401(k)/403(b)
An employer-sponsored investment plan that allows individuals
to set aside tax-deferred income for retirement or emergency
purposes. 401(k) plans are provided by employers that are
private corporations. 403(b) plans are provided by employers
that are not for profit organizations.
401(k)/403(b) loan
Some administrators of 401(k)/403(b) plans allow for loans
against the monies you have accumulated in these plans. Loans
against 401K plans are an acceptable source of down payment
for most types of loans.
Abstract of title
The condensed history of a title to a particular parcel of
real estate, consisting of a summary of the original grant
and all subsequent conveyances and encumbrances affecting
the property and a certification by the abstractor that the
history is complete and accurate.
Abutting
The joining, reaching, or touching of adjoining land. Abutting
pieces of land have a common boundary.
Acceleration clause
The clause in a mortgage or deed of trust that can be enforced
to make the entire debt due immediately if the borrower defaults
on an installment payment or other covenant.
Acceptance
An offeree’s consent to enter into a contract and be
bound by the terms of the offer.
Accessed value
Accessed value is the valuation placed on property by a public
tax assessor for purposes of taxation.
Accession
Acquiring title to additions or improvements to real property
as a result of the annexation of fixtures or the accretion
of alluvial deposits along the banks of streams.
Accretion
The increase or addition of land by the deposit of sand or
soil washed up naturally from a river, lake or sea.
Accrued ltecs
On a closing statement, items of expense that are incurred
but not yet payable, such as interest on a mortgage loan or
taxes on real property.
Acknowled gement
A formal declaration made before a duly authorized officer,
usually a notary public, by a person who has signed a document.
Acre
A measure of land equal to 43,560 square feet, 4,840
square yards, 4,047 square meters, 160 square rods or 0.4047
hectares.
Actual eviction
The legal process that results in the tenant's being
physically removed from the leased premises.
Actual notice
Express information or fact; that which is known;
direct knowledge.
Additional principal payment
A payment by a borrower of more than the scheduled principal
amount due in order to reduce the remaining balance on the
loan.
Adjustable-Rate Mortgage (ARM)
A loan characterized by a fluctuating interest rate,
usually one tied to a bank or savings and loan association
cost-of-funds index.
Adjusted basis
The financial interest that the Internal Revenue Service attributes
to an owner of an investment property for the purpose of determining
annual depreciation and gain or loss on the sale of the asset.
If a property was acquired by purchase, the owner's basis
is the cost of the property plus the value of any capital
expenditures for improvements to the property, minus any depreciation
allowable or actually taken. This new basis is called the
adjusted basis.
Adjustment date
The date on which the interest rate changes for an adjustable-rate
mortgage (ARM).
Adjustment period
The period that elapses between the adjustment dates for an
adjustable-rate mortgage (ARM).
Adjustment interval
On an adjustable rate mortgage, the time between changes in
the interest rate and/or monthly payment, usually one, three
or five years
Adjustments
Money that the buyer and sellers credit each other at the
time of closing. Often includes taxes and down payment..
Administrator/Administratrix
A man/woman appointed by a court to settle the estate of a
deceased person when there is no will. Contrast with executor/executrix.
Ad val orem tax
A tax levied according to value, generally used to
refer to real estate tax. Also called the general tax.
Adverse possession
The actual, open, notorious, hostile and continuous
possession of another's land under a claim of title. Possession
for a statutory period may be a means of acquiring title.
Affidavit of title
A written statement, made under oath by a seller or grantor
of real property and acknowledged by a notary public, in which
the grantor
(I) identifies himself or herself and indicates marital status,
(2) certifies that since the examination of the title on the
date of the contracts no defects have occurred in the title
and
(3) certifies that he or she is in possession of the property
(if applicable).
Affiliate
An entity related to a Seller that is subject to common operating
control and that is operated as part of the same system or
enterprise. The Seller typically owns less than a majority
of the voting stock or the Seller and the entity are subsidiaries
of a third party.
