Money Management Glossary: Real Estate Investment Terms
a | b | c | d | e | f | g | h | i | j | k | l | m | n | o | p | q | r | s | t | u | v | w | x | y | z
- Acceleration Clause
- Acceleration Clause is often included in a trust/mortgage deed for allowing the payee to declare the entire balance immediately due and payable in the event of default.
- Adjustment Period
- In case of an ARM, the term "Adjustment Period" specifies the time between scheduled changes to the loan payment and the interest rate.
- Agent
- A person or a business entity that acts for or represents another.
- Appraisal
- The term Appraisal denotes a certified professional's opinion of an asset's current market value -as on a given date.
- Appraised Value
- The phrase "Appraised Value" denotes the estimated value of a real estate as established by a duly qualified/trained real estate well versed in current real estate prices and markets.
- Appraiser
- An Appraiser is a person who is duly qualified (by education, training, and experience) to estimate the value of a real property and/or a personal property.
- Appreciation
- The term Appreciation denotes the increase in the value or price of a property over time.
- ARM
- ARM stands for: Adjustable Rate Mortgage. It is a type of mortgage loan program in which the interest rate and the payments may be adjusted periodically at a predetermined frequency.
- Assessed Value
- The phrase "Assessed Value" denotes the government's estimate of a property's value -used for calculating real estate owner's property taxes.
- Assignment
- Within the context of a real estate transaction, the term Assignment denotes transfer of a mortgage from one person to another.
- Assignment of Lease
- Assignment of Lease denotes the document used to convey leasehold. It is used to transfer all rights, title, and interest under a lease that a lessee or tenant may possess a real property.
- Assumability
- Assumability denotes whether or not the terms of a mortgage are such that it can be taken over by a new borrower.
- Assumable
- The term Assumable denotes a loan or an obligation (often related to a real estate property, or an automobile, etc.) that can be taken over by a new borrower.
- Assumable Mortgage
- The term Assumable Mortgage refers to a mortgage that can be taken over (i.e. "assumed") by the buyer when a home is sold.
- Assumption
- The term "Assumption" denotes a transaction wherein a new applicant (borrower) takes over an existing loan. Not all loans are assumable.
- Assumption Clause
- The term "Assumption Clause" denotes a provision (i.e. a clause) in an Assumable Mortgage that allows a buyer to assume the obligation/responsibility for the mortgage from the seller.
- Assumption Fee
- Assumption Fee denotes the fee paid to a lender resulting from the assumption of an existing (mortgage) liability.
- Balloon Mortgage
- Balloon Mortgage is a type of with periodic (smaller) installments of principal and interest that do not fully amortize the entire loan. The remaining balance of the mortgage (baloon payment) becomes due in a lump sum on a predetermined future date.
- Balloon Payment
- The phrase "Balloon Payment" denotes a scheduled payment on a mortgage that is bigger than other periodic payments -often around the middle or near the end of a mortgage term.
- Biweekly Mortgage
- Biweekly Mortgage is a type of real estate financing (mortgage) loan on which payments become due and payable every two weeks instead of on a monthly payment schedule.
- Bridge Loan
- Bridge Loan (or Second Mortgage) is a loan that is collateralized by (other) property owned by the borrower/applicant, and currently being offered for sale.
- Broker
- The term Broker denotes an individual or a firm (a business entity) who acts on behalf of another.
- Capital Improvement
- Capital Improvement includes any structure or component incorporated into a real estate property as a permanent improvement -an improvement that adds to its value and useful life.
- Certificate of Eligibility
- "Certificate of Eligibility" or "Veterans Certificate of Eligibility" is a document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and the loan amount for a VA mortgage.
- Certificate of Title
- Certificate of Title is a written document indicating that the title to a certain (usually a real estate) property is legally vested in the present owner.
- Clear Title
- The phrase "Clear Title" implies that the Title (to a property or an asset) is not burdened by liens, liabilities, or legal questions.
- Closing
- The term "Closing" is often used to mark conclusion of a real estate transaction. In other contexts, it could imply the delivery of a deed, the payment of the full purchase price, the signing of promissory notes, and the paying of any closing costs.
- Closing Costs
- The phrase "Closing Costs" denotes various costs (such as title search, appraisal fee, legal fees, escrow service fees and mortgage points, etc.) associated with the underwriting and funding of a loan.
- Closing Date
- Also known as "Settlement Date", the term "Closing Date" specifies the date on which the mortgage loan transaction is to be closed/concluded.
- Closing Statement
- A Closing Statement is the final statement of costs incurred to close a loan or to purchase a capital asset such as a home.
- CLTV
- CLTV stands for: Combined Loan-to-Value. It is the relationship between the unpaid principal balances of all the mortgages on a property and the appraised value thereof.
- CMT
- CMT stands for: Constant Maturity Treasury. The CMT index is calculated weekly and published by Federal Reserve in its weekly publication called "Statistical Release - H15". The 1-year CMT is the average yield of all Treasury Securities having one year remaining until maturity.
- Co-op
- The term Co-op is an abbreviation of Cooperative Corporation. A Co-op is usually a residential project funded by the Residents own shares in the cooperation, ownership of which in turn gives them the right to live in the project.
- Combination Loan
- Combination Loan -a type of home financing loan -is a loan in which the borrower receives up to 80%% of the load amount as First Mortgage, and the remaining amount as a Second Mortgage.
- Commission
- Usually expressed as a percentage of the selling price, the term "Commission" denotes a real estate agent's fee for negotiating a real estate or loan transaction.
- Common Areas
- Common Areas includes those portions of a building, land, and amenities -owned (or being managed) by a Planned Unit Development (PUD), a Condominium Homeowners' Association, or a Cooperative Corporation (Co-op) -that are for shared use by all of the unit owners. Common areas often include swimming pools, tennis courts, Gymnasiums, and other recreational facilities, parking spaces, etc.
- Comparables
- The term Comparables (an abbreviation for "comparable properties") is used for comparative analysis of properties like the property under consideration for appraisal purposes. Comparables are properties that are reasonably similar in size, location, and amenities; and have been sold recently.
- Condominium
- Condominium is a structure of two or more housing units -interior space of which (the units) are individually owned. The owners of the individual units jointly own the common area property such as remaining land, building and other amenities.
- Condominium Conversion
- The phrase "Condominium Conversion" refers to changing of the ownership of an existing (rental) building to the condominium form of property ownership.
- Conforming Loan
- Conforming Loan is a loan that is eligible for purchase by FNMA or FHLMC. Conforming loan limits are usually adjusted annually in accordance with the changes in the average sales price of conventionally financed single-family homes.
- Construction Loan
- Construction Loan is a short-term (interim) loan for financing the cost of construction where the lender makes progressive payments to the builder at periodic intervals as the construction work progresses.
- Conventional Mortgage
- Conventional Mortgage ia a mortgage that is not insured (i.e. guaranteed) by the federal government.
- Convertible ARM
- Convertible ARM is a form of "adjustable-rate mortgage (ARM)" that can be converted to a fixed-rate mortgage under pre-specified conditions.
- Conveyance
- Conveyance is a process by which the title to a property is officially transferred to (thereby creating an interest therein) in real estate property.
- Deed
- The term "Deed" denotes a legal document used for conveying of the title to a property.
- Deed of Trust
- Deed of Trust is a document that conveys title (to a real estate property) to a trustee. In some states, the Deed of Trust is used instead of a mortgage.
- Double Escrow
- The phrase "Double Escrow" denotes two concurrent escrows on a property wherein the same party is designated as buyer and seller of the property.
- Due on Sale
- The phrases "Due-on-Sale Provision" or "Due-on-Sale Clause" describes a stipulation in a mortgage that allows the lender to demand repayment -in full -in the event the borrower sells a property that serves as security (i.e. collateral) for a mortgage.
- Earnest Money Deposit
- The phrases "Earnest Money Deposit" and "Good Faith Deposit" describe a payment made to by a potential buyer to prove that he/she is seriously interested in making a given transaction. For example, a potential homebuyer may give a "binder" (earnest money deposit) in good faith to a real estate seller to prove that he or she is serious about buying the property in question.
