A

Annual Percentage Rate (APR): The annual interest rate on a loan that includes closing costs in its calculation. APR may vary by lender.

Appraisal: The estimated value of a property, based on comparable sales or income the property will produce.

Appreciation: An increase in a property’s value over time.

Arm’s Length Transaction: A deal made by unrelated parties acting in their own interest.

Arrears: Overdue debt or payments.

Assessment: A tax levied on property, usually for public services.

Asset: Anything valuable that can be sold or used to cover debt.

Assign: To transfer ownership or rights.

Assignee: The person who receives the transfer.

Assignor: The one who makes the transfer.

Assignment Clause: A sales contract clause allowing the buyer to transfer their interest.

Assumable Mortgage: A mortgage that can be transferred to another party, often with lender approval.

Abstract of Title: A summary of legal records relating to ownership of a property.

Amortization: The process of paying off a loan through scheduled payments over time.

Acceleration Clause: A contract clause that allows a lender to demand full repayment if certain conditions are breached.

Agreement of Sale: A written contract outlining terms of a real estate transaction.

Amendment: A formal change to a contract or agreement.

B

Balloon Mortgage: A loan requiring small payments initially and a large payment at the end.

Bankruptcy: A legal process declaring a person or business unable to repay debts.

Beneficiary: A person entitled to benefits from a legal arrangement.

Bid: An offer to purchase at a specific price.

Bi-Weekly Mortgage: Payments made every two weeks, reducing interest over time.

Blanket Mortgage: A single mortgage covering multiple properties.

Book Value: The value of an asset recorded on financial statements.

Borrower (Mortgagor): The person who takes out a loan.

Broker: A licensed individual who arranges real estate transactions.

Buy Back Agreement: A contract where the seller agrees to repurchase the property.

Buy Down: A method of lowering interest rates by paying upfront fees.

Buyer’s Broker: An agent representing the buyer in a transaction.

C

Capital: Funds used for investment or operations.

Capital Gains: Profit from selling property for more than its purchase price.

Capitalization Rate: Used to estimate return on investment for income-producing properties.

CAPS (Interest): Limits on rate increases for adjustable-rate mortgages.

Cash Flow: The net income from a property after expenses.

Caveat Emptor: "Buyer beware" — the buyer assumes the risk of defects.

Certificate of Occupancy: Confirms a property meets building codes and is habitable.

Certificate of Title: A document affirming property ownership.

Chain of Title: A record of past ownership of a property.

Chattel: Personal property not attached to land.

Clear Title: A title free of liens or legal disputes.

Closing: The final step in a transaction where property ownership transfers.

Closing Costs: Fees paid at the end of a real estate transaction.

Contingency: A condition that must be met for a contract to be binding.

Contract: A legal agreement between two or more parties.

Contract for Deed: A seller-financed agreement where title transfers after final payment.

Conventional Loan: A mortgage not backed by the government.

Convertible ARM: An adjustable-rate mortgage that can convert to a fixed rate.

Conveyance: Legal transfer of property title.

Co-op: A property owned by a corporation in which residents buy shares.

Corporation: A legal entity separate from its owners.

Covenant: A written agreement or restriction on property use.

(Sections D, E, K, Q, W, X, Y, Z will be added upon request.)

F

Fannie Mae (FNMA): A government-sponsored enterprise that buys and resells mortgages.

Farmer’s Home Administration (FmHA): USDA agency offering loans for rural housing.

FDIC: Federal agency that insures bank deposits.

Fee Simple: Complete ownership of property without restrictions.

Federal Housing Administration (FHA): Provides mortgage insurance to lenders.

FHA Loan: A government-backed loan with easier qualification.

FICO Score: A credit score used to assess borrower risk.

Fiduciary: A person or institution with legal responsibility to manage assets on behalf of another.

Finance Charge: Total cost of borrowing including interest and fees.

Fixed Rate Mortgage (FRM): A mortgage with a constant interest rate.

Forbearance: Temporary delay of mortgage payments by the lender.

Foreclosure: Legal process by which the lender repossesses a home after default.

Free and Clear: A property free of liens.

G

Grace Period: Time after a due date where no penalty is applied.

Graduated Payment Mortgage (GPM): A loan with initially low payments that increase over time.

Grantee: The recipient of property rights.

Grantor: The party transferring property rights.

H

Hard Money Lender: A private lender offering high-interest loans based on collateral.

Home Improvement Loan: A loan for renovations or repairs.

Homeowner’s Association (HOA): A group that manages common areas and enforces community rules.

Home Warranty: An insurance policy covering repairs for appliances and systems.

Homestead: A primary residence with legal protections.

Homestead Exemption: A property tax reduction for primary residences.

HUD: The U.S. Department of Housing and Urban Development.

I

Improvements: Enhancements that increase property value.

Income Approach: A valuation method based on income generated by the property.

Income Property: A property used to earn rental income.

Ingress and Egress: Rights to enter and exit a property.

Inspection: An evaluation of a property’s condition.

Installment Sale: A sale where payments are made over time.

Interest Cap: A limit on interest rate changes.

Interest Rate: The cost of borrowing expressed as a percentage.

Investor: Someone who allocates capital with the expectation of a return.

J

Joint Venture: A partnership formed for a specific investment.

Jumbo Loan: A mortgage exceeding conforming loan limits.

Junior Loan: A secondary loan subordinated to a primary one.

K

Kick-Out Clause: Allows sellers to accept a better offer if the original buyer has contingencies.

Key Money: An upfront, nonrefundable fee paid to secure a lease, often in commercial or rental markets.

Knock-Down Rebuild: Buying a property with the intention to demolish and build anew.

L

Land Contract: A financing agreement where the seller retains the title until the buyer completes payment.

Landlord: A property owner who leases space to a tenant.

Land Trust: A legal agreement in which a trustee holds title to a property on behalf of a beneficiary.

Lease: A contract granting use or occupation of property during a specified period in exchange for rent.

Lease Option: An agreement giving a tenant the right to purchase the property.

Lien: A legal claim against property as security for a debt.

Listing Agreement: A contract between a seller and a broker to market a property.

M

Margin: The fixed percentage added to the index for an adjustable-rate mortgage.

Market Value: The expected price a property would sell for in a competitive market.

Mortgage: A loan secured by the collateral of specified real estate.

Mortgage Broker: An intermediary who matches borrowers with lenders.

Mortgagee: The lender in a mortgage agreement.

Mortgagor: The borrower in a mortgage agreement.

Multiple Listing Service (MLS): A database of properties listed by real estate agents.

N

Negative Amortization: When loan payments are less than the interest due, increasing the loan balance.

Net Operating Income (NOI): Total income from a property minus operating expenses.

Non-Conforming Loan: A loan that does not meet Fannie Mae or Freddie Mac guidelines.

Notary Public: A licensed official who authenticates signatures on documents.

Note: A written promise to pay a specified amount under agreed terms.

Notice of Default: Formal notice that a borrower is in breach of a loan agreement.

O

Offer: A proposal to purchase a property under specific terms.

Offeree: The party receiving an offer.

Offeror: The party making an offer.

Option: A right to buy or lease property during a specified time.

Origination Fee: The charge for processing a loan application.

Owner Occupant: A person who owns and lives in a property.

P

PITI: Principal, Interest, Taxes, and Insurance—components of a mortgage payment.

Points: Prepaid interest assessed at closing to reduce the interest rate.

Portfolio Loan: A loan held and serviced by the lender rather than sold.

Power of Attorney: A legal document giving someone authority to act on another’s behalf.

Prepayment: Paying off a loan or part of it before the due date.

Principal: The original sum borrowed or the part of the amount still owed.

Private Mortgage Insurance (PMI): Insurance to protect lenders from borrower default.

Probate: Legal process for distributing a deceased person’s estate.

Q

Quiet Title: A legal action to establish ownership of a property and clear up title defects.

Quitclaim Deed: A deed that conveys a property without guarantees of title quality.

R

Refinance: Obtaining a new mortgage to replace an existing one.

REO (Real Estate Owned): Property owned by a lender after an unsuccessful foreclosure sale.

Reverse Mortgage: A loan available to seniors where they convert home equity into cash.

Rider: An addition or amendment to a real estate contract.

S

Single Family Residence (SFR): A stand-alone residential structure maintained as a single dwelling unit.

Special Assessment: A charge imposed by the local government on properties for improvements like sidewalks, lighting, or sewer lines.

Special Warranty Deed: A deed where the seller guarantees title only against defects that occurred during their ownership.

Subject-To: A method of purchasing property where the buyer takes over the seller’s existing mortgage payments without formally assuming the loan.

Survey: A process of determining property boundaries and physical features, often conducted by a licensed surveyor.

Sweat Equity: The value added to a property from labor rather than capital.

T

Tax Lien: A legal claim by a government entity for unpaid property taxes.

Tax Sale: A public sale of a property due to unpaid taxes.

Tenancy at Will: A lease agreement that can be terminated at any time by either the tenant or landlord.

Tenancy in Common: Shared ownership of a property where each owner can transfer their interest independently.

Title: A legal document showing ownership of property.

Title Insurance: Insurance that protects against losses from title defects or claims.

Title Search: An examination of public records to verify property ownership and discover any claims or liens.

Transfer Tax: A state or local tax imposed on the transfer of real estate.

Trustee: An individual or entity that holds or manages assets for the benefit of another.

U

Underwriting: The process by which a lender evaluates a borrower's creditworthiness and the risk of issuing them a loan.

Unencumbered Property: Property free of liens, judgments, or other legal claims.

Unimproved Land: Land that has not been built on or developed.

Usury: Charging an illegally high interest rate on a loan.

V

VA Loan: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs, often with no down payment requirement.

Valuation: The estimated market value of a property, determined through various appraisal methods.

Variable Rate Mortgage: A mortgage with interest rates that change periodically based on a financial index.

Voluntary Lien: A lien placed on property with the consent of the owner, such as a mortgage.

W

Warranty Deed: A deed in which the seller guarantees clear title to the property.

Wraparound Mortgage: A secondary financing method where the new mortgage wraps around the existing one.

X

Xeriscaping: Landscaping designed for dry environments to reduce the need for irrigation.

Y

Yield: The earnings generated and realized on an investment over a period of time.

Z

Zoning: Municipal or local government laws that dictate how property can be used (residential, commercial, industrial, etc.).

Zoning Variance: An approved exception to zoning regulations.