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Glossary

Abandonment
Voluntarily relinquishing rights of ownership with an intent to abandon (give up the interest).
Abatement
A reduction or decrease. Usually applies to taxes.
Abstract Of Title
A compilation of the recorded documents relating to a parcel of land, from which an attorney may give an opinion as to the validity and legality of title.
Acceleration Clause
Clause used in a mortgage (or deed of trust), which gives the lender the right to demand payment in full upon the happening of a certain event, such as a payment default by a first time home buyer.
Accretion
The gradual addition of land to the shore or bank of a waterway.
Acknowledgement
A declaration, usually in writing, by a person executing an instrument, given before a person authorized to give an oath (usually a notary public), stating that the execution is of his own free will.
Acquisition Costs
Costs of acquiring property beyond the purchase price: escrow fees, title insurance, lenders fees, etc. Some of these costs for the first time home buyer can be paid for with grants.
Act Of God
Damage caused by nature (hurricanes. ice. etc.) rather than destruction by man.
Adjustable Rate Mortgages (ARM's)
Second mortgage loans in which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the creation of the loan. Also called: Adjustable Rate Loans, Adjustable second mortgage loans, Flexible Rate Loans, Variable Rate Loans.
Agency
A relationship created when one person (the principal) delegates to another (the agent) the right to act on his or her behalf in business transactions.
American Land Title Association (ALTA)
A national association of title insurance companies, abstractors, and agents. The association adopts standard title policy forms.
Amortization
Payment of a debt in equal installments of principal and interest, rather than interest only payments, so that in a specified period of time the outstanding balance will be completely paid off.
Annual Percentage Rate
The yearly interest percentage of a loan, expressed by the actual rate of interest paid. The APR will factor in all interest costs, including prepaid interest in the form of points. The APR is disclosed as a requirement of federal truth in lending statutes.
Appraisal
An opinion of value based upon a factual analysis compiled by a person of suitable qualifications. Especially important for first time home buyers.
Arrears
If a mortgage payment is late, it is said to be in arrears.
Assumable
A mortgage loan which can be transferred to another person without a change in the terms of the loan.
Assumption of Note
Agreement by a buyer to assume the liability under an existing mortgage note secured by a mortgage deed. The lender usually must approve the new debtor in order to release the existing debtor from liability.

Balloon Note
A note calling for the principal sum, or a large portion thereof, (known as a "balloon") is due at maturity. Sometimes used in creative financing for first time home buyers.
Balloon Payment
The unpaid principal balance of a loan due on a specific date in the future. Usually the amount that must be paid in a lump sum at the end of the term.
Bankruptcy
Proceedings under federal bankruptcy laws to relieve a debtor from insurmountable debt. Voluntary bankruptcy is petitioned by the debtor, involuntary by the creditors.
Beneficiary
The Person who is entitled to receive funds of property under the terms and provisions of a will, trust, insurance policy or security instrument. Many first time home buyers are beneficiaries of money for the down payment.
Biweekly
A mortgage note that establishes a payment period of every two weeks, instead of once per month, resulting in the equivalent of 13 payments per year, rather than 12.
Blanket Mortgage
A mortgage covering more than one property of the mortgagor, such as a mortgage covering all the lots of a builder in a subdivision.
Borough
A part of a city, having legal authority over certain local matters. The most famous boroughs are the five boroughs of New York City.
Breast Height
The height at which the diameter of a tree is measured. A height of 4 1/2 feet above the ground level. The abbreviation D.B.H. (diameter-breast-height) is usually used.
Broker, Real Estate
One who is licensed by the state to carry on the business of dealing in real estate owned by others for monetary compensation. A broker may receive a commission for his or her part in bringing together a buyer and seller, landlord and tenant, or parties to an exchange.
Buy-down
A payment to the lender from the seller, buyer, builder, other third party, or some combination of these, causing the lender to reduce the interest rate of a first time home buyer loan. The buy-down is usually for the first 1 to 5 years of the loan.