- Easement
- The term "Easement" denotes a right-of-way that gives persons (other than the property owner) access to or over a property.
- Effective Age
- Effective Age of a building reflects an appraiser's estimate of the physical condition of a building.
- Eighty-Ten-Ten
- Also known as 80-10-10 or a "Combination Loan," an Eighty-Ten-Ten mortgage provides the borrower a first mortgage for 80 percent of the loan amount, and a second mortgage (at the same time) for the remaining balance. Borrowers wishing to curtail/avoid PMI (mortgage insurance) costs often consider Combination Loans.
- Encumbrance
- The term "Encumbrance" describes anything (such as claims, liens, charges, liability, mortgages, leases, easements, or restrictions) that may affect or limit (but not prevent) the transfer of the fee simple title to a property.
- Escrow Deposit Account
- Escrow Deposit Accounts (a.k.a. Reserves) are used by Lenders to set aside portion of a borrower's monthly payment to pay for hazard insurance, mortgage insurance, lease payments, taxes, and other payments as they become due.
- Escrow Disbursements
- The allocation (use) of escrow funds to pay for various costs -such as real estate taxes, hazard insurance, mortgage insurance, etc. as they become due.
- Escrow Holdback
- Escrow Holdback (or simply Holdback) denotes money held at (real estate) closing to pay for any specific upgrades or repairs that are to be completed after closing.
- Periodic Escrow Analysis
- The phrase "Periodic Escrow Analysis" describes (periodic) examination of escrow accounts to determine whether or not the current monthly deposit amounts will sufficiently fund various bills (such as taxes, insurance, etc.) when they become due.
- Escrow Fee
- The phrase "Escrow Fee" denotes the fee charged by an escrow company for providing various escrow activities (such as paying off liens, clearing title, etc.) related services.
- Estimated Market Value
- The phrase "Estimated Market Value" denotes an estimate of the current value (fair-market value) of a real estate property -if it was to be sold today.
- Fair Credit Reporting Act
- Fair Credit Reporting Act (FCRA) is a consumer protection law that regulates the disclosure of consumer credit reports by various consumer/credit reporting agencies and outlines acceptable procedures for correcting any mistakes found on a person's credit record.
- Fannie Mae
- Fannie Mae (a.k.a. Federal National Mortgage Association or FNMA) is a government-sponsored corporation that buys (from lenders) and sells (to investors and other lenders) mortgage loans in the secondary market.
- FHA
- FHA (Federal Housing Administration - a division of the US Department of Housing and Urban Development or HUD) insures housing related loans made (in accordance with HUD regulations) by approved lenders.
- FHA Mortgage
- Loans insured by the Department of Housing and Urban Development of the Federal Housing Administration (FHA) are often referred to as FHA Mortgages or FHA Mortgage Loans.
- Floating Interest Rate
- Floating Interest Rate allows for the interest rate and points that to change (due to a change in the lender's interest rate and points for similar loans, etc.) before the loan closes or before the borrower locks in the interest rate and points.
- Foreclosure
- Foreclosure is a legal process that allows lenders to terminate the borrower's interest in a property in the event of a loan has being in default. Foreclosed properties are known as Real Estate Owned (REO) properties.
- Freddie Mac
- Freddie Mac (one of the major secondary market investors and a major purchaser of mortgages) is a government sponsored (but privately owned) corporation. It is also known as Federal Home Loan Mortgage Corporation (FHLMC).
- FRM
- FRM is an abbreviation of "Fixed Rate Mortgage." FRM mortgage loans have a fixed (pre-determined) interest rate and a predefined payment schedule throughout the life of the loan.
- Fully Indexed Interest Rate
- Fully Indexed Interest Rate denotes the sum of the current index rate on an adjustable-rate mortgage (ARM) PLUS the margin.
- Home Equity
- The phrase "Home Equity" denotes the value of a borrower's property that has already been paid for, plus any appreciation, and minus the decline in the value thereof.
- HUD-1
- HUD-1 (a form of closing Statement) is the final statement of costs incurred to close a real estate property (home) loan.