mortgage
bankers and offer the most appropriate deal to each buyer.
The entity that lends money in a real estate transaction.
A policy that fulfills those obligations of a mortgage when
the policy holder defaults or is no longer able to make
MORTGAGE INSURANCE PREMIUM
A fee that is often included in mortgage payments that pays for
mortgage insurance coverage.
MORTGAGE LIFE INSURANCE
A policy that fulfills the obligations of a mortgage when the
policy holder dies.
The entity that borrows money in a real estate transaction.
Any collection of buildings that are designed and built to support
the habitation of more than four families.
NATIONAL ASSOCIATION OF MASTER APPRAISERS
A non profit professional association organized in 1982, dedicated
to the advancement of professionalism in real estate appraisal.
NATIONAL SOCIETY OF REAL ESTATE
An organization founded in 1956 which promotes standards of
professionalism in its members.
NATURAL VACANCY RATE
The percentage of vacant properties in a given area that is the
result of natural turnover and market forces.
When the balance of a loan increases instead of decreases. Usually
due to a borrower making a minimum payment on an Adjustable Rate
Mortgage during a period when the rate fluctuates to a high enough
point that the minimum payment does not cover all of the
The evolution of neighborhood use and demographics over time.
Economic fluctuations, municipal zoning changes and population
shifts can effect the life cycle.
A subsection of a municipality that has been designated by a
developer, economic forces or physical formations.
NET LEASABLE AREA
The space in a development, outside of the common areas, that can
be rented to tenants.
NEW ENGLAND COLONIAL
An architectural style dating from early American history typified
by a two-story building with clapboard siding.
Many lenders offer loans that you can obtain at "no cost." You
should inquire whether this means there are no "lender" costs
associated with the loan, or if it also covers the other costs you
would normally have in a purchase or refinance transactions, such
as title insurance, escrow fees, settlement fees, appraisal,
recording fees, notary fees, and others. These are fees and costs
which may be associated with buying a home or obtaining a loan, but
not charged directly by the lender. Keep in mind that, like a
"no-point" loan, the interest rate will be higher than if you
obtain a loan that has costs associated with it.
A loan with no "points". The interest rate on such a loan will be
higher than a loan with points paid. Also sometimes refers to a
refinance loan where closing costs are included in the loan.
The use of land for purposes contrary to the applicable municipal
zoning specifications. Often occurs when zoning changes after a
property is in use.
Any asset which can not be quickly converted into cash at little or
A legal document that obligates a borrower to repay a mortgage loan
at a stated interest rate during a specified period of time.
The interest rate stated on a mortgage note.
NOTICE OF DEFAULT
Formal written notice from a lender to a borrower that default has
The process of an assets value diminishing due to the development
of more desirable alternatives or because of the degradation of its
A physical presence within and control of a property.
The percentage of properties in a given area that are occupied.
An outlet with too many devices plugged into it, using a power
strip or other device to multiply the outlets.
Buildings, structures or other amenities which are not located on a
piece of property, but are necessary to maximize the use of the
property or in some way contribute to the value of the
Designated parking spaces associated with a particular building or
other structure which are not located on public streets.
OLD TERMITE ACTIVITY
Where no termites are currently active, but indications of past
activity can be seen.
Buildings, structures or other amenities that are erected on a
piece of property and contribute to its value.
Any land which has not had any significant buildings or structures
erected on it. Most often used to describe desirable neighborhood
features like parks.
An uncovered electrical connection.
The amount of cash a home buyer initially invests in the home.
The total amount of principal owed on a mortgage loan at the time
Refers to the total number of points paid by a borrower at
A transaction where the property owner provides all or part of the
The state of property wherein the owner occupies at least some
portion of the property.
The cement coat applied to block foundations.
A shared ownership in a piece of property. May be divided among two
or more parties.
A payment of less than the regular monthly amount. Usually, a
lender will not accept partial payments.
PERIODIC PAYMENT CAP
The limit on how much regular monthly payments on an Adjustable
Rate Mortgage can change during one adjustment period.
PERIODIC RATE CAP
The limit on how much the interest rate on an Adjustable Rate
Mortgage can change during any one adjustment period.
Owned items which are not permanently affixed to the land.
The primary domicile of a person or family.
PLANNED UNIT DEVELOPMENT
A coordinated, real estate development where common areas are
shared and maintained by an owner's association or other
A plan or chart of a piece of land which lays out existing or
planned streets, lots or other improvements.