California Land Title Association (CLTA)
An association in California of tide insurers and underwritten title companies. The association adopts standard title policy forms.
Call
In a metes and bounds legal description of a property, the angle and distance of a given line or arc.
Cancellation Clause
A clause in a lease, purchase and sale agreement, or other contract, setting forth the conditions under which each party may cancel or terminate the agreement. The conditions may be as simple as giving notice or complex and require payment by the party desiring to cancel.
Cap
The maximum which an adjustable rate first or second mortgage may increase, regardless of index changes. Cap can describe yearly changes as well as total change over the life of the loan.
Capital Gains
Gains realized from the sale of property. Generally, the difference between cost and selling price, less certain deductible expenses. Used mainly for income tax purposes.
Carrying Charges
The costs involved in retaining a property which is intended to produce income (either by sale or rent) but has not yet done so. Primarily amongst carrying charges are principal and interest charges on the first or second mortgage.
Caveat Emptor
Latin for "Let the buyer beware." Legal maxim stating that the buyer takes the risk regarding quality or condition of the item purchased, unless protected by warranty or there is misrepresentation.
Covenants, Conditions and Restrictions (CCR's)
Limitations placed on the use and enjoyment of real property. These are found most often in condominium projects, subdivisions and planned unit developments. The intent of CCR's is to protect the beauty of the development by disallowing various uses such as storing old, unregistered vehicles, etc.
Certificate Of Title
A legal document, usually written by an attorney, stating that title is vested as stated in the abstract. Certificates of title are one of the required elements in the paperwork at closing of a first time home buyer loan.
Chain of Title
A chronological list of publicly recorded instruments tracing title to land, from the original owner to the present owner.
Clear Title
Title to real property which is free from liens, defects or other encumbrances.
Closing
(1) In real estate sales, the final procedure in which documents are executed and/or recorded, and the sale between buyer and seller, or when a loan refinancing is completed. (2) The final call in a metes and bounds legal description which "closes" the boundaries of the described property.
Closing Costs
Expenses, beyond the selling price, such as loan fees, title fees, etc. Paid when documents are executed and/or recorded and the sale is complete. This process usually happens when signing all the papers at the closing of the loan for first time home buyers.
Closing Statement
A summary, in the form of a balance sheet, showing the amounts of debits and credits to which the seller is entitled to receive and the first time home buyer is required to pay upon closing of a mortgage.
Coinsurance
A sharing of the risk of an insurance policy by more than one insurer. Usually one insurer is liable up to a certain amount, the other liable above and beyond that amount.
Commercial Property
Property which is zoned "commercial" (for business use), but not industrial.
Commission
Compensation due a real estate broker for working on behalf of the first time home buyer.
Community Property
Property acquired during a marriage by either a husband or wife, or both, which is not separate property.
Comparables (Comps)
An abbreviation for comparable properties used for comparative purposes to determine value in the appraisal process. Appraisals are required before any lender will grant a first or second mortgage.
Condominium
A structure of two or more units, the interior space of which are individually owned: the balance of the property (both land and building) is owned in common by the owners of the individual units and is called the common area. Condominiums are less costly for builders to build, and can be affordable is designed to be. As such, they are very popular with first time home buyers.
Consideration
A required element in all contracts by which some-thing of value is exchanged for the act or promise of another (usually to purchase property).
Contingency
Action conditioned upon a certain event. Acceptance of the terms of a contract based on something else happening or certain conditions being met, such as contingent upon borrower obtaining first or second mortgage financing..
Conveyance
The transfer of title or an interest in real property to the first time home buyer by means of a written instrument such as a warranty deed.

Deed
An instrument to convey property from one person to the home buyer.
Deed Of Trust
An instrument used in many states in place of a first or second mortgage. Property is transferred to a trustee by the borrower in favor of the lender. Upon payment in full property is conveyed to the borrower from the trustee.
Delivery
The granting of a deed transferring ownership. Usually accomplished by delivery of a deed to the first time home buyer.
Demand Note
A note having no date for repayment, but due on demand by the lender.
Deposit
Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. When a broker is involved, the first time home buyer's deposit money is held in an escrow account until the transaction takes place.
Depreciation
Decrease in value to real property caused by deterioration or obsolescence, usually used for tax purposes. In the real world, continuous monetary inflation masks depreciation.
Discount Points
A prepaid interest fee associated with the note rate on the first time home buyer's loan, the more discount points you pay, the lower interest rate you can obtain on your mortgage.
Documentary Transfer Tax
The tax, based on sales price, less loans which are being assumed, which is charged by the city and/or county on the transfer of real property to the home buyer.
Dual Agency
The representation of opposing principals (first time home buyer and seller) at the same time.
Due on-Sale-Clause
A clause in a mortgage loan which gives the lender the right to demand payment in full upon the sale of property.

