FTC Real Estate Vocab

https://www.ftc.gov/sites/default/files/documents/one-stops/real-estate-competition/realestateglossary.pdf

Annual Percentage Rate (APR)

The cost of a loan or other financing as an annual rate. The APR includes the interest rate

Annuity

An amount paid yearly or at other regular intervals

Application Fee

The fee that a mortgage lender or broker charges to apply for a mortgage to cover processing costs.

Appraisal

A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.

Appraiser

A professional who conducts an analysis of the property

Appreciation

An increase in the market value of a home due to changing market conditions and/or home improvements.

Arbitration

"A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with
the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard

Asbestos

A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases

Assessed Value

Typically the value placed on property for the purpose of taxation.

Assessor

A public official who establishes the value of a property for taxation purposes.

Asset

Anything of monetary value that is owned by a person or company. Assets include real property

Assignment of Mortgage

A document evidencing the transfer of ownership of a mortgage from one person to another.

Assumable Mortgage

A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the seller's existing mortgage

the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due-on-sale clause

the loan may not be assumed without the lender's consent.

Assumption

A homebuyer's agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Assumption Fee

A fee a lender charges a buyer who will assume the seller's existing mortgage.

Automated Underwriting

An automated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.

Balance Sheet

A financial statement that shows assets

Balloon Mortgage

A mortgage with monthly payments often based on a 30-year amortization schedule

Balloon Payment

A final lump sum payment that is due

Bankruptcy

Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.

Before-tax Income

Income before taxes are deducted. Also known as "gross income."

Biweekly Payment Mortgage

A mortgage with payments due every two weeks (instead of monthly).

Bona fide

In good faith

Bridge Loan

A short-term loan secured by the borrower's current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold. Also known as a "swing loan."

Broker

An individual or firm that acts as an agent between providers and users of products or services

Building Code

Local regulations that set forth the standards and requirements for the construction

Buydown

An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower's monthly payments

Buydown Account

An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.

Cap

For an adjustable-rate mortgage (ARM)

Capacity

Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security)

Cash-out Refinance

A refinance transaction in which the borrower receives additional funds over and above the amount needed to repay the existing mortgage

Certificate of Deposit

A document issued by a bank or other financial institution that is evidence of a deposit

Certificate of Eligibility

A document issued by the U.S. Department of Veterans Affairs (VA) certifying a veteran's eligibility for a VA-guaranteed mortgage loan.

Chain of Title

The history of all of the documents that have transferred title to a parcel of real property

Change Orders

A change in the original construction plans ordered by the property owner or general contractor.

Clear Title

Ownership that is free of liens

Closing

The process of completing a financial transaction. For mortgage loans

Closing Agent

The person or entity that coordinates the various closing activities

Closing Costs

"The upfront fees charged in connection with a mortgage loan transaction. Money paid by a buyer (and/or seller or other third party

Closing Date

The date on which the sale of a property is to be finalized and a loan transaction completed. Often

Closing Statement

See "HUD-1 Settlement Statement."

Co-borrower

Any borrower other than the first borrower whose name appears on the application and mortgage note

Collateral

An asset that is pledged as security for a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan agreement. In the case of a mortgage

Commission

The fee charged for services performed

Commitment Letter

A binding offer from your lender that includes the amount of the mortgage

Common Areas

Those portions of a building

Comparables

An abbreviation for "comparable properties

Concession

Something given up or agreed to in negotiating the sale of a house. For example

Condominium

A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right

these are owned by the condominium association. There are usually condominium association fees for building maintenance

property upkeep

Construction Loan

A loan for financing the cost of construction or improvements to a property

the lender disburses payments to the builder at periodic intervals during construction.

Contingency

A condition that must be met before a contract is legally binding. For example

the sales contract is not binding unless and until the purchaser has the home inspected.

Conventional Mortgage

A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies

Conversion Option

A provision of some adjustable-rate mortgage (ARM) loans that allows the borrower to change the ARM to a fixed-rate mortgage at specified times after loan origination.

Convertible ARM

An adjustable-rate mortgage (ARM) that allows the borrower to convert the loan to a fixed-rate mortgage under specified conditions.

Cooperative (Co-op) Project

A project in which a corporation holds title to a residential property and sells shares to individual buyers

Cost of Funds Index (COFI)

An index that is used to determine interest rate changes for certain adjustable-rate mortgage (ARM) loans. It is based on the weighted monthly average cost of deposits

Counter-offer

An offer made in response to a previous offer. For example

Credit

The ability of a person to borrow money

Credit Bureau

A company that gathers information on consumers who use credit. These companies sell that information to lenders and other businesses in the form of a credit report.

Credit History

Information in the files of a credit bureau

Credit Life Insurance

A type of insurance that pays off a specific amount of debt or a specified credit account if the borrower dies while the policy is in force.

Credit Report

Information provided by a credit bureau that allows a lender or other business to examine your use of credit. It provides information on money that you've borrowed from credit institutions and your payment history.

Credit Score

A numerical value that ranks a borrower's credit risk at a given point in time based on a statistical evaluation of information in the individual's credit history that has been proven to be predictive of loan performance.

Creditor

A person who extends credit to whom you owe money.

Creditworthy

Your ability to qualify for credit and repay debts.

Debt

Money owed from one person or institution to another person or institution.

Debt-to-Income Ratio

The percentage of gross monthly income that goes toward paying for your monthly housing expense

Deed

The legal document transferring ownership or title to a property.

Deed-in-Lieu of Foreclosure

The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure. Also called a "voluntary conveyance."

Deed of Trust

A legal document in which the borrower transfers the title to a third party (trustee) to hold as security for the lender. When the loan is paid in full

Default

Failure to fulfill a legal obligation. A default includes failure to pay on a financial obligation

Delinquency

Failure to make a payment when it is due. The condition of a loan when a scheduled payment has not been received by the due date

Depreciation

A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

Discount Point

A fee paid by the borrower at closing to reduce the interest rate. A point equals one percent of the loan amount.

Down Payment

A portion of the price of a home

Due-on-Sale Clause

A provision in a mortgage that allows the lender to demand repayment in full of the outstanding balance if the property securing the mortgage is sold.

Earnest Money Deposit

The deposit to show that you're committed to buying the home. The deposit usually will not be refunded to you after the seller accepts your offer

Easement

A right to the use of

Employer-Assisted Housing

A program in which companies assist their employees in purchasing homes by providing assistance with the down payment

Encroachment

The intrusion onto another's property without right or permission.

Encumbrance

Any claim on a property

Equal Credit Opportunity Act (ECOA)

A federal law that requires lenders to make credit equally available without regard to the applicant's race

the fact that all or part of the applicant's income is derived from a public assistance program

or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. It also requires various notices to consumers.

Equity

The value in your home above the total amount of the liens against your home. If you owe $100

Escrow

An item of value

Escrow Account

An account that a mortgage servicer establishes on behalf of a borrower to pay taxes

Escrow Analysis

The accounting that a mortgage servicer performs to determine the appropriate balances for the escrow account

Eviction

The legal act of removing someone from real property.

Exclusive Right-to-Sell Listing

The traditional kind of listing agreement under which the property owner appoints a real estate broker (known as the listing broker) as exclusive agent to sell the property on the owner's stated terms

Exclusive Agency Listing

A listing agreement under which a real estate broker (known as the listing broker) acts as an exclusive agent to sell the property for the property owner

Executor

A person named in a will and approved by a probate court to administer the disposition of an estate in accordance with the instructions of the will.

Fair Credit Reporting Act (FCRA)

A consumer protection law that imposes obligations on (1) credit bureaus (and similar agencies) that maintain consumer credit histories

Fair Market Value

The price at which property would be transferred between a willing buyer and willing seller

Fannie Mae

A New York Stock Exchange company. It is a public company that operates under a federal charter and is the nation's largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers

Fannie Mae Seller/Servicer

A lender that Fannie Mae has approved to sell loans to it and to service loans on Fannie Mae's behalf.