A percentage of a mortgage amount (one point = 1 percent).
The process of applying for a mortgage loan and becoming approved
for a certain amount at a certain interest rate before a property
has been chosen. Pre-approval allows the borrower greater freedom
in negotiations with sellers.
Any building or portion thereof which is manufactured and assembled
off site, then erected on a property.
Payment made that reduces the principal balance of a loan before
the due date and before the loan has become fully amortized.
A fee that may be charged to a borrower who pays off a loan before
it is due.
Less formal that pre-approval, pre-qualification usually means a
written statement from a loan officer indicating his or her opinion
that the borrower will be able to become approved for a mortgage
The interest rate that banks and other lending institutions charge
other banks or preferred customers.
The amount owed on a mortgage which does not include interest or
The outstanding balance of principal on a mortgage. Does not
included interest due.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE
The most common constituents of a monthly mortgage payment.
PRIVATE MORTGAGE INSURANCE (PMI)
A form of mortgage insurance provided by private, non-government
entities. Normally required when the LOAN TO VALUE RATIO is less
Any item which is owned or possessed.
A written contract signed by the buyer and seller stating the terms
and conditions under which a property will be sold.
Any building designed to accommodate four families.
Two ratios used in determining credit worthiness for a mortgage
loan. One is the ratio of a borrower's monthly housing costs to
monthly income. The other is a ratio of all monthly debt to monthly
A legal document which transfers any ownership an individual has in
a piece of property. Often used when the amount of ownership is not
known or is unclear.
A structural element of the roof, sloping from the peak to the
An architectural style typified by a single-story, low-roof
construction. Popular in the western U.S.
A guarantee from a lender of a specific interest rate for a period
Any land which has not been developed.
A piece of land and any improvements or fixtures located on that
REAL ESTATE AGENT
A licensed professional who facilitates the buying and selling of
REAL ESTATE SETTLEMENT PROCEDURES ACT
A federal law requiring lenders to give full disclosure of closing
costs to borrowers.
Land, improvements and appurtenances, and the interest and benefits
A real estate agent or broker who is a member of the NATIONAL
ASSOCIATION of REALTORS.
An electrical outlet to plug into.
A local government employee whose role it is to keep records of all
real estate transactions within the jurisdiction.
The filing of a real estate transaction with the appropriate
government agent (normally the RECORDER). A real estate transaction
is considered final when it is recorded.
A new loan to pay off an existing loan. Typically to gain a lower
interest rate or convert equity into cash.
Where air from a furnace or air conditioning system enters the
Any company or agency that assists corporate employees in
relocating from one place to another. Services may include hiring
and coordinating real estate agents, moving companies, utilizes and
The amount of principal, interest and other costs that has not yet
The amount of time remaining on the original amortization
An activity designed to improve the value or desirability of a
property through rebuilding, refurbishing, redecorating or adding
on to it.
A plan to repay delinquent payments, agreed upon between a lender
and borrower, in an effort to avoid foreclosure.
An account, or fund, setup for the replacement of short life items,
such as carpeting, in the common areas of a cooperative
A piece of property whose highest and best use is the maintenance
of a residence.
A type of credit that allows the borrower/customer to make charges
against a predetermined line of credit. The customer then pays
monthly installments on the amount borrowed, plus interest.
The structural member of a roof where the rafters join at the
RIGHT OF FIRST
An agreement giving a person the first opportunity to buy or lease
a property before the owner offers it for sale to others.
The degree of slope in a roof.
An area outside of an established urban area or metropolitan
The actual price a property sells for, exclusive of any special
SALES COMPARISON APPROACH
An appraisal practice which estimates the value of a property by
comparing it to comparable properties which have sold recently.
An economic principal that dictates the price of a good or service
through the interaction of supply and demand. When an item is
scarce, its price tends to rise, given a constant demand. Real
Estate is a classic example of scarcity.
A loan secured by the equity in a home, when a primary mortgage
SECONDARY MORTGAGE MARKET
An economic marketplace where mortgage bankers buy and sell
A loan that is backed by collateral. In the case of a mortgage
loan, the collateral is the house.
The property used as collateral for a loan.
Two residences which share a common wall.
A financial institution which collects mortgage payments from
borrowers and applies the appropriate portions to principal,
interest and any escrow accounts.