Easement
A right created by grant, agreement, or necessary implication, which one has in the land of another, such as right to cross A to get to B.
Egress
A term concerning a right to come and go across the land (public or private) of another. Usually part of the term ingress and egress.
Encumbrance
A claim, lien, charge, or liability attached to and binding real property.
Equity
The value of a first time home buyer's interest in real property after any and all liens, first or second mortgages, and charges have been deducted.
Equity Line Of Credit
A combination of a line of credit and equity loan. A mortgage note is recorded against the potential first time home buyer's property for said maximum loan amount. The potential borrower has the right to borrow, as needed, up to the amount of the first or second mortgage note.
Escalation Clause
A clause in a lease providing for an increased rental payment at a future time.
Escrow
Delivery of a deed by a grantor to a third party for delivery to the grantee upon the happening of a contingent event or events.
Exclusive Listing
A written contract between a property owner and a real estate broker, giving the broker the exclusive right to sell the property for a commission. The owner promises to pay a fee or commission (typically a percentage of the selling price) to the broker if certain real property of the owner is sold during a certain period, regardless of whether the broker causes the sale.
Expert Testimony
Testimony in court by one acknowledged to have special training and knowledge in a particular field. Only testimony pertaining to the field in which the witness is "expert" is considered expert testimony. For example, and loan officer at a bank could provide expert testimony on second mortgages, but not on auto repair.
Exposure
(1) The degree to which a property for sale, lease, etc., is made noticeable (exposed) to potential buyers, tenants, etc., through advertising, multiple listing groups, word of mouth, etc. (2) The direction in which a property faces.

Fair Market Value
An appraisal term for the price which a property would bring in a competitive market providing a willing seller and willing first time home buyer, each of whom has a reasonable knowledge of all pertinent facts, and neither being under any duress to buy or sell.
Federal Deposit Insurance Corporation
The federal corporation which insures against loss of deposits in participating banks, up to a maximum amount.
Federal Home Loan Banks
Banks created under the Federal Home Loan Bank Act of 1932, in order to keep a permanent supply of money available for home financing. The banks are controlled by the Federal Home Loan Bank Board. Savings and loans, insurance companies, and other similar companies offering long term first or second mortgage financing to first time home buyers and others may become members of the Federal Home Loan Bank System, and thus may borrow from one of the regional banks throughout the country.
Federal National Mortgage Association (Fannie Mae)
A for-profit corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by VA as conventional home mortgages.
FHA (Federal Housing Administration)
A federal agency which insures first mortgages, enabling lenders to loan a very high percentage of the sale price, and borrowers to qualify for a second mortgage loan with very little down payment. FHA loans are used often by first time home buyers because smaller down payments are needed.
FHLMC (Freddie Mac)
Federal Home Loan Mortgage Corporation - A federal agency purchasing first mortgages from members of the Federal Reserve System, and the Federal Home Loan Bank System.
Finance Charge
A total of all costs imposed (primarily mortgage interest, but other costs are included as well) directly or indirectly by the creditor and payable either directly or indirectly by the first time home buyer, as defined by the federal Truth-In-Lending laws.
Financial Statement
An accounting statement showing assets and liabilities of the first time home buyer, or any person or company. Used generally for large mortgage loans or other instances when the credit report (history of payment of debts) in itself is not sufficient.
Finder's Fee
A fee paid to someone who finds a buyer or property for a broker, buyer, etc. The term is sometimes used to attempt to pay a commission to an unlicensed person. In most sates, a finder's fee is considered a commission and may only be paid to one who holds a real estate license.
First Mortgage
A mortgage on property that is superior in position (first) to any other mortgage (second, third, etc).
First Refusal Right
A right, granted by an owner, which gives another person a first chance to buy the property if the owner decides to sell. The owner must have a legitimate offer which the person can match or refuse.
Fixed Rate Loan
A mortgage loan on which the same rate of interest is charged for the life of the loan.
Fixture
Personal property which is permanently attached to the property (such as a built-in oven), and, as such, becomes part of the real property.
FNMA Buydown
FNMA (Federal National Mortgage Association) accepts first and second mortgage loans containing a buy down provision on single family residential, owner occupied properties. A prepayment (points) will buy a lower rate of interest during the first one to five years of the loan for the first time home buyer.
Forfeiture
The taking of an individual's properly by a government, because the individual has committed a crime. In the United States, private property cannot be taken, except by eminent domain upon payment of just compensation, or for nonpayment of taxes. All outstanding mortgage balances are still due.
Full Disclosure
In real estate, revealing all the known facts (good or bad, but primarily bad) which may affect the decision of the home buyer or tenant. A broker must disclose known defects in the property for sale or lease. A builder must give to a potential buyer the facts of his new development.