Affordability analysis
A detailed analysis of your ability to afford the purchase
of a home. An affordability analysis takes into consideration
your income, liabilities, and available funds, along with
the type of mortgage you plan to use, the area where you want
to purchase a home, and the closing costs that you might expect
to pay.
Affordable seconds
Subsidized secondary financing or other financial assistance
provided under an established, documented secondary financing
or financial assistance program that has formal procedures
in place to provide applicant qualification, loan processing,
and loan program administration on an ongoing basis.
Agency
The relationship between a principal and an agent
wherein the agent is authorized to represent the principal
in certain transactions.
Agency coupled with an interest
An agency relationship in which the agent is given
an estate or interest in the subject of the agency (the property).
Agent
An authorized person who manages or transacts business for
another. Laws governing real estate--especially relating to
agents--vary considerably from state to state. While some
standardization has been achieved, it is best to check the
particulars in each state.
Agreement of sale
Known by various names, such as contract of purchase, purchase
agreement, or sales agreement according to location or jurisdiction.
A contract in which a seller agrees to sell and a buyer agrees
to buy, under specific terms spelled out in writing and signed
by both parties.
Air lot
A designated airspace over a piece of land. An air
lot, like surface property, may be transferred.
Air rights
The right to use the open space above a property,
usually allowing the surface to be used for another purpose.
Alienation
The act of transferring property to another. Alienation
may be voluntary, such as by gift or sale, or involuntary,
as through eminent domain or adverse possession.
Alienation clause
The clause in a mortgage or deed of trust that states
that the balance of the secured debt becomes immediately due
and payable at the lender's option if the property is sold
by the borrower. In effect this clause prevents the borrower
from assigning the debt without the lender's approval.
Allodial system
A system of land ownership in which land is held
free and clear of any rent or service due to the government;
commonly contrasted to the feudal system. Land is held under
the allodial system in the United States.
Amenities
Non monetary benefits and satisfactions derived from property
ownership, such as a pleasant view, pride in home ownership,
etc.
American Land Title Association (ALTA) policy
A title insurance policy that protects the interest
in a collateral property of a mortgage lender who originates
a new real estate loan.
Ammendment
A modification to an existing contract, mutually agreed to
by all parties. Examples might include a change in the pruchase
price due to a low appraisal, or a change in the closing date.
Amortization
The operation of paying off indebtedness, such as a mortgage,
by installments. The conventional amortization periods are15
or 30 years.
Amortization schedule
A timetable for payment of a mortgage loan. An amortization
schedule shows the amount of each payment applied to interest
and principal and shows the remaining balance after each payment
is made.
Amortization term
The amount of time required to amortize the mortgage loan.
The amortization term is expressed as a number of months.
For example, for a 30-year fixed-rate mortgage, the amortization
term is 360 months.
Amortize
To repay a mortgage with regular payments that cover both
principal and interest.
Amortized loan
A loan in which the principal as well as the interest
is payable in monthly or other periodic installments over
the term of the loan.
Amortized mortgage
A mortgage requiring periodic payments that include both interest
and principal.
Annual membership
The amount that is charged annually for having a line of credit
available. Often charged regardless of whether or not you
use the line.
Annual mortgagor statement
A report sent to the mortgagor each year. The report shows
how much was paid in taxes and interest during the year, as
well as the remaining mortgage loan balance at the end of
the year.
Annual Percentage Rate (APR)
The relationship of the total finance charges associated
with a loan. This must be disclosed to borrowers by lenders
under the Truth-in-Lending Act.
Annuity
An amount paid yearly or at other regular intervals, often
on a guaranteed dollar basis.
Anticipation
The appraisal principle that holds that value can
increase or decrease based on the expectation of some future
benefit or detriment produced by the property.
