GLOSSARY OF TERMS FOR BUYERS

AMORTIZED LOAN - A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal.  Also called a Level Payments Loan. 

APPRECIATION - An increase in value of real estate. 

ASSUMPTION OF MORTGAGE - The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property; becoming a co-guarantor for the payment of a mortgage or deed of trust note. 

CLOSING - The final settlement of a real estate transaction between buyer and seller. 

CONDOMINIUM - A system of individual fee ownership of units combined with joint ownership of common area of the structure and the land. 

CONTRACT FOR DEED - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer.

CONVENTIONAL MORTGAGE - A mortgage securing  loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. 

COUNTER-OFFER - A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer. 

DEED - Written instrument which, when properly executed and delivered, conveys title. 

DISCOUNT POINTS - Additional charges made by a lender at the time a loan is made.  Points are measured as a percent of the loan, with each point equal to one percent. These additional interest charges are paid at the time a loan is closed to increase the rate of return to the lender so as to approximate the market level. Click the button below for more about Points.

EARNEST MONEY DEPOSIT - Down payment made by a purchaser of real estate as evidence of good faith. 

EASEMENT - Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another. (Example: right of way) 

EQUITY - The interest or value which an owner has in real estate over and above the liens against real property. 

ESCROW - The deposit of instruments and funds with instructions to a third neutral party (Escrow Agent) to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow. 

FHA LOAN - A loan which has been insured by the federal government guaranteeing its payment in case of default by the borrower. 

FMHA LOAN - A loan insured by the federal government similar to FHA loan usually used for residential properties in rural areas. 

FEE APPRAISAL - The act or process of estimating values of real estate or any interest therein for a fee.

For a special Q&A page about POINTS click the button below.

JOINT TENANCY - Joint ownership by two or more conveyances, persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property. 

LAND CONTRACT - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer. 

LIEN - A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation. 

MARKETABLE TITLE - Merchantable title; title free and clear of objectionable liens or encumbrances. 

MORTGAGE - An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; procedure for foreclosure in event of default is established by statute. 

MULTIPLE LISTING - the name given a service performed by the Local Board of Realtors (Multiple Listing Service).  MLS provides necessary information to aid in the sale of listings.  It is a marketing tool used by members of the Service to expose properties to a wider market base. 

ORIGINATION FEE - A fee charged the borrower by the lending institution. 

PERSONAL PROPERTY - Any property which is real property, eg., money, savings accounts, not appliances, cars, boats, etc. 

PROMISSORY NOTE - Following a loan commitment from the lender, the borrower signs a note promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment. 

PURCHASE AGREEMENT - An agreement between a buyer and seller for the purchase of real estate. 

REAL PROPERTY - Land and whatever by nature or artificial annexation is a part of it. 

SPECIAL ASSESSMENT - Legal charge against real estate by a public authority to pay cost of public improvements such as: street lights, sidewalks, street improvements, etc. 

SUBDIVISION - A parcel of land that has been divided into smaller parts (lots, blocks or tracts). 

TENANCY IN COMMON - Ownership by two or more persons who hold undivided interest; without right of survivorship; interests need not be equal. 

TERM OF MORTGAGE - The period during which a mortgage must be paid. 

TRUST ACCOUNT - An account separate and apart and physically segregated from broker’s own funds, in which broker is required by law to deposit all funds collected for clients. 

VA LOAN - A loan guaranteed by the Veteran’s Administration insuring payment in case of default by the borrower.  Available to qualified veterans. 

WARRANTY DEED - A deed used to convey real property which contains warranties of title and quiet possession, and the grantor agrees to defend the premises against the lawful claims of third persons.