Garnishment
A legal proceeding under which a person's money in control of another (such as salary) is taken for payment of a debt (usually taxes). The amount which may be taken is set by statute (usually as a percentage), and, in most states, a judgment is necessary before garnishment.
Georgian Architecture
A colonial style of architecture dating back to the eighteenth century and characterized by first floor windows extending to the ground. Architectural details and exterior placements (windows, doors. etc.) are simple and well balanced yet formal in appearance.
Graduated Payment Mortgage
A mortgage loan calling for increasingly higher payments over a portion or entire term of the loan. This allows the buyer low beginning payments. The payments then increase as (theoretically) the first time home buyer's earnings increase.
Grantee
One to whom a grant is made. The buyer of real property.
Grantor
One who has made a grant. The seller of real property.
Gross Income
The scheduled (total) income, either actual or projected, derived from a business or property.
Gross Income Multiplier
A figure which, when multiplied by the annual gross income, will theoretically determine the fair market value of an income producing property. A general rule of thumb which varies with specific properties and areas.
Grout
Thin mortar used in masonry work to fill joints between bricks, stone, blocks, tiles. etc.
Growing Equity Mortgage
A fixed rate, graduated payment second mortgage loan allowing low beginning payments and a shorter term because of higher payments as the loan progress. Based on the theory of increasing income by the first time home buyer and, therefore, ability to make higher future payments.
Guaranty
Agreement to pay the debt or perform the obligation of another in the event the debt is not paid or obligation not performed.

Hard Money Mortgage
A first or second mortgage given in return for cash, rather than to borrow a portion of the purchase price, as with a purchase money mortgage.
Heir
One who by law receives the estate of a deceased person.
Hidden Defect
An encumbrance on a title that is not apparent in the public records; for example, unknown heirs, secret marriages and previous fraudulent transfers.
Holdback
Portion of a mortgage loan held back by the lender until a contingency is met, generally repairs.
Holding Period
The time period used by the IRS to differentiate between a long or short term capital gain. The period during which the taxpayer owns the capital asset.
Homestead
The dwelling (house and land) of the head of a family. Some states grant statutory exemptions, protecting homestead property (usually to a set maximum amount) against the rights of creditors. Property tax exemptions (for all or part of the tax) are also available in some states.

Home Inspection
The evaluation by a home inspector for the home you are buying or selling. The home inspection should be something that you ensure is done in order to give a more fully disclosure about the home. A home inspection is not a guarantee or warranty, it is the inspector's evaluation of the home and in most cases deemed of great value to all involved in the home transaction.
Home Warranty Insurance
Private insurance insuring a first time home buyer against defects (usually in plumbing, roofing, structural, and electrical) in the home she has purchased. The period of insurance varies and both new and used homes may be insured.
Housing Starts
Government compiled statistics on number of houses on which construction has begun. The figures are used to determine the availability of housing, need for real estate loans, need for labor and materials, etc.
Hypothecate
To mortgage or pledge without delivery of the underlying security to the lender.

Improvements
Typically buildings, but may include any permanent structures such as a street, utilities. etc.
Industrial Tax Exemption
An exemption from local property taxes granted to encourage industries to come into an area. Has been used successfully in the South. Usually granted for a specified period of time.
Inheritance Tax
A tax on the transfer of property from a deceased person to heirs.
Installment Contract
A method of purchasing by installment payments. When referring to real property, the most common term is a land contract.
Institutional Lenders
Banks, savings and loan associations and other businesses which make first or second mortgage loans to first time home buyers and the public in the ordinary course of business.
Insured Mortgage
A first or second mortgage insured against loss to the mortgagee in the event of default and a failure of the mortgaged property to satisfy the balance owing plus costs of foreclosure.
Interest Cap
The maximum interest rate increase of an adjustable first or second mortgage loan. Can be referred to as a yearly cap or a total cap over the entire life of the second mortgage loan.
Interstate Land Sales
Sales of land to a buyer in another state. Because the buyer is usually totally dependent on the seller for information regarding the property, federal disclosure laws have been passed to aid and protect the buyer. The buyer also has a period (now 3 days) after singing a purchase agreement, in which to rescind.

Jetty
(1) A pier or other structure (usually of stone), built out into a body of water to protect a harbor. (2) A part of a building which projects out beyond the exterior walls, such as an overhanging upper floor, a balcony, etc.
Joint Appraisal
An appraisal by more than one appraiser, but one which states common conclusions.
Joint Tenancy
An undivided interest in property, taken by two or more joint tenants. The interests must be equal, accruing under the same conveyance, and beginning at the same time. Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.
Judgment
The decision of a judge in a court of law. Money judgments, when recorded, become a lien on real property of the defendant.
Judgment Lien
An involuntary lien against the property of a judgment debtor.
Jumbo Loan
A first or second mortgage loan of a large amount, usually in excess of $500,000. Does not typically apply to first time home buyers.
Just Compensation
In condemnation the amount paid to the property owner. The theory is that in order to be "just," the property owner should be no richer or poorer than before the taking.

