Adjustable Rate Mortgage (ARM)
A loan that allows the interest rate to be changed periodically.
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Agency
A legal relationship in which an owner-principal engages a broker-agent in the sale of property or a buyer-principal engages a broker-agent in the purchase of property.
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Annual Percentage Rate (APR)
The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.
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Amortization
The gradual repayment of a mortgage by periodic installments.
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Appraisal
An estimate of the value of a property.
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Assessed Value
The valuation placed on property by a public tax assessor as the basis of property taxes.
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Assumption of Mortgage
Agreement by the buyer to assume responsibility for a mortgage owned by the seller. The seller remains liable to the lender unless the lender agrees to release the seller.
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Balloon Mortgage
A mortgage that has a substantial amount of the principle due at the maturity of the note.
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Broker
A person licensed by a state real estate commission to act independently in conducting a real estate brokerage business. Although the requirements for a broker's license vary from state to state, an individual usually must have one or more years of experience in the industry and pass an examination.
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Buydowns
When a home buyer, or third party, puts up an amount of money sufficient to "buy" or obtain a lower-than-market interest rate from a lending institution.
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Cap
The maximum amount of interest that can be charged.
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Closing
The final step in transferring ownership of a property from seller to buyer.
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Closing Costs
Fees and expenses, not including the price of the home, payable by the seller and the buyer at the time of closing (eg., brokerage commissions, title insurance, inspection and appraisal fees).
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Condominium
Ownership which involves a separation of property into individual ownership elements and common ownership elements.
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Contingency
A condition that must be satisfied before a contract is binding.
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Conventional Loan
A fixed-rate, fixed-term loan that is made without government insurance.
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Co-op
A buyer purchases shares in a co-op corporation, made up of the residents in the co-op property. The buyer owns the shares rather than owning the real property. In exchange, the buyer has the right to occupy a co-op unit.
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Deed
A legal document conveying title to a property.
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Discount Points
See Points.
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Earnest Money
A payment given to the seller by a potential buyer indicating the buyer's intent to complete the purchase of the property.
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Equity
The owner's value of interest in a property.
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Escrow
The placement of money or documents with a third party for safekeeping pending the fulfillment or performance of a specific act or condition.
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FHA Mortgage
A mortgage loan insured by the Federal Housing Administration, permitting lenders to offer better terms.
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Fixed-rate Mortgage
A loan that has only one stated interest rate.
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Housing and Urban Development (HUD)
A US governmental agency established to implement certain federal housing and community development programs.
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Lien
A legal claim against a property that must be paid when the property is sold.
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Loan Origination Fee
The charge you must pay a lender for processing your mortgage.
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Market Value
The highest price a ready, willing and able buyer will pay and the lowest price a seller will accept.
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Mortgage
A lien on real estate given by the buyer as security for money borrowed from a lender.
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Multiple Listing Service (MLS)
An organization that collects, organizes and distributes information about homes listed for sale by its member real estate brokers. Multiple Listing Services are generally either local or regional - there is no one single MLS covering the entire US.
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Points
A dollar amount, expressed as a percentage of the mortgage amount, which is paid to a lender as consideration for making a loan. Also called discount points.
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Principal and Interest (P&I)
A periodic payment that includes the interest charges for the period plus an amount applied to amortization of the principal balance.
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PITI
Stands for Principal, Interest, Property Taxes, and Property Insurance. Refers to a periodic payment that includes principal and interest payment, plus a contribution to the escrow account set up by the lender to pay insurance premiums and property taxes on the mortgage property.
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REALTORŪ and REALTOR ASSOCIATE
Registered collective membership marks that identify real estate professional who are members of the National Association of REALTORSŪ and subscribe to a strict Code of Ethics.
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Title
A document that is evidence of ownership.
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Title Insurance
Protection for lenders and homeowners against financial loss resulting from legal defects in the title.
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VA Mortgage
A mortgage loan guaranteed by the Veterans Administration, an agency of the federal government that provides services for eligible veterans.
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