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Real Estate Terms

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AThere are 942 entries in the glossary.Pages: «1 2 3 4 5 6 7 8 9 10 » Examination of TitleThe report on the title of a property from the public records or an abstract of the title. ExchangeWhen ownership of like-kind properties are transferred between two or more owners; can result in postponement of part or all of the tax for one or more of the parties to the exchange. Exclusive agency listingA listing agreement between a seller and a broker in which either has a right to sell the property; if sold by the broker a commission will be due Exclusive ListingA written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner's right to sell the property alone without the payment of a commission. Exclusive right to sellA listing agreement between a seller and a broker whereby the broker receives a commission, regardless of who sells the property. ExecutorA person named in a will to administer an estate. The court will appoint an administrator if no executor is named. "Executrix" is the feminine form. Fair credit billing actA federal law that gives a borrower the right to question credit card bills from companies other than banks. The law lays out a process for a borrower to follow if a credit-card bill is wrong, or appears to be wrong. Fair Credit Reporting ActA consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one's credit record. Fair debt collection practices actA federal law that protects consumers from abuse or threats from collection agencies trying to get overdue payments. Fair Housing ActLegislation first enacted in 1968 and expanded by amendments in 1974 and 1988, which provides the Secretary with investigation and enforcement responsibilities for fair housing practices. Prohibits discrimination in housing and lending based on race, color, religion, sex, national origin, handicap, or familial status. Fair Housing Assistance Program (FHAP)A Program to assist state and local agencies and community housing resources boards in processing Fair Housing Act complaints. Fair Housing Initiatives Program (FHIP)A Program to assist states, local agencies, fair housing groups, and community housing resource boards in bringing public and private efforts together to combat housing discrimination. Fair Market Rents (FMR)Rent Schedules published in the Federal Register which establish maximum eligible rent levels allowed under the Section 8 program by geographic area. Fair Market ValueThe highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept. Fannie MaeA federally chartered, stockholder owned corporation which supports the secondary market for both conventional mortgages and mortgages insured by the FHA and guaranteed by VA. Feasibility analysisStudy of the cash flow, profitability potential and overall desirability of a project. Federal Deposit Insurance Corporation Federal Home Loan Bank Board (FHLBB)Supervises Federal Home Loan Banks, which supply member banks with credit to enhance their service as savings depositories and as lenders of mortgage funds. Federal Home Loan Bank SystemThrough its 12 District Banks, the FHLB makes advances to over 7,000 member financial institutions, which in turn lend the funds for home mortgages and community development. Also see AHP. Federal Home Loan Mortgage Corporation (A federally chartered stockholder owned corporation which supports the secondary market for conventional mortgages. Federal Housing Finance Board (FHFB)The FHFB regulates the Federal Home Loan Bank System. Federal National Mortgage Association (FA federally chartered, stockholder owned corporation which supports the secondary market for both conventional mortgages and mortgages insured by the FHA and guaranteed by VA. Federal Reserve SystemThe System's duties fall into four general areas: conducting the nation's monetary policy; supervising and regulating banking institutions; maintaining the stability of the financial system; and providing certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions. Fee SimpleThe greatest possible interest a person can have in real estate. Fee simple ownership provides the owner with unrestricted powers to dispose of the owned property as the owner sees fit. Of all types of ownership a person can have in real estate, fee simple provides the greatest amount of personal control. Fee simple absoluteEntire bundle of rights to use and control real property. Fee Simple EstateAn unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed. It is of perpetual duration. When the real estate is in a condominium project, the unit owner is the exclusive owner only of the air space within his or her portion of the building (the unit) and is an owner in common with respect to the land and other common portions of the property. FHA (Federal Housing Administration)A division of the U.S. Department of Housing and Urban Development that insures mortgage loans. FHA Coinsured MortgageA mortgage (under FHA Section 244) for which the Federal Housing Administration (FHA) and the originating lender share the risk of loss in the event of the mortgagor's default. FHA FundThis fund is comprised of four separate funds to finance specific FHA mortgage insurance programs: Mutual Mortgage Insurance Fund (MMI), Cooperative Management Housing Insurance Fund (CMHI), General Insurance Fund (GI), and Special Risk Insurance Fund (SRI). FHA loanA mortgage that is insured by the Federal Housing Administration. FHA LoansWith FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower. FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a conventional mortgage through a lender. FHA MortgageA mortgage that is insured by the Federal Housing Administration (FHA). Also known as a government mortgage. With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower.FHA mortgages have a maximum loan limit that varies depending on the average cost of housing in a given region. In general, the loan limit is less than what is available with a mortgage through a lender. FHLMC (Federal Home Loan Mortgage CorporReferred to as "Freddie Mac" and supervised by the Federal Home Loan Bank Board. FHLMC creates a secondary market for conventional mortgage loans. Final Walk-Through InspectionYour sales contract should include a clause that allows you to examine the property you want to purchase within the 24 hours before closing.This walk-through, during which you will be accompanied by the real estate sales professional, is your chance to ensure that the seller has vacated the house and left behind whatever property was agreed upon.Make sure to check that all lights, appliances, and plumbing fixtures are in working order.You will also want to make sure that all conditions of the sales contract have been met. If they aren't, or you observe major problems, you have the right to delay the closing until the problems are corrected.One other option is to make sure money to correct the problems is placed in an escrow account at closing to cover the cost of repairs. FinanceTo supply money for a purchase. A lender can finance home ownership with a mortgage loan. Financial IndexAn index is a number to which the interest rate on an adjustable rate mortgage (ARM) is tied. It is generally a published number expressed as a percentage, such as the average interest rate or yield on U.S. Treasury bills. A margin is added to the index to determine the interest rate that will be charged on ARMs. This interest rate is subject to any caps associated with the mortgage. The interest rate changes on an ARM are tied to some type of financial index. Some of the most common type of indexed ARMs are:

Treasury-Indexed ARMs

CD-Indexed ARMs (Certificate of Deposit)

Cost of Funds-Indexed ARMs (COFI)

LIBOR-Based ARMs

When comparing ARMs, look at how the index to which it is tied has performed recently. Your lender can provide information on how to track the index and a history of the index they use. Financial leverageThe use of borrowed funds to acquire an investment. Financial riskThe possible change in an investment's ability to return principal and income. FinancingThose functions necessary to provide the financial resources to fund government operations and federal assistance including the functions of taxation, fee and revenue generation, public debt, deposit funds, and intra governmental collections. (JFMIP Framework) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97 Finder's FeeA fee or commission paid to a mortgage broker for finding a mortgage loan for a prospective borrower. Firm CommitmentA lender's agreement to make a loan to a specific borrower on a specific property. First and Second MortgagesA first mortgage is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments. First MortgageA mortgage that is the primary lien against a property. A "first mortgage" is the primary lien against a property. The term is usually coined "first mortgage" only when a "second mortgage" is obtained on a property. A "second mortgage" is a lien that is subordinate to the first mortgage. Usually, the interest rates on second mortgages are slightly higher than the interest rates on a first mortgage. The amount of a second mortgage you can take out will depend on the equity you have built up in your home, the appraised value of your property, your credit history, and any other liens you may have against your property, such as a home equity line of credit.Borrowers will typically get a second mortgage to tap into the equity they've built in their home -- and use that for home improvements, debt consolidation, medical bills, or other purposes. You apply for a second mortgage with the same process you follow for a first mortgage. However, some of your closing costs may be less.When you have a first and second mortgage, you theoretically have two loans, both requiring interest and principal payments. Fiscal YearAny yearly accounting period, regardless of its relationship to a calendar year. (GAO) HUDCAPS Core Financial System Standard Accounting Interface, dated 9/30/97 Fixed expensesCosts that do not change with a building's occupancy rate. They include property taxes, insurance, and some forms of building maintenance. Fixed expenses or fixed paymentsExpenses or payments that usually stay the same from month to month, such as rent, a car loan, a student loan, insurance, child support. Fixed InstallmentThe monthly payment due on a mortgage loan. The fixed installment includes payment of both principal and interest. Fixed LeaseA lease in which the lessee pays a fixed amount for the durration of the lease. May also be referred to as a Gross Lease. Fixed Rate MortgageA mortgage in which the interest rate does not change during the entire term of the loan. Fixed-rate mortgages, the most popular type of mortgage, offer the peace of mind that your interest rate will remain the same for as long as you have your loan. If you expect to live in your home for many years, having the same interest rate may be your key concern. If you decide that you like the stable, predictable payments of a fixed-rate loan, you have the option of choosing from a variety of repayment terms: 15, 20, and 30 years are the most common. Typically, the longer the term of the mortgage, the more interest you pay over the life of your loan. However, stretching out your repayment term means your monthly mortgage payments will be less than they would be with a comparable shorter-term mortgage. Lenders offer a wide array of fixed-rate mortgages, including Balloon Mortgages and Biweekly Mortgages. Fixed-Period Adjustable-Rate MortgagesThis type of adjustable-rate mortgage (ARM) maintains the same initial interest rate for the first three, five, seven, or 10 years of your loan, depending on the term you choose. Your interest rate then adjusts annually, and can move up or down as market conditions change. Be sure to ask your lender about the interest rate caps for both the annual adjustments and for the life of the loan. Advantages: (1)Your initial interest rate will be lower than a fixed-rate mortgage, so you may be able to afford more home.(2)You are protected against interest rate increases for the first three, five, seven, or 10 years of the loan, depending on which type of fixed-period ARM you choose.(3)You may have the option to convert your ARM to a fixed-rate mortgage at the first, second, or third interest rate adjustment dates.(4)You have time to improve your financial position (i.e., salary increases) or accumulate additional assets before the interest rate adjusts at the end of the fixed period. Fixed-rate mortgageA mortgage in which the interest rate does not change during the entire term of the loan. FixturePersonal property that becomes real property when attached in a permanent manner to real estate. Flood InsuranceInsurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood areas. FNMA (Federal National Mortgage AssociatReferred to "Fannie Mae", FNMA is a privately owned, government sponsored agency that buys and sells FHA-insured, VA-guaranteed and conventional mortgage loans. ForbearanceThe lender's postponement of foreclosure to give the borrower time to catch up on overdue payments. ForecloseThe process of the lender taking a property when the borrower has defaulted on the loan. The lender then sells the property to recoup its loss on the unpaid loan. ForeclosureThe legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. If you repeatedly do not make your mortgage payments on time, your lender could sell your home and evict you from it in a legal procedure called foreclosure. A foreclosure on your property can result in the loss of your home and your good credit rating. Foreclosure is most often a last resort effort that lenders will take if you repeatedly don't make your mortgage payments. Before going to foreclosure, lenders will work with you if you are facing financial hardships to come up with repayment plans that will let you get back on track and remain in your home. ForfeitureThe loss of money, property, rights, or privileges due to a breach of legal obligation. Front footA measure of property by which the distance is measured along the street, highway, stream, or other body of water. Fully Amortized ARMAn adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance, at the interest accrual rate, over the amortization term. Fully amortized mortgageA method of loan amortization in which equal periodic payments completely loan repay the loan. Functional obsolescenceDecline in value of property caused by changes in technology or by defects in design, layout, or size of building; loss of a building's ability to perform its function. Future valueThe amount to which money grows over a designated period of time at a specified rate of interest. General ContractorA general contractor is someone whom you may work closely with during your home improvement project. The general contractor is the person who oversees the construction project and handles various aspects such as scheduling workers and ordering supplies. If you are borrowing mortgage funds to renovate a home, your lender may need to review whether your contractor meets all federal, state, and local registration, licensing and certification standards. General partnershipForm of co-ownership wherein all partners have a voice in the management of a business and unlimited liability for its debts. General warranty deedA deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable. Good faith depositSee Earnest Money. Good Faith EstimateThe good-faith estimate is a report from your lender that outlines the costs you will incur to get your mortgage. It is based on the lender's typical loan origination costs for the area where your home is located. The estimate usually changes between application and closing, so you'll want to review your settlement form before the closing meeting. The settlement form will list the actual amount of money you'll need to bring to closing. You'll need to pay your closing costs in the form of a certified or cashier's check because personal checks usually are not accepted. Gound LeaseA lease of the land only. Usually the land is leased for a relatively long period of time to a tenant that constructs a building on the property. Gross Area The entire floor area of a building. Government MortgageA mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Contrast with conventional mortage. Government National Mortgage AssociationA government-owned corporation within the U.S. Department of Housing and Urban Development (HUD). Created by Congress on September 1, 1968, GNMA assumed responsibility for the special assistance loan program formerly administered by Fannie Mae. Popularly known as Ginnie Mae. GradeThe level of the ground at the structure foundation. Graduated leaseA lease providing for a variable rate of rent depending upon some future event. Graduated paymentA mortgage loan with monthly payments that start at a lower amount and then increase slowly over the next several years. The monthly payments then stay the same at the higher amount. GranteeThe person to whom an interest in real property is conveyed. GrantorThe person conveying an interest in real property. Gross incomeThe total amount of money that a person receives, before taxes and other deductions. This income may include funds from a job or jobs; interest or dividends; alimo-ny; disability payments; or public assistance. Gross LeaseA lease in which the lessee pays a fixed rental amount for the durration of the lease and the lessor pays the expenses associated with owning the property such as taxes and insurance. Gross operating incomeThe total amount of cash generated by the operations of a property. Hedging Protecting oneself against negative outcomes. Ground leaseAn agreement for rental of land only. Ground RentThe amount of money that is paid for the use of land when title to a property is held as a leasehold estate rather than as a fee simple estate. Group HomeA single-family residential structure designed or adapted for occupancy by unrelated developmentally disabled persons. The structure provides long-term housing and support services that are residential in nature. Growing-Equity MortgageA fixed-rate mortgage that provides scheduled payment increases over an established period of time, with the increased amount of the monthly payment applied directly toward reducing the remaining balance of the mortgage. Guarantee MortgageA mortgage that is guaranteed by a third party. Guaranteed Loansee Government mortgage. Hazard InsuranceInsurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards. Highest and best useThe use of a property that will yield the greatest return on the property. Home Equity Conversion MortgageA special type of mortgage that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Unlike traditional home equity loans, a borrower does not qualify on the basis of income but on the value of his or her home. In addition, the loan does not have to be repaid until the borrower no longer occupies the property. Sometimes called a reverse mortgage. A Home Equity Conversion Mortgage (HECM) is a type of home loan that lets homeowners aged 62 or over with little or no remaining balance on their mortgage convert their equity into cash. The equity can be paid to the homeowner in a lump sum, in a stream of payments, draws from a line of credit, or a combination of monthly payments and line of credit. Whatever payment plan you select, you do not have to repay any part of this reverse mortgage until you sell the home or vacate it for another reason. At that time, you pay the loan balance, plus any accrued interest. Any proceeds above that amount go to you or to your estate. Developed by the Federal Housing Administration (FHA), the HECM mortgage provides a cash growth feature not found with some other reverse mortgages. Home Equity Line of CreditA mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property. Home Equity Loan Home InspectionA thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal. The home inspection reviews the structural and mechanical condition of the property. This is not an evaluation of the market value of the home or a determination of whether the home complies with applicable building and safety codes. The inspection does not include a recommendation on whether you should or should not buy the house.The inspector bases the findings on observable structural elements of the home. Potential home buyers are urged to be present during the inspection. This will allow you to ask questions and be in a better position to learn more about any problems that arise. Home inspectorA licensed professional who looks at all parts of a house and evaluates its condition. Home Mortgage Disclosure Act (HMDA)The Home Mortgage Disclosure Act of 1975, as amended in 1989, requires most financial institutions and mortgage lenders that make mortgage loans, home improvement loans, or home refinance loans to collect and disclose information about their lending practices. Office Of The Assistant Secretary For Housing-Federal Housing Commissioner Mortgagee Letter 94-22, May 4, 1994 Homebuyer Protection PlanA HUD package of home appraisal reforms that will increase the level of consumer confidence in the homebuying process and benefit 800,000 families who get Federal Housing Administration mortgages each year. HUD web site at www.hud.gov/pressrel/pr98-206.html Homeowner's InsuranceHomeowners insurance (also called "hazard insurance") should be equal to at least the replacement cost of the property you want to purchase. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss. Most home buyers purchase a homeowner's insurance policy that includes personal liability insurance in case someone is injured on their property; personal property coverage for loss and damage to personal property due to theft or other events; and dwelling coverage to protect the house against fire, theft, weather damage, and other hazards. If the home you want to buy is located near water, you may be able to get flood insurance as part of your homeowner's protection. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.Seek out and compare rates from several insurance companies before making your final decision.Lenders often want the first year's premium to be paid at or before closing. Your lender may add the insurance cost to your monthly mortgage payments and keep this portion of your payments in an escrow account. The lender then pays your insurance bill out of escrow when it receives premium notices from your insurance company. Homeowner's Insurance for Reverse MortgaHomeowner's insurance (also called hazard insurance) is required and should be equal to at least the replacement cost of the home you want to purchase. Replacement cost coverage ensures that your home will be fully rebuilt in case of a total loss.Most home buyers purchase a homeowner's insurance policy that includes personal liability insurance (though this personal liability insurance is not required) in case someone is injured on their property; personal property coverage for loss and damage to property due to theft or other events; and dwelling coverage to protect the house against fire, theft, weather damage, and other hazards.If the home is near water, you may be able to get flood insurance as part of your homeowner's protection. In fact, it may be required in some areas, so check with your real estate professional or an approved lender for further information.Seek out and compare rates from several insurance companies before making your final decision. Homeowner's warrantyA type of insurance that covers repairs to specified parts of a house for a specific period of time. It is provided by the builder or property seller as a condition of the sale. Homeowners AssociationA nonprofit association that manages the common areas of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common elements. In a PUD project, it holds title to the common elements. HomesteadPrimary residence as declared by the head of a household and filed with the county clerk in order to exempt the homestead from claims of creditors. Housing Expense RatioThe percentage of gross monthly income that goes toward paying housing expenses. 

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