Keyman Insurance
Insurance of loss (through death or disability) of a "key" (critically important) person within a company. The liability is the estimated cost of the loss (in business lost, and replacement of the individual). Some mortgage lenders require this insurance before lending to small companies which rely on one or a few "key" people.
Knot
The hard, irregular shaped defects in boards, caused by cutting at the point where the branch of the tree meets the trunk.

Landowner's Royalty
In oil and gas and mineral leases, the portion of the proceeds which goes to the property owner.
Late Charge
A penalty for failure of the first time home buyer to pay an installment payment (typically a second mortgage loan payment) on time.
Lease With Option To Purchase
A lease under which the lessee has the right to purchase the property for a specified sum. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the lease or only for a portion of the lease period.
Legal Description
A description by which property can be definitely and accurately located by reference to surveys or recorded maps.
Legal Owner
The term has come to be used as a technical difference from the equitable owner, and not as opposed to an illegal owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than a lien.
Lien Waiver
For real estate purposes, a waiver of mechanic's lien rights, signed by a subcontractor so that the owner or general contractor can receive a draw on a construction loan. The mortgage lender usually requires lien waivers to ensure that subcontractors get paid.
Liquidated Damages
A specified amount of damages, set forth in a contract, to be paid by the party breaching the contract. A predetermined estimate of actual damages from a breach.
Loan Ratio
The ratio, expressed as a percentage, of the amount of a second mortgage loan to the appraised value or selling price of real property. Usually, the higher the percentage, the greater the risk to the mortgage lender, thus the more the interest charged. Maximum percentages for banks, savings and loans, or government insured loans, is set by statute.
Loan to Value Ratio
The ratio of the first and second mortgage loan's principal to the property's appraised value or its sales price, whichever is lower.
Long Term Capital Gain
Gain on the sale of a capital asset which has been held for a specified time or longer. Long term capital gain is often taxed at a special rate and not as ordinary income.

Made Land
Land formed by human activity, usually by filling, and not by nature.
Marketable Title
Title which can be readily sold to a reasonably prudent buyer aware of the facts and their legal meaning concerning liens and encumbrances.
Market Value
The highest price a willing first time home buyer would pay and a willing seller accept, both being fully informed, and the property exposed for sale to the public for a reasonable period of time. In times of low interest rates, market value tends to be high because mortgage payments are lower - home buyers can afford more house and bid up prices. In times of high interest rates, payments become expensive and sellers have to lower their prices for buyers to be able to afford the monthly payments.
Market Value Approach
Appraising the value of a property by comparing the price of similar properties (comparables) recently sold.
Maturity
Termination period of a note. For example: A 30 year mortgage has maturity of 30 years. Mechanic's Lien
A lien created by statute for the purpose of securing priority of payment for the cost of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the property as well as the improvements.
Metes and Bounds
A form of land description in which boundaries are described by courses, directions, distances and monuments.
Month To Month Tenancy
A tenancy where no written lease is involved, rent being paid monthly. Some obligations as to notice of moving or eviction may exist by statute, depending upon the state.
Mortgage
(1) To hypothecate as security, real property for the payment of a debt owed. The borrower (mortgagor) retains possession and use of the property. (2) The instrument by which real estate is hypothecated as security for the repayment of a loan.
Mortgage Banker
A company providing first or second mortgage financing with its own funds rather than simply bringing together lender and borrower, as does a mortgage broker. Although the mortgage banker used its own funds, the mortgages are sold on the secondary market to investors (many times insurance companies) within a short time.
Mortgage Bonds
Bonds issued by corporations, which offer first mortgages on real property of the corporation as security for the payment of the bonds.
Mortgage Broker
One who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a first or second mortgage loan against real property by pledging the property as security. Also called a loan broker.
Mortgage Company
A company authorized to service first or second mortgage loans, charging a fee for this service.
Mortgagee
The party lending the money and receiving the mortgage. Some states treat the mortgagee as the "legal" owner, entitled to rents from the property. Other states treat the mortgagee as a secured creditor, the mortgagor being the owner. The latter is the more common and accepted view.
Mortgage Insurance
Insurance written by a mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price. The Federal Government writes this form of insurance through the FHA and the VA. Very common for first time home buyers.
Mortgage Life Insurance
A term life insurance policy for the amount of the declining balance of a first or second mortgage loan secured by a mortgage or deed of trust. The beneficiary under the policy is the mortgagee. In the event of death (some policies also cover disability) of the insured (mortgagor), the mortgage balance is paid in full.
Mortgage Servicing
Controlling the necessary duties of a mortgagee, such as collecting payments, releasing the lien upon payment in full, foreclosing if in default, and making sure the taxes are paid, property insurance is in force, etc. Servicing may be done by the lender or a company acting for the lender, for a servicing fee.
Mutual Savings Bank
An institution owned by its depositors, as evidenced by certificates of deposit rather than stock. These institutions are active in long term real estate financing, as opposed to commercial banks, which concentrates more on short term loans.

Negative Amortization
A condition created when a first or second mortgage loan payment is less than interest alone. Even though payments are made on time, the balance of the amount owing increases with the passage of time. Not recommended for first time home buyers.
Negotiable Instrument
According to the Uniform Negotiable Instruments Act, an instrument is negotiable when it is in writing and signed, containing an unconditional promise or order to pay a certain amount of money, on demand, or at a definite future date, to the bearer.
Net Lease
A lease requiring the tenant to pay, in addition to a fixed rental, the expenses of the property leased, such as taxes, insurance, maintenance, etc. In some states the terms net net net, triple net, and other such repetitions are used.
Net Worth
The difference between total assets and liabilities of a first time home buyer, any individual, corporation, etc.
Nonbearing Wall
A wall used only to separate areas, and which carries only its own weight and does not support any of the structure.
Nonexclusive Listing
A listing under which the real estate broker has the right to sell a property, but also the owner may sell the property without the assistance of the agent, and not be liable to pay a commission.
Non-recourse Loan
A first or second mortgage loan not allowing for a deficiency judgment. The lender's only recourse in the event of default is the security (property) and the borrower is not personally liable.
Notarization
The certification by a Notary Public that a person signing a document has been properly identified. Notarization does not certify the content of a document, only validity of signature under one's own free will.
Notice Of Cessation
A notice stating that work has stopped on a construction project. Done to accelerate the period for filing a mechanic's lien.

Oath
An attestation by a person which binds him or her legally and morally. Usually attesting to the truth of something, as an affidavit, or the validity of one's signature. A promise to tell the truth.
Office
A zoning designation allowing businesses to carry on their paperwork rather than manufacturing on the site. Some businesses may be conducted entirely out of such space, when only paperwork is involved, such as insurance companies, law firms, accounting firms, etc.
"One, Two, Three" Financing
A method of creative mortgage financing by which the buyer (1) assumes an existing second mortgage loan, (2) secures a second mortgage loan from a third party lender, (3) takes a third mortgage loan from the seller.
Open End Mortgage
A mortgage permitting the first time home buyer to borrow additional money under the same mortgage, with certain conditions, usually as to the assets of the mortgage.
Origination Fee
The fee that the lender charges to originate the first or second mortgage loan, this fee is commonly 1 point.
Ownership
Rights to the use, enjoyment, and alienation of property, to the exclusion of others. Concerning real property, absolute rights are rare, being restricted by zoning laws, restrictions, liens, etc.
Owner Will Carry Mortgage
A term used to indicate that the seller is willing to take back a purchase money mortgage.

Partial Release
A release of a portion of property covered by a first or second mortgage. A developer will obtain a partial release as each lot is sold, upon payment of an agreed upon amount.
Participation Certificates
Mortgage securities, rather than mortgages. The advantage of the certificate is that it is readily marketable.
Partition
A wall, sometimes moveable, and not load-bearing, used to divide a room or building.
Payment Cap
A maximum amount for a payment under an adjustable first or second mortgage loan, regardless of the increase in the interest rate.
Payoff
The payment in full of an existing mortgage loan or other lien.
Payoff Escrow
An escrow, specifically for the purpose of paying off an existing lien. Usually part of an existing escrow, and called a sub escrow.
Perfecting Title
Process involving the elimination of any adverse claims against a title.
Personal Property Loan
A loan which is secured by both real and personal property. The minimum ratio of personal to real property is set by law. The credit of the borrower is a major consideration in making the loan.
Pillar To Post Professional Home Inspection
Pillar To Post is the largest home inspection company in all of North America. Pillar To Post has been ranked highest out of all other home inspection companies.
PITI
Refers to principal, interest, taxes and insurance, the four major components of a typical monthly mortgage payment for the first time home buyer.
PITI Ratio
The PITI payment to income ratio. Used in mortgage lending decisions.
Planned Unit Development (PUD)
A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels. The lots are generally small, being the exact size of the improvements, or slightly larger.
Point
One percent. When referring to first or second mortgages or deeds of trust, the term is used to describe the percentage of discount rather than interest (for which the word "percent" is used).
Points
A fee charged by the lender to fund a first or second mortgage loan, in addition to and separate from other fees charged. One Point equals one percent of the amount of the loan.
Power of Attorney
An authority by which one person (principal) enables another (attorney in fact) to act for him.
Prescriptive Easement
The granting of an easement by a court, based on the presumption that a written easement was given (although none existed), after a period of open and continuous use of land.
Principal
The outstanding balance of a first or second mortgage loan upon which interest is payable.
Private Mortgage Insurance (PMI)
Insurance written by a private mortgage insurance company protecting the mortgage lender against loss occasioned by a mortgage default and foreclosure. Very popular with first time home buyers because homes can be purchased with a smaller down payment.
Property Management
The branch of the real estate business dealing with the management of property. The property may be a rented house, commercial/retail, an office building, or industrial complex. The duties may range from merely collecting rents to complete management of all maintenance and may also include being leasing agent or sales agent.
Prorate
The method used in dividing charges into that portion which applies only to a party's ownership up to particular date. Most commonly used in determining how much each party owes for real estate taxes.

Quadrant
One of the quarters created by two intersecting roads or streets.
Qualification
The process of reviewing a prospective first time home buyer's credit and payment capacity prior to approving a second mortgage loan.
Question Of Law
Given the facts, what laws, if any, are applicable - decided by a judge, even in a jury trial.
Quitclaim Deed
A deed operating as a release, intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty or guarantee of a valid interest.

Rate Index
An index used to adjust the interest rate of an adjustable first or second mortgage loan. For example: the change in U.S. Treasury securities (T-Bills) with a 1 year maturity.
Rate Of Return
The annual percentage of return on investment on income producing property.
Real Estate
Land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items which would be personal property if not attached.
Real Estate Settlement Procedures Act (RESPA)
A federal statute requiring disclosure of certain costs in the sale of residential, improved property which is to be financed by a federally insured lender.
Recordation
Involves filing for record in the office of the county recorder for the purpose of giving constructive notice of title, claim or interest in real property.
Record Owner
The owner of property as shown by an examination of the public record.
Redemption Period
A time period during which a mortgage, land contract, deed of trust, etc., can be redeemed. Usually set by statute, and after judicial foreclosure.
Refinance
Replacement of an existing loan with a new loan on the same property.
Reinstatement
Payment of a note, mortgage, deed of trust, etc., to bring it from default to good standing. Reinsurance
The transferring of a portion of the liability to other insurers. Example: Insurer A insures for $200,000, A insures for $100,000 and reinsures the "second" $100,000 through B insurer.
Renegotiable Rate Mortgage
A mortgage loan calling for an adjustment in the interest rate at a given time. Example: A mortgage loan with a 15 year amortization is adjusted to current interest rates after 2 years. The lender agrees to make the adjusted loan at the new rate as long as the old loan is not in default.
Reservation
A right created and retained by a grantor, either temporary (such as a life estate), or permanent (such as an easement running with the land).
Right Of Way
A strip of land which is used as a roadbed, either for a street or railway. May also be used to describe the right itself to pass over the land of another.

Savings And Loan Association
Originally an association chartered to hold savings and make first and second mortgage loans. Federally insured and regulated. Active in long term mortgage financing rather than construction loans.
Secondary Financing
A loan secured by a mortgage or trust deed, which lien is junior (secondary) to another mortgage or trust deed.
Secondary Mortgage Market
The buying and selling of first and second mortgages by banks, insurance companies, government agencies, and other mortgagees. This enables lenders to keep an adequate supply of money for new loans.
Second Mortgage
A mortgage which ranks after a first mortgage in priority. Properties may have two, three, or more mortgages as liens at the same time. Legal priority would determine whether they are called a first, second, third, etc.
"Subject To" Clause
A clause in a deed, stating that the grantee takes title "subject to" an existing mortgage. The original mortgagor is alone responsible for any deficiency, should there be foreclosure of the mortgage.
Surface Rights
The rights to use the surface of land, including the right to drill or mine through the surface when subsurface rights are involved.
Sweat Equity
A program which allows a first time home buyer to do work on the property in place of all or part of the down payment and other costs of purchase.
Subordination Agreement
An agreement under which a prior or superior lien is made inferior or subject to a previous junior lien.
Survey
The measurement of the boundaries of a parcel of land, its area, and sometimes its topography.
Syndicate
An association of individuals, formed for the purpose of carrying on some particular business venture in which the members are mutually interested.

Tax Base
The assessed valuation of real property, which is multiplied by the tax rate to determine the amount of tax due by the first time home buyer.
Tax Lien
A statutory lien imposed against real property for nonpayment of taxes.
Tenancy In Common
An undivided ownership in real estate by two or more persons. The interests need not be equal, and, in the event of the death of one of the owners, no right of survivorship in the other owners exists.
Tenant At Will
One who holds possession of premises by permission of the owner or landlord, but without agreement for a fixed term of possession.
Townhouse
Originally a house in a city as opposed to a country estate. More recently the term is applied to certain types of row houses, be they planned unit developments or condominiums.
Transfer Tax
State tax on the transfer of real property. Based on purchase price or money changing hands.
Treasury Bills
Interest bearing U.S. Government obligations sold at a weekly sale. The change in interest rates paid on these obligations is frequently used as the Rate Index of Adjustable Rate second mortgage loans.
Trustee
A person who holds title in trust for the benefit of another. In a deed of trust, the trustee is the person named to hold title in trust for the benefit of the lender until the loan is paid off by the first time home buyer.
Trustee In Bankruptcy
One appointed by a bankruptcy court who holds the property in trust for the creditors.
Trustor
The borrower under a deed of trust. The person who deeds their property to a trustee as security for repayment of a loan.

Uniform Laws
Laws approved by the National Conference of Commissioners on Uniform State Laws. Many have been adopted in one or more states. Among these are the Uniform Commercial Code, Uniform Negotiable Instruments Act, Uniform Partnership Act, Uniform Residential Landlord and Tenant Act, etc.
Uniform Settlement Statement
The Standard HUD Form 1 required to be given to the seller, lender and borrower at, or prior to, settlement.
Unity Of Possession
In joint tenancy, the joint tenants must have equal rights to possession.
Unmarketable Title
Title which contains defects which would allow a first time home buyer to be released from her obligation to purchase, and prevent a borrower from obtaining a first or second mortgage.
Unrecorded Instrument
A deed, mortgage, etc., which is not recorded in the county recorder's office and, therefore, not protected under recording statutes. Valid between the parties involved, but not against innocent third parties.

Vacancy Factor
The estimated percentage of vacancies in a commercial real estate rental project. May be based on past records of the property, or a professional estimate if a new project. Surrounding area buildings, if similar, may be used for comparison.
Variable Interest Rate
An interest rate on a first or second mortgage loan which fluctuates as the prevailing rate moves up or down. Popular with first time home buyers because variable rate loans carry a lower initial interest rate compared to fixed rate loans, and thus, a lower monthly payment.
Venue
The county (or other geographical division) in which an action is brought for trial.
Veterans Administration
A government agency that provides VA loans to veterans. Lower down payments and interest rates are common benefits of VA Loans. To Qualify you must prove that you are a veteran and fill out VA form 26-1880.
Volt
A term in electronics, being the force necessary to cause one ampere to flow through a conductor with a resistance of one ohm. Common household current is 110 volts, with a 220 volt circuit used for some cooking appliances. Industrial uses may require higher voltage.
Voluntary Lien
A lien placed against real property by the voluntary act of the owner, commonly, a mortgage.

Waive
To knowingly abandon, relinquish, or surrender a benefit, right, or claim.
Warranty Deed
A deed used in many states to convey fee title to real property whereby the grantor guarantees marketable title to the grantee.
Watt Hour
The basis used to determine electric bills. Example: A 60 watt light bulb means that if the bulb burns for one hour, it will use 60 watts of electricity.
Weep Holes
Small holes in a retaining wall purposely installed to drain off excess water, preventing water from building up behind the wall.
Without Recourse
A finance term. A mortgage securing a note without recourse allows the lender to look only to the security (property) for repayment in the event of default, and not personally to the borrower.
Wrap-Around Mortgage
A second or junior mortgage with a face value of both the amount it secures and the balance due under the first mortgage loan. The mortgagee under the wrap-around collects a payment based on its face value and then pays the first mortgagee. It is most effective when the first mortgage loan has a lower interest rate than the second mortgage loan, since the mortgagee under the wrap-around gains the difference between the interest rates, or the mortgagor under the wrap-around may obtain a lower rate then if refinancing.
Wrought Iron
A molded form of iron used for decorative railings, gates, furniture, etc.

X No terms for letter x.

Yard
The area between the building and property line of a residential property (back yard, side yard, front yard).
Yield
Ratio of income derived from an investment to the total cost of the investment over a specified period of time.

Zero Lot Line
The construction of a building on any of the boundary lines of a lot. Usually built on the front line such as a store built to the sidewalk.
Zone
An area of a county or city in which the use of the land is restricted by law (zoning ordinance).
Zoning Ordinance
Laws enacted by local municipalities restricting the use of real estate.

C.T.R.
(Certified - Trained - Reliable)

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