Glossary

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  • 401(k)/403(b)

    401(k) plan –

    A qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit-sharing feature to the plan. Earnings accrue on a tax-deferred basis.

    403(b) plan –

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers.

    Generally, retirement income accounts can invest in either annuities or mutual funds.

    Also known as a “tax-sheltered annuity (TSA) plan.”

  • 401(k)/403(b) loan

    You will find the 401(k) and 403(b) plans similar: the contribution limits are the same; both plans allow employees to make contributions on a pre-tax basis; both plans have the ability to offer loans to employees; and, for both plans, employees must meet certain requirements to be able to withdraw assets from the plan.

    The key difference between 403(b) and 401(k) plans lies in the investment options.

    403b investments are limited to annuity contracts or mutual funds and money market funds (the type of 403(b) will determine whether the investment must be annuity contract or mutual fund). The investment options for 401(k) plans include any publicly-traded securities, mutual funds, options, etc. The plan may limit the investments to a selected list prepared by the plan administrator.

    When individuals are in a tight spot financially, they usually turn to 401(k) loans. The interest rate for the 401(k) loans are usually a point or two higher than the prime rate, but they can vary. By law, individuals are allowed to borrow the lesser of $50,000, or 50% of the total amount of the 401(k).

  • Acceleration clause

    A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.

  • Adjustable-rate mortgage (ARM)

    A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.

  • Adjustment date

    The date the interest rate changes on an adjustable-rate mortgage.

  • Amortization

    The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

  • Amortization schedule

    A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

  • Annual percentage rate (APR)

    This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual note rate on your loan.

  • Application

    The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more.

  • Appraisal

    A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.

  • Appraised value

    An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.

  • Appraiser

    An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.

  • Appreciation

    The increase in the value of a property due to changes in market conditions, inflation, or other causes.

  • Assessed value

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

  • Assessment

    The placing of a value on property for the purpose of taxation.

  • Assessor

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

  • Asset

    Items of value owned by an individual. Assets that can be quickly converted into cash are considered “liquid assets.” These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others.

  • Assignment

    When ownership of your mortgage is transferred from one company or individual to another, it is called an assignment.

  • Assumable mortgage

    A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan.

  • Assumption

    The term applied when a buyer assumes the seller’s mortgage.

  • Balloon mortgage

    A type of short-term mortgage. Balloon mortgages require borrowers to make regular payments for a specific interval, then pay off the remaining balance within a relatively short time. Some types of balloon mortgages can be interest-only for 10 years, and the final “balloon” payment to pay off the balance comes as one large installment at the end of the term.

  • Balloon payment

    An oversized payment due at the end of a mortgage, commercial loan or other amortized loan. Because the entire loan amount is not amortized over the life of the loan, the remaining balance is due as a final repayment to the lender.

    Balloon payments are often prepackaged into what are called “two-step mortgages.” In this type of mortgage, the balloon payment is rolled into a new or continuing amortized mortgage at the prevailing market rates.

    Balloon payments can occur within a fixed-rate or adjustable-rate mortgage (ARM).

  • Bankruptcy

    A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor’s assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy.

  • Bill of sale

    A document that details in writing a sale of goods or transfer of property from one party to another. A bill of sale serves as legal evidence that full consideration has been provided in a transaction and that the seller has transferred the rights to the assets detailed in the bill of sale to the buyer.

  • Bond market

    The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.

  • Bridge loan

    A short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as real estate or inventory.

    Also known as “interim financing”, “gap financing” or a “swing loan”.

  • Broker

    A licensed real estate professional who typically represents the seller of a property. A broker’s duties may include: determining market values, advertising properties for sale, showing properties to prospective buyers, and advising clients with regard to offers and related matters.

  • Bungalow

    A bungalow today is a residential building, normally detached, which is either single-story or has a second story built into a sloping roof, usually with dormer windows, and one-and-a-half stories tall.

  • Buydown

    A mortgage-financing technique with which the buyer attempts to obtain a lower interest rate for at least the first few years of the mortgage, but possibly its entire life. The builder or seller or the property usually provides payments to the mortgage-lending institution, which, in turn, lowers the buyer’s monthly interest rate and therefore monthly payment. The home seller, however, increases the purchase price of the home to compensate for the costs of the buydown agreement.

  • CABO

    An acronym for the Council of American Building Officials after many hours of technical academics, actual field experience, & completion of a test an inspector will be CABO certified or by the new title “ICC Residential Combination Inspector (International Code Council)

  • Call option

    Similar to the acceleration clause.

  • Cap

    The highest point to which an adjustable rate mortgage (ARM) can rise in a given time period or the highest rate that investors can receive on a floating-rate type bond. The issuer typically sets the cap at the time the contract is issued. With an ARM, it is detailed in the terms of the mortgage document.

  • Cash-out refinance

    A mortgage refinancing transaction in which the new mortgage amount is greater than the existing mortgage amount, plus loan settlement costs. The purpose of a cash-out refinance is to extract equity from the borrower’s home. A cash-out refinance is an alternative to a home equity loan.

  • Certificate of deposit

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years.

  • Certificate of deposit index

    The 12-month average of the most recently published dealer bid rates (yields) on nationally traded three-month certificates of deposit as reported in the H.15 Federal Reserve Statistical Release. The yields are annualized using a 360-day year. For purposes of determining CODI, “published” means first made available to the public by the Federal Reserve Board. The CODI index is calculated on or near the first Monday of each calendar month and is often used for adjustable rate mortgages.

  • Certificate of Eligibility

    A government-issued document which indicates that a member of the armed forces who serves a certain number of days and is honorably discharged can apply for a Veterans Administration (VA) loan, such as a VA mortgage.

  • Certificate of Reasonable Value (CRV)

    A document issued by the Department of Veterans Affairs as a prerequisite for a VA loan;it is based on an approved appraisal.It establishes the maximum value of the property for VA purposes and,as a result,the maximum size of the VA loan.

  • Chain of title

    The official record of ownership of a property or asset. The chain of ownership gets its name from its sequential nature; a chain of title traces historical title transfers from the current owner back to the original owner. Due to their critical importance in establishing ownership of a property or asset, rigorous and accurate title records are generally maintained by a centralized registry or system.

  • Clear title

    Also known as “clean title,” “just title,” “good title” and “free and clear title.” A clear title is a title without any kind of lien or levy from creditors or other parties and poses no question as to legal ownership. For example, an owner of a car with a clear title is the sole undisputed owner, and no other party can make any kind of legal claim to its ownership.

  • Closing

    The end of a trading session. The closing of a trading day halts trading on exchanges. After-hours trading still occurs until 8 pm.

    An action which will eliminate your position in a security. Closing a position is done by taking an action which will take away your exposure to risk.

  • Closing costs

    The expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction. Costs incurred include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges.

  • Closing statement

    A document commonly used in real estate transactions, detailing the fees, commissions, insurance, etc. that must be transacted for a successful transfer of ownership to take place. This document is prepared by a closing agent and is also known as a “settlement sheet”.

  • Cloud on title

    Any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property or make the title doubtful. Clouds on title are usually discovered during a title search. Clouds on title are resolved through initiating a quitclaim deed or a commencement of action to quiet title.

  • Co-borrower

    Any additional borrower(s) whose name(s) appear on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan. For mortgages, the names of applicable co-borrowers also appear on the property’s title.

  • Collateral

    Property or other assets that a borrower offers a lender to secure a loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. Because collateral offers some security to the lender in case the borrower fails to pay back the loan, loans that are secured by collateral typically have lower interest rates than unsecured loans. A lender’s claim to a borrower’s collateral is called a lien.

  • Collection

    Collection of funds (after futures positions have been marked to market) between clearing members and their respective clearing houses.

  • Commission

    A service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security. Most major, full-service brokerages derive most of their profits from charging commissions on client transactions. Commissions vary widely from brokerage to brokerage.

  • Common area assessments

    A fee paid by the members of a homeowner’s association or similar community association for the maintenance of a common area. Examples of spaces and facilities that may be included in the assessment are a pool, tennis court, parking area, or interior corridors (in a condominium). Golf courses are usually not included in the definition of common areas for assessment purposes.

  • Common law

    In the United States, a body of unwritten laws based on precedents established by the courts. Common law is used in deciding novel cases where the outcome cannot be determined based on existing statutes. The U.S. common-law system evolved from the precolonial system of English common law.

  • Community property

    A U.S. state-level legal distinction of a married individual’s assets. Property acquired by either spouse during the course of a marriage is considered community property. For example, an IRA in the name of an individual with a spouse, accumulated during the course of the marriage, would be considered community property.

  • Comparable sales

    The amount of revenue a retail location generated in the most recent accounting period, relative to the amount of revenue it generated in a similar period in the past. Comparable store sales are most commonly used to compare the most recent year’s holiday shopping season, to last year’s, or to compare this week, month, quarter or year’s sales to last week, month, quarter or year’s sales.

  • Condominium

    A large property complex that is divided into individual units and sold. Ownership usually includes a non-exclusive interest in certain “common properties” controlled by the condominium management.

  • Condominium conversion

    In real estate, a condominium conversion or condo conversion is the process of entitling an income property or other lands currently held under one title to convert from sole ownership of the entire property (which often already is a multi unit property) into individually sold units as condominiums. Such entitlement is generally derived from approvals granted by state/provincial and/or local municipal authorities (and often other relevant agencies, such as conservation authorities).

    Indeed, though, virtually every condominium project could be characterized as a conversion of property that is held generally under one title, to property that is severed into portions so that the title to most such portions (i.e., units) can be held separately. However, the term “conversion” is usually reserved for just those projects which involve changing the title (and sometimes also the use) of an existing structure, such as a multi-dwelling apartment building, row dwellings (townhomes) or a commercial multi-unit rental site.

  • Construction loan

    A construction loan (also called a home construction loan in the United States and self-build mortgage in the United Kingdom) is any value added loan where the proceeds are used to finance construction of some kind. In the United States Financial Services industry, however, a construction loan is a more specific type of loan, designed for construction and containing features such as interest reserves, where repayment ability may be based on something that can only occur when the project is built. Thus, the defining features of these loans are special monitoring and guidelines above normal loan guidelines to ensure that the project is completed so that repayment can begin to take place.

  • Contingency

    A potential negative economic event which may occur in the future. In finance, managers often attempt to identify and plan for any contingencies that they feel may occur with any significant likelihood. To mitigate risk, financial managers often err on the conservative side, assuming slightly worse-than-expected outcomes, and arranging a company’s affairs so that it can weather negative outcomes with the least distress possible.

  • Contract

    In common law legal systems, a contract (or informally known as an agreement in some jurisdictions) is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are “offer” and “acceptance” by “competent persons” having legal capacity who exchange “consideration” to create “mutuality of obligation.”

  • Conventional mortgage

    A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. About 35-50% of mortgages, depending on market conditions and consumer trends, are conventional mortgages. In other words, Fannie Mae and Freddie Mac guarantee or purchase 35-50% of all mortgages. Conventional mortgages may be fixed-rate or adjustable-rate mortgages.

  • Convertible ARM

    An Adjustable Rate Mortgage (ARM) that gives the borrower the option to convert to a fixed-rate mortgage. Convertible ARMs are marketed as a way to avoid rising interest rates and usually include specific conditions. The financial institution often charges a fee to switch the ARM to a fixed-rate mortgage.

  • Cooperative (co-op)

    A cooperative (“coop“) or co-operative (“co-op“) is an autonomous association of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit. Cooperatives include non-profit community organizations and businesses that are owned and managed by the people who use its services (a consumer cooperative) or by the people who work there (a worker cooperative) or by the people who live there (a housing cooperative), hybrids such as worker cooperatives that are also consumer cooperatives or credit unions, multi-stakeholder cooperatives such as those that bring together civil society and local actors to deliver community needs, and second and third tier cooperatives whose members are other cooperatives.

  • Cost of funds index (COFI)

    A cost of funds index or COFI is a regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating variable rate loans. The interest rate on an adjustable rate mortgage, for example, is often linked to a regional COFI specified in the particular loan documents. COFIs, in turn, are usually calculated by a self-regulatory agency like Federal Home Loan Banks. In California, for example, many home mortgage loans are indexed to the Federal Home Loan Bank of San Francisco. Interest rates on COFI loans and mortgages tend to fluctuate more slowly than variable-rate loans linked to other indexes. An index used to determine interest rate changes for some adjustable-rate mