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Buying or selling Real Estate is a complex transaction, with a language all its own. Your Crestico Real Estate Agent can help you understand the terminology and its implications for you, but we’ve provided the definitions for many frequently used Real Estate terms here. Please scroll down.


A Federal Housing Authority program which provides mortgage insurance that protects lenders from default. Can be used to finance the purchase of new or existing one- to four family housing; generally characterized by low down payments, flexible qualifying guidelines, limited fees, and limits on maximum loan amount.

A Federal Housing Authority mortgage insurance program which enables homebuyers to finance both the purchase of a home and its rehab cast via a single mortgage loan.


Abstract of title
A history of ownership of a property and any documents that affect the title during that ownership.

Acceptance of sale/sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that outlines all details of the property transaction. (Same as “offer to purchase/contract of sale/sales contract.”)

Adjustable Rate Mortgage (ARM)
A loan with an interest rate that fluctuates according to the movements of a predetermined index.

Agent/sales associate
A person licensed by the state to sell real estate through a real estate broker.

Any feature of a property that is beneficial but not necessary. Amenities may be natural (like location, view, water access) or man-made (walk-in closet, swimming pool, etc.)

Gradual payment of a mortgage loan by installments over a period of time

Amortization schedule
A timetable for payment of a mortgage loan. The 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.

To repay a mortgage with regular payments that cover both principal and interest.

Annual Percentage Rate (APR)
Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

The first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

An opinion by a licensed real estate appraiser about the fair market value of a home.

A qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

An increase in the value of a property due to beneficial alterations in market conditions or other reasons.

Assessed value
The valuation placed on property by a public tax assessor for purposes of taxation.

The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.

Assessment rolls
The public record of taxable property.

A government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable loan
An existing mortgage that can be taken over by the buyer — usually on the same terms given to the original buyer.

Taking over responsibility for payments on a mortgage and meeting any of the other requirements. Typically, a buyer assumes a mortgage from the seller.


Balloon payment
A loan with monthly payments too low to pay off the balance in the specified term. The balance must be paid in full when the loan comes due — typically within three to five years.

Bi-Weekly Mortgage
A mortgage with payments due every two weeks, totaling 26 payments per year.

Billing Cycle
The period or number of days shown on a billing statement in which interest is billed.

Bond Program
A state sponsored method of assisting borrowers and first-time buyers in the purchase of a home at a reduced interest rate.

Bridge loan
A form of second trust that is collateralized by the borrower’s present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as “swing loan.”

A person who has a real estate broker’s license, who may not only make real estate transactions for others in exchange for a fee (or other consideration), but also may operate a real estate business and employ sales associates and other brokers.

Building code
Based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.

Buy down
A method of lowering the interest rates on a mortgage, either temporarily or for the entire term of the loan. Often points are paid up front to make up the difference between the rate actually charged on the mortgage and the rate at which the buyer pays. Practically anyone — sellers, buyers, home builders, relatives, etc. — can buy down rates.

Buyer pool
The entire market of prospective home buyers in a specific area or looking for a type of home.


Capital expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

A safeguard against excessively high payment increases, some ARMs place a cap on the amount by which either the interest rate or payment may rise at any single adjustment, over the life of the loan, or both. Look at the cap as “the worst case scenario” to determine if the ARM suits your financial capabilities.

Cash reserves
A cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of Eligibility
A document issued by the federal government certifying a veteran’s eligibility for a Department of Veterans Affairs (VA) mortgage.

Certificate of Reasonable Value (CRV)
A document issued by the Department of Veterans Affairs (VA) that establishes the maximum value and loan amount for a VA mortgage

Certificate of title
A document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Clear or marketable title
A title that doesn’t have any liens or claims against it that would keep it from being transferred, put the buyer in a position to sue for property rights or be obligated for claims.

Closed-End Loan
A credit arrangement in which the borrower and lender agree on the total amount loaned and the number, amount and due dates of each payment; all proceeds are advanced at time of closing.

Also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs
Customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.

Closing costs
Expenses above the purchase price that buyers and sellers pay at closing.

An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

Combined Loan-to-Value (“CLTV”)
The relationship of the outstanding balances of a first and second mortgage to the appraised value of the security used to determine the maximum lendable amount on real estate.

A lender’s offer to grant a mortgage loan outlining the terms, the amount of the loan, the interest rate and other conditions. It can also serve as a communication of the lender’s decision on the borrower’s application.

An abbreviation for “comparable properties”; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

A form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conforming Loan
A loan, which meets all requirements to be eligible for sale to Fannie Mae or Freddie Mac.

Construction Loan
A short-term, interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as work progresses.

A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Contract of purchase
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property. (Each of these means the same thing offer to purchase, or purchase offer, or earnest money agreement, or contract of purchase, or deposit receipt.)

Contract of sale/sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that outlines all details of the property transaction. (Same as “offer to purchase/acceptance of sale/sales contract.”)

Conventional loan
A private sector loan, one that is not guaranteed or insured by the U.S. government.

Cooperative (Co-op)
Residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Corporate relocation
Arrangements under which an employer moves an employee to another area as part of the employer’s normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

Credit bureau score
A number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Credit history
History of an individual’s debt payment; lenders use this information to gauge a potential borrower’s ability to repay a loan.

Credit Pre-Approval
A process in which an individual can apply for a credit pre-approval decision before he/she actually finds a home and enters into a sales agreement.

Credit Report
A report on the credit standing of a prospective borrower, used to aid in the determination of credit worthiness.

Credit Score
A score based upon present financial condition, experience, and past credit history, used to determine the credit standing and creditworthiness of a prospective borrower.

Current Debt
The amount of money owed on a property, or other secured or unsecured loan balance, such as credit cards or car loans.


Debt-to-income ratio
A comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.

The legal document that is used to transfer the title from one owner to another.

The state of being one or more months behind the loan payment schedule.

Deposit receipt
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property. (Each of these means the same thing offer to purchase, or purchase offer, or earnest money agreement, or contract of purchase, or deposit receipt.)

Discount point
Normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down payment
The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.

Due-on-sale clause
A restriction in a mortgage that has the effect of stopping assumptions. The clause states that the entire balance of the mortgage is due and payable immediately if the property is sold or conveyed.

Earnest money
Money deposited by potential buyers to show their seriousness about buying. It becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.


Earnest money agreement
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property. (Each of these means the same thing offer to purchase, or purchase offer, or earnest money agreement, or contract of purchase, or deposit receipt.)

A right of way giving persons other than the owner access to or over a property.

An improvement that intrudes illegally on another’s property.

Equity is the sale price minus selling costs and the remaining principal on the mortgage. The money you are left with after selling your home and paying off the mortgage, selling costs and any other liens. It can also be defined as the amount of ownership that one has in a home. Ownership value is built up by paying down the principal on your mortgage plus the increase in value (appreciation) of your home in the market place.

Escrow account
A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Escrow analysis
The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance and other bills when due.

Escrow collections
Funds collected by the servicer and set aside in an escrow account to pay the borrower’s property taxes, mortgage insurance and hazard insurance.

Escrow disbursements
The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance and other property expenses as they become due.

Escrow payment
The portion of a mortgagor’s monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due. Known as “impounds” or “reserves” in some states.

Exclusive agency listing
A listing contract in which the agent has the sole right to sell your home for you, though you are not bound to pay the commission if you produce the buyer. See Listing agreements.

Exclusive right-to-sell contract
A listing contract in which you give the real estate broker the sole right to sell; the person receives a commission, regardless of who produces the buyer. See Listing agreements.


Fair Housing Act
A law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value
The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Federal Home Loan Mortgage Corporation (Freddie Mac)
A government-sponsored institution that supports the secondary mortgage market by purchasing mortgages from lenders and reselling them as securities.

Federal Housing Administration (FHA)
A federal agency that insures first mortgages, enabling lenders to lend a very high percentage of the sale price.

Federal National Mortgage Association (Fannie Mae)
A privately owned, congressionally chartered company that is the nation’s largest mortgage investor.

Finance Charge
The cost of interest and other charges involved in borrowing money.

First Mortgage
A mortgage which has priority over all other voluntary liens against a certain property; used in states that secure loans against real property with a mortgage.

Fixed Rate Mortgage
A mortgage in which the interest rate and monthly principal and interest payments remain the same for the life of the loan.

Floating Your Rate
Deciding not to lock in the interest rate at the time of application, and instead to float with the market until a later date at which time you will ask the lender to lock in the interest rate.

Flood insurance
Insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.


General warranty deed
The type of deed considered to provide the most protection to an owner, since the seller guarantees that he or she is the true owner of the property and that no claim will be brought against the property.

Gift Letter
A written statement from friends or family that explains gift funds given to a borrower to purchase a home, and states that no repayment is expected.

Ginnie Mae
Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good faith estimate
An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.


Hazard insurance
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other hazards.

Home inspection
An examination of the structure and mechanical systems to determine a home’s safety; makes the potential homebuyer aware of any repairs that may be needed.

Home Market Analysis
The Home Market Analysis presents an opportunity to review and evaluate the facts before you decide the price you will ask for your home. It also helps you look at your home from a buyer’s perspective. This process will establish a realistic listing price and increase the percentage of qualified buyers who look at your property.

Home warranty
Offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance; overage extends over a specific time period and does not cover the home’s structure.

Homeowner’s insurance
An insurance policy that combines protection against damage to a dwelling and Is contents with protection against claims of negligence, inappropriate action that result in someone’s injury or property damage.

Homeowner’s Association Fees
The fee condominiums and planned unit developments assess monthly for maintaining common areas and service for the development

Housing counseling agency
Provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.

Housing Market Index (HMI)
The HMI is based on a monthly survey of home builders that the National Association of Home Builders (NAHB) has been conducting for over 16 years. Each month, the survey asks builders to rate present sales of single-family detached homes and sales expectations over the next six months as “good,” “fair,” or “poor.” Traffic of prospective buyers is rated as “high to very high,” “average,” or “low to very low.” The HMI is a weighted average of the three seasonally adjusted components. On a scale of 0 to 100, with zero being the worst and 100 the best.

The U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement
Also known as the “settlement sheet,” it itemizes all closing costs; must be given to the borrower at or before closing.

Heating, Ventilation and Air Conditioning; a home’s heating and cooling system.


The rate you pay directly related to a particular interest-rate index.

The number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar’s value.

The regular periodic payment that a borrower agrees to make to a lender.

Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

A fee charged for the use of money.

Interest rate
The amount of interest charged on a monthly loan payment; usually expressed as a percentage.

Interest rate ceiling
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

Interest rate floor
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

Investment property
A property that is not occupied by the owner.


Jumbo loan
A loan that exceeds Fannie Mae’s mortgage amount limits. Also called a nonconforming loan.

A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Lease purchase
Assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

Your debts and other financial obligations.

A monetary claim against your property. Usually liens must be settled before the seller can take the title.

Line of credit
An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a certain time to a specified borrower. See home equity line of credit

Liquid asset
A cash asset or an asset that is easily converted into cash.

Listing agreements
Three types of listing agreements: 1. With an exclusive right-to-sell agreement, the seller pays a fee regardless of who produces the buyer. This fee covers many important services that the sales associate performs above and beyond finding a qualified buyer. 2. If the seller finds a buyer, he or she is not obligated to pay the fee in exclusive-agency listing. If the sales associate finds a buyer, then the fee is paid to the real estate company. 3. An open listing is one in which you sign with several real estate firms and give each authority to sell your home. It is typically less effective than exclusive listing because the sales associate lacks the incentive to make and all-out effort to sell your home.

Listing contract
A contract with the broker or firm you hire to represent you in the sale of your home, according to the terms of the sale that you specify. In exchange for producing a ready, willing and able buyer for you, the sales associate is paid a commission. See listing agreements.

Money borrowed that is usually repaid with interest.

Loan application fee
A lender’s fee that you must pay when applying for a mortgage.

Loan fraud
Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan origination fee
A fee, usually one to four points, charged by the lender for processing your mortgage.

Loan-to-Value Ratio (LTV)
The ratio of mortgage amount to appraised value or sales price of real property. Used by lenders to determine maximum loan amounts set by secondary market investors and/or government insuring agencies.

Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Locking Your Rate
A procedure where a lender agrees to lock-in a specific interest rate (initial interest rate in the case of an adjustable rate mortgage) on a mortgage loan request for a specified period of time.


An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.

Most lenders will offer adjustable-rate mortgages that state a margin which is added to the index to get the rate upon which payments are based.

The date on which the principal balance of a loan, bond or other financial instrument becomes due and payable.

A lien on the property that secures the Promise to repay a loan.

Mortgage banker
A company that originates loans and resells them to secondary mortgage lenders such as Fannie Mae or Freddie Mac.

Mortgage broker
A firm that originates and processes loans for a number of lenders.

Mortgage insurance
A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Mortgage insurance premium (MIP)
A monthly payment -usually part of the mortgage payment – paid by a borrower for mortgage insurance.

Mortgage Life Insurance
Term life insurance paid by the borrower in which the amount of coverage decreases as the mortgage balance declines. In the event the borrower dies while the policy is in force, the debt is automatically satisfied by the insurance proceeds.

The lender in a mortgage agreement.

The borrower in a mortgage agreement.

Multiple Listing Service (MLS)
A networking system, frequently on computer, in which a number of real estate firms share information about their clients’ houses that are for sale.


National Association of Home Builders
The National Association of Home Builders (NAHB) is a federation of more than 800 state and local builders associations throughout the United States. The mission of this Washington, D.C.-based trade association is to enhance the climate for housing and the building industry, and to promote policies that will keep housing a national priority. Chief among NAHB’s goals is providing and expanding opportunities for all consumers to have safe, decent and affordable housing. About one-third of NAHB’s 190,000 members are home builders and/or remodelers. The remainder of the membership consists of associates working in closely related fields — such as mortgage finance and building products and services — within the housing industry.

National Association of REALTORS®
Founded in 1908, NAR has grown from its original nucleus of 120 to today’s 720,000 members. NAR is composed of residential and commercial REALTORS®, who are brokers, salespeople, property managers, appraisers, counselors and others engaged in all aspects of the real estate industry. Members belong to one or more of some 1,700 local associations/boards and 54 state and territory associations of REALTORS®. They can join one of many institutes, societies and councils. NAR offers members the opportunity to be active in appraisal and international real estate specialty sections. REALTORS® are pledged to a strict Code of Ethics and Standards of Practice.

Negative amortization
The increasing of a debt. In the case of a mortgage, the principal is increased.

Net worth
The value of all of a person’s assets, including cash, minus all liabilities.

A loan that is not eligible to be purchased by Fannie Mae or Freddie Mac.

Nonliquid asset
An asset that cannot easily be converted into cash.

A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Offer to purchase
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property. (Each of these means the same thing offer to purchase, or purchase offer, or earnest money agreement, or contract of purchase, or deposit receipt.)


Offer to purchase of sale/sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that outlines all details of the property transaction. (Same as “acceptance/contract of sale/sales contract.”)

Open House
When the seller’s real estate agent opens the seller’s house to the public. You don’t need a real estate agent to attend an open house.

Open listing
A listing contract in which you hire more than one firm or person to sell your home, and only the one who produces the buyer is entitled to the commission. See listing agreements.

The process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Origination fee
The charge for originating a loan; is usually calculated in the form of points and paid at closing.


Pest Inspection
May be required on new loans to determine if there is an infestation of termites or other pests in the home.

Borrowers often use a “piggyback” second mortgage in conjunction with a first mortgage so that they do not have to provide a 20 percent down payment in order to avoid PMI.

Principal, Interest, Taxes, and Insurance – the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner’s and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.

Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.

An amount equal to 1 percent of a mortgage (not sale price) that is paid at closing. A point is usually considered to be prepaid interest — interest paid up front that represents the difference between the interest being charged on the mortgage and the rate the lender wants to receive.

Fees charged by lenders. One point equals one percent of the mortgage amount.

Power of attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

Pre-Qualification Letter
A letter from a mortgage lender that states that you’re pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.

A lender informally determines the maximum amount an individual is eligible to borrow.

Preapproved buyer
Preapproval is more in-depth and gives the buyer more buying strength. The lender makes a credit decision based on the information gathered from and about the buyer. The buyer is then preapproved for a mortgage amount of “X,” with maximum interest rate of “Y”. The buyer now has the strength of a cash buyer.

An amount paid on a regular schedule by a policyholder that maintains insurance coverage.

Prepayment penalties
A penalty charged for paying off a mortgage early.

Prequalified buyer
A buyer can be prequalified for a loan based on non-verified income and credit information provided by the buyer. The prequalification, which is usually done over the phone, is the opinion of the loan originator and does not represent a formal loan approval.

Prime rate
The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

The amount borrowed from a lender; doesn’t include interest or additional fees.

Property Tax
The tax assessed on the property by the local government (e.g. city, county, village or township) for the various services provided to the property owner. Services may include police and fire department, garbage pick up and snow removal.

PUD (Planned Unit Development)
A real estate project in which each unit owner has title to a residential lot and a nonexclusive easement on the common areas of the project.

Purchase Contract (Purchase Offer)
A document that lists the price, conditions and terms under which the buyer is willing to purchase a property.

Purchase offer
A document that lists the price, conditions and terms under which the buyer is willing to purchase the property. (Each of these means the same thing offer to purchase, or purchase offer, or earnest money agreement, or contract of purchase, or deposit receipt.)


Qualifying ratios
Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quitclaim deed
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.


A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Rate adjustment periods
With most ARMs, any periodic adjustment in the interest rate changes the payment. Adjustment periods tend to reflect the period of the index of the most popular ARMs; currently, annual adjustments are the most common.

Real estate agent
An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

An active member of a local board of realtors. Local boards are affiliated with the National Association of REALTORS®.

The public official who keeps records of transactions that affect real property in the area. Sometimes known as a “Registrar of Deeds” or “County Clerk.”

The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage or an extension of mortgage, thereby making it a part of the public record.

Recording Fees
Charged by the county recorder’s office for the filing of documents or details of a legal document to make them a matter of public record. Usually requires the witnessing and notarizing of the documents to be recorded.

Getting a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation mortgage
A mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages – like the FHA’s 203(k) – allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.

Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships

Revolving Debt
A debt that does not have a fixed payment, although repayment is usually a percentage of the outstanding balance and made at regular intervals; most common are credit cards issued by banks and department stores.

Rural Housing Service (RHS)
An agency within the Department of Agriculture, which operates principally under the Consolidated Farm and Rural Development Act of 1921 and Title V of the Housing Act of 1949. This agency provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. Funds are borrowed from the U.S. Treasury.


Second Mortgage
A mortgage that is in a second position behind (or subordinate to) the original first mortgage; see also Junior Lien. A second mortgage is a good alternative to refinancing when one has an original first mortgage loan with a low interest rate. A second mortgage will give the borrower a lump sum of funds to use as needed. The qualification process and debt-to-income ratio requirement are the same as refinancing.

Secondary Mortgage market
The buying and selling of existing mortgages.

Secured loan
A loan that is backed by collateral.

The property that will be pledged as collateral for a loan.

Another name for closing.

SFR (Single-Family Residence)
A structure intended to house one family.

Special Forbearance
A loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments.

Step-Rate Mortgage
A mortgage that allows for the interest rate to increase according to a specified schedule (i.e., seven years), resulting in increased payments as well. At the end of the specified period, the rate and payments will remain constant for the remainder of the loan.

A housing development that is created by dividing a tract of land into individual lots for sale or lease.

To place in a rank of lesser importance or to make one claim secondary to another.

A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Sweat equity
Using labor to build or improve a property as part of the down payment

The right to ownership in real estate, which is transferred by a deed. Evidence of ownership in real estate.


Title insurance
Insurance, usually paid through a single premium at closing, that insures the owner against loss because of a claim against the title that was not found in the title search.

Title search
The process of checking all the records relating to the title to see that it doesn’t have any liens or claims against it that would keep it from being transferred.

A federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.

Two-step Mortgage
An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its mortgage term and a different interest rate for the remainder of the amortization term.


The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.

Uniform Residential Loan Application
A standard mortgage application your lender will ask you to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Unsecured Loan
A loan that is not backed by collateral.


Department of Veterans Affairs, formerly known as the Veteran’s Administration- a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.

Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge. See Home Warranties.


The creation of districts by local governments in which specific types of property uses are authorized (e.g., commercial, industrial, residential, high density, mixed use).