The processing of payments, mailing of monthly statements,
management and disbursement of escrow funds etc Typically carried
out by the company you make payments to.
The covering on outside walls beneath the siding or exterior finish
such as stucco.
Also called drywall, the gypsum board commonly used on interior
The lumber used around the foundation to support exterior wall
Garden hose pipe connection.
A property designed and built to support the habitation of one
The underside of a cornice at the eaves.
A textured plaster exterior (and occasionally interior) wall
A vertical framing piece in a wall, generally 2x4 lumber in
A residential development that is created from a piece of land
which has been subdivided into individual lots.
A term which indicates a property which is being appraised.
A basin into which water drains and from which the water is pumped
A specific map of a piece of property which includes the legal
boundaries and any improvements or features of the land. Surveys
also depict any rights-of-way, encroachments or easements.
The method whereby a home owner develops equity in a property,
either during the purchase or throughout its life, by personally
constructing improvements rather than paying to have them
Any property which is not taxed.
The right to occupy a building or unit.
TENANCY IN COMMON
A form of holding title, whereby there are two or more people on
title to a property, ownership does not pass on to the others upon
the death of one individual.
THIRD PARTY ORIGINATION
When a lender uses a third party to originate and package loans for
sale to the secondary market (Fannie Mae, Freddie Mac).
A specific document which serves as proof of ownership.
An organization which researches and certifies ownership of real
estate before it is bought or sold. Title companies also act at the
facilitator ensures all parties are paid during the real estate
A policy which insures a property owner should a prior claim arise
against the property after the purchase has been completed. This
also covers a lender should a question of ownership arise.
The process whereby the TITLE COMPANY researches a properties title
history and ensures that no outstanding claims exist.
TRANSFER OF OWNERSHIP
Any means by which the ownership of a property changes hands.
TRANSFER OF TAX
Taxes payable when title passes from one owner to another.
A bend in water pipe.
A fiduciary that holds or controls property for the benefit of
TRUTH IN LENDING
A federal law requiring full disclosure by lenders to borrowers of
all terms, conditions and costs of a mortgage.
A style of architecture typified by exposed stone, wood and brick
construction. Similar in style to English manor homes.
UNDER IMPROVED LAND
A piece of land which has been improved, but not to the full extent
of its potential.
Any property which has no outstanding claims or liens against
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL
Developed in 1986 by the Ad Hoc Committee on Uniform Standards and
copyrighted in 1987 by The Appraisal Foundation, USPAP forms the
guidelines followed by every licensed and certified real estate
appraiser in the United States. The purpose of these Standards is
to establish requirements for professional appraisal practice,
which includes appraisal, appraisal review, and appraisal
consulting. The intent of these Standards is to promote and
maintain a high level of public trust in professional appraisal
The span of time over which a property can be used or can provide
benefits to its owner.
The current percentage of vacant properties in a given area,
regardless of why they are vacant.
A mortgage that is guaranteed by the Department of Veterans Affairs
An exception to municipal zoning regulations granted for a specific
time period to allow for non-conforming use of the land.
A pipe allowing gas to escape.
Having the right to use a portion of a fund such as an IRA.
Typically vesting occurs over time. If you are 100% vested, you
have a right to 100% of the fund.
VETERANS AFFAIRS, DEPARTMENT OF
The successor to the Veteran's Administration, this government
agency is responsible for ensuring the rights and welfare of our
nation's veterans and their dependents. Among other duties, the VA
insures home loans made to veterans.
An expression of electric force, or pressure. One volt being the
force needed to move one amp against one ohm resistance.
A process whereby an appraiser examines a property in preparation
for estimating its value. Also, the process of inspecting a
property for any damage prior to that property being bought or
An affidavit given to stipulate the condition of a property. The
person giving the warranty assumes liability if the condition turns
out to be untrue.
An expression of amount of electrical power. Volt times amps equals
WEAR AND TEAR
A term used to indicate the normal damage inflicted on a property
through every-day use.
Material used around windows and doors to prevent drafts.
Drainage hole that allows water to escape.
ZERO LOT LINE
A municipal zoning category wherein a building or other fixture may
abut the property line.
A specific area within a municipality or other jurisdiction which
conforms to certain guidelines regarding the use of property in the
zone. Typical zones include single-family, multi-family,
industrial, commercial and mixed-use.