Antitrust laws
Laws designed to preserve the free enterprise of
the open marketplace by making illegal certain private conspiracies
and combinations formed to minimize competition. Most violations
of antitrust laws in the real estate business involve either
price-fixing (brokers conspiring to set fixed compensation
rates) or allocation of customers or markets (brokers agreeing
to limit their areas of trade or dealing to certain areas
or properties).
Application
An initial statement of personal and financial information,
which is required to approve your loan.
Application fee
Fees that are paid upon application. Charges for property
appraisal and a credit report are usually included in the
application fee.
Appraisal
An estimate of the quantity, quality or value of something.
The process through which conclusions of property value are
obtained; also refers to the report that sets forth the process
of estimation and conclusion of value.
Appraised value
An estimate of the present worth.
Appraiser
A person qualified by education, training, and experience
to estimate the value of real property and personal property.
Appreciation
An increase in the worth or value of a property due to economic
or related causes, which may prove to be either temporary
or permanent; opposite of depreciation.
Appurtenance
A right, privilege or improvement belonging to, and passing
with, the land.
Appurtenant easement
An easement that is annexed to the ownership of one
parcel and allows the owner the use of the neighbor's land.
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise or lower
the mortgage interest rate according to a set index, such
as six-month Treasury bills.
Asking (List) price
The price placed on property for sale.
Assemblage
The combining of two or more adjoining lots into one larger
tract to increase their total value.
Assessed value
The valuation placed on property by a public tax assessor
for purposes of taxation.
Assessment
The imposition of a tax, charge or levy, usually
according to established rates.
Assessment report
Report that appraisers use to record property values, marketability
analyses and any pertinent comments regarding the subject
property. Assessment reports are classified as appraisal reports
or inspection reports.
Assessor
A local government official who determines the value of the
property for taxation purposes.
Asset
Anything of monetary value that is owned by a person. Assets
include real property, personal property, and enforceable
claims against others (including bank accounts, stocks, mutual
funds, and so on).
Assignee
A person to whom a property right is transferred. For example,
an assignee may take over a lease from a tenant who wants
to permanently move out before the lease expires. The assignee
takes control of the property and assumes all the legal rights
and responsibilities of the tenant, including payment of rent.
However, the original tenant remains legally responsible if
the assignee fails to pay the rent.
Assignment
The transfer in writing of interest in a bond, mortgage,
lease or other instrument.
Assumable mortgage
An existing mortgage that can be taken over by the buyer on
the same terms given to the original borrower.
Assumption
The transfer of the seller’s existing mortgage to the
buyer. See assumable mortgage.
Assumption clause
A provision in an assumable mortgage that allows a buyer to
assume responsibility for the mortgage from the seller. The
loan does not need to be paid in full by the original borrower
upon sale or transfer of the property.
Assumption fee
The fee paid to a lender (usually by the purchaser of real
property) resulting from the assumption of an existing mortgage.
Assumption of mortgage
Acquiring title to property on which there is an
existing mortgage and agreeing to be personally liable for
the terms and conditions of the mortgage, including payments.
Attachment
The act of taking a person's property into legal
custody by writ or other judicial order to hold it available
for application to that person's debt to a creditor.
Attorney-in-fact
One who holds a power of attorney from another to execute
documents on behalf of the grantor of the power.
Attorney's opinion of title
An abstract of title that an attorney has examined
and has certified to be, in his or her opinion, an accurate
statement of the facts concerning the property ownership.
Attractive nuisance
Something on a piece of property that attracts children but
also endangers their safety. For example, unfenced swimming
pools, open pits, farm equipment and abandoned refrigerators
have all qualified as attractive nuisances.
Auction
A public sale of property to the highest bidder.
Automatic extension
A clause in a listing agreement that states that
the agreement will continue automatically for a certain period
of time after its expiration date. In many states, use of
this clause is discouraged or prohibited.
Avulsion
The sudden tearing away of land, as by earthquake,
flood, volcanic action or the sudden change in the course
of a stream.
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