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Real Estate Glossary Terminology |
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Agreement of Sale- |
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When a written agreement or contract is made in which the seller
agrees to sell and the buyer agrees to buy under specific terms and
conditions. |
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Agency- |
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A mortgage organization in which an owner can appoint a broker to
market their property or when a buyer appoints a broker to locate
and negotiate the purchase of a property on mutually agreed terms. |
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Amortization- |
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The reduction of a mortgage or debt by making payments in installments or regular transfers. |
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Appraisal- |
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The process of estimating property value. Assessed value –
the value placed on property by a public tax assessor as the basis
of property taxes. |
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Balloon Mortgage- |
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A mortgage for a fixed term shorter than necessary to fully repay
the debt. At the end of the term a large remaining balance of the
principal is due. |
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Binder- |
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An agreement to enter into a contract that is typically accompanied
by a deposit, where the purchaser is indicating good faith. |
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Bridge loan- |
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A loan used to finance, usually short term, the portion of the purchase
price not provided by the mortgage loan and the down payment. A bridge
loan is commonly used when a purchaser has not sold their existing
home before closing on their purchase of the new home. The bridge
loan is paid off once the old home is sold. |
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Broker – |
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Someone who is licensed by the real estate commission and paid to act as an agent in conducting real estate brokerage business. |
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Buyer-brokerage - |
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Agreement where the agent is representing the buyer. The seller’s agent and prospective seller must be advised and agree to this relationship. |
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Cap - |
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The upper limit or maximum amount that can be charged. |
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Capital Gain - |
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A profit made from the sale of a financial asset such as the closing of the house. |
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Closing - |
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The final step in which the transferring ownership of a property from
a seller to a buyer is done. |
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Closing Cost - |
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Fee’s and expenses, not including the price of the property, payable by the seller and the buyer at the time of closing. |
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Conventional Loan - |
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A fixed-rate and term loan that is made without government insurance. |
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Counter Offer - |
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An offer made in response to the original offer or last offer. |
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Deed - |
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A legal document assigning title to a property. |
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Earnest money - |
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Down payment given to the seller by a potential buyer indicating the buyer’s intent in completing the purchase of a property. |
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Equity - |
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The monetary value of property beyond any amounts owed on it in
mortgages. Equity is calculated by subtracting the unpaid mortgage
from the property's fair market value. A homeowner’s equity
increases the mortgage is paid off or as the property appreciates
in value. When the mortgage is paid in full and there are no debts
or liens on the property then the homeowner has 100 percent equity
in their property. |
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Equity Loan - |
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A loan that is based on the borrower’s equity in real estate property instead of the credit history. |
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Escrow - |
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The placement of money and/or documents with a third party for safekeeping and only released after a condition has been met. |
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Exclusive Agency Listing - |
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A formal agreement giving the broker excusive rights to market the
owner’s property for a specific period of time and receive a
commission if the broker finds a ready, willing and able buyer during
that time. It also allows the owner to market and sell the property
during the same period and avoid paying a commission if the owner
locates the ready, willing and able buyer. |
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Exclusive Right-to-Sell listing - |
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A written agreement by which the owner hires a broker as the only marketing agent and promises to pay the broker a commission if a ready, willing and able buyer is found for the property during the listing period, regardless of whether the broker is responsible for finding that buyer. |
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Fannie Mae - |
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Federal National Mortgage Association, FNMA is a public corporation
originally established by the federal government. Fannie Mae purchased
mortgage loans from lenders which is a major source of funds for mortgage
companies. |
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Housing and Urban Development (HUD) - |
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A US Government agency established to execute certain federal housing and community development programs. |
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Lien - |
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Legal claim against a property. |
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Listing Contract - |
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An agreement between a homeowner and licensed real estate broker authorizing
the broker to offer the owner’s property for sale during a period
of time. |
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Loan Origination Fee - |
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Fee charged by the lender for evaluating, preparing and submitting a proposed mortgage loan. |
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Loan-to-Value Ratio - |
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The ratio of a mortgage loan principal to the property’s appraised value or its sale price, whichever is lower. Loan-to-value ratios may vary depending upon the individual lender’s policy. |
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Lock-in Rate - |
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A commitment made by a lender to make a mortgage loan at a specified
rate, pending loan approval, on a prior specified date. |
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Market Value - |
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The highest price a ready, willing and able buyer will pay and the lowest price a seller, not under duress, will accept. |
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Mortgage Broker - |
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An individual or company that obtains mortgage for others by finding lending institutions, insurance companies or private sources to lend the money; may also handle collections and disbursements. |
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Mortgage Insurance - |
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An insurance policy that provided protection to the lender in case of default and/or which guarantees repayment of the loan if the borrower becomes disabled or dies. |
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Offer - |
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A proposal to purchase real estate property at a particular price and/or subject to other specified terms and conditions. Acceptance of the offer by the seller would create a purchase contract. |
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Points - |
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A dollar amount, expressed as a percentage of the mortgage amount,
which is paid to a lender as a consideration for making the loan.
A point is one percent of the amount of the mortgage loan also called
discount point. |
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Prepayment Penalty - |
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A penalty for the payment of a mortgage before it becomes due. Also know as “reinvestment fee”. |
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Principal - |
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A person who appoints another as a representative. It also refers
to the capital sum lent on interest. |
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Principal and Interest Payment (P&I) - |
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A periodic (usually monthly) payment that includes the interest charges for the period plus an amount applied to amortization of the principal balance. |
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Realtor or Realtor Associate - |
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A registered group of member’s that identify real estate professionals who are members of the national association of Realtors and subscribe to its Code of Ethics. |
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Rollover loan - |
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A loan that is renewed at an established time with current market interest rates. |
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Title - |
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A document that is evidence of property ownership. |
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Title Insurance - |
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Protection for lenders and homeowners against financial loss resulting from legal defects in the title. |
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Title Search - |
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A title records check to identify liens, encumbrance and ownership right property. |
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Trust - |
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A property interest held by one person for the benefits or another. |
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VA Mortgage - |
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A mortgage loan guaranteed by the Veterans Administration, an agency of the federal government that provides services for eligible veterans. |
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Zoning - |
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A restriction specified for a defined area. |
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