Some of the Real Estate Terms and Definitions

Amortized Loan — A loan that is completely paid off, interest and principal by a series of regular payment that are 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 no secured by a mortgage or deed of trust against the property, becoming co-guarantor for the payment of a mortgage or deed of trust note.

Balloon Payment — The final payment of a mortgage loan when it is larger than the regular payment. It usually extinguished the note.

Capital Gains — The taxable profit derive from the sale of a capital asset. It is the difference between the sale price and the basis of the property after making appropriated adjustments for closing costs, fixing-c expenses, capital improvements, allowable depreciations, etc.

Closing — The final settlement of a Real Estate transaction between buy and seller.

Contract for Deed — A contract ordinarily used in connection with the sale of the 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.

Contact of Title — A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any 0th elements or record which may affect the marketability of the title.

Counter Offer — A seller’s rejection of an offer made by a Buy accompanied by an agreement to sell the property to the potential Buy on terms differing from the original offer.

Deed — The written instrument which, when properly executed and delivered, conveys title.

Easement — Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which a party has in the land of another.

Equity — The interest or value an owner has in Real Estate over and above the liens against the real property.

Joint Tenancy — Joint ownership by two or more persons with the right of survivorship, all joint tenants own equal interest and have equal rights in the property.

Lien — An encumbrance on the property which usually names the property as security for the payment of a debt or discharge of an obligation. Examples: Judgments, taxes, mortgages, deed or trust, etc.

Loan Commitment — A written promise by a lender to make a loan under certain terms and conditions. These include interest rate, length of loan, lender fees, annual percentage rate, mortgage and hazard insurance and other special requirements.

Loan to Value Ratio — The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (selling price). On a $100,000.00 home with a mortgage loan principal of $80,000.00, the loan to value ratio is 80%. Mortgagee — The lender of money or the receiver of the mortgage document.

Mortgagor — The borrower of money or the giver of the mortgage document.

Note - A written promise to pay a certain amount of money with or without specific terms.

Personal Property — Any property which is not real property. For instance, money, savings accounts, appliances, cars, boats, etc.

Point — One percent of the loan amount.

Prepayment Penalty — The fee paid to the mortgagee for paying the mortgage before it becomes due. Also known as "Prepayment Fee" or "Reinvestment Fee".

Prepayment Privilege — The right given to a purchaser to pay all or part of a debt prior to its maturity. The mortgagee cannot be compelled to accept any payment other than those originally agreed to.

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 the Buyer and the Seller for the purchase of Real Estate.

Rent with Option — A contract which gives one the right to lease property at a certain sum with the option to purchase it at a future date.

Second Mortgage/Second Trust — Also know as a "Junior Mortgage" or "Junior Lien". An additional loan imposed on property with a first mortgage, generally at a higher interest rate and shorter terms than a "First Mortgage".

Special Assessment — A legal charge against Real Estate by a public authority to pay the costs of public improvements such as street lights, sidewalks, street improvement,

Subdivision — A parcel of land that has been divided into smaller parts.

Tenancy in Common — Ownership by two or more persons who hold undivided interest, without the right of survivorship. Interest need not be equal.

Term of Mortgage — The period during which a mortgage must by paid.

Title — Often used interchangeably with the word ownership. It indicates the accumulation of all rights in a property.

Title insurance:  Protects the named insured against loss because of defects, liens, encumbrances, adverse claims or other matters not shown or disclosed to the new owner.

Trust Account — An account separate and apart and physically segregated from a Broker’s own funds, in which the Broker is required by law to deposit all funds collected for clients.