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Glossary of Terms

- A -
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 market.
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 garage.
The natural growth of a piece of land resulting from forces of nature
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 mortgage.
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 appraisal form.
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 applicable depreciation.
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.
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 particular transaction.
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 other recreation.
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.
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 economics.
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.
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 USPAP.
The value of a property according to jurisdictional tax assessment.
The function of assigning a value to a property for the purpose of levying taxes.
The comparative relationship of a property's assessed value to its market value.
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 sold.
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.
- B -
The slope of the ground around a house.
The valve inside a toilet tank that controls the filling of the tank.
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 payment.
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.
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 structure.
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.
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.
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.
- C -
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.
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 additional income.
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 windows.
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.
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.
An index based on the interest rate of six month CD's. Used to set interest rates on some Adjustable Rate Mortgages.
A document issued by the Veterans Administration that certifies eligibility for a VA loan.
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.
Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.
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.
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 or lien.
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 property.
An asset which is placed at risk to secure the repayment of a loan.
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 property.
Fees which are charged to the tenants or owners of properties to cover the costs of maintaining areas shared with other tenants 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 tenants or owners of property near by. Commonly found in condominium, PUD or office spaces.
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 interest.
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 conditions.
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 parties.
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 timeframe.
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 building.
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.
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 unsecured.
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.
- D -
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 monetary.
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 debt.
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 procedures.
A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.
A document which transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.
A document which dismisses a lien or other claim on a property.
A document used to surrender any claim a person has to a property.
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 on time.
Cash given along with an offer to purchase property, Also called EARNEST MONEY.
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 family.
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 amount.
A mortgaged property which has been foreclosed on.
The pipe that water moves through to reach the ground from the rain gutter.
A clause in a mortgage giving the lender the right to demand payment of the full balance when the borrower sells the property.
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.
- E -
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 power lines.
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 actual age.
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 easements.
An efficiency rating system for air conditioning units that corresponds to the number of BTU's output per watt of electricity used.
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 property.
The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.
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.
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.
- F -
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.
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.
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.
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 practices.
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 exchange.
A complete, unencumbered ownership right in a piece of property.
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 (FHA).
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 loan.
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 amenities.
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 purpose.
- G -
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 defaulting party.
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 moderate-income homebuyers.
A main supporting beam.
Any mortgage insured by a government agency, such as the FHA or VA.
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 lengths.
Material used around ceramic tile.
The trough around the edge of the roof that catches and diverts rain.
- H -
320 acres.
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 it.
A municipal restriction on the maximum height of any building or other structure.
Assets of a property which contribute to its value, but are not readily apparent. Examples might include upgraded or premium building materials.
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.
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.
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 them.
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.
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.
- I -
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, unaltered state.
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 amenities.
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.
- J -
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 owners.
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 law.
A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.
- L -
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 interest amounts.
A person's outstanding debt obligations.
Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.
Any claim against a piece of property resulting from a debt or other obligation.
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.
Any property which is substantially similar to another property.
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.
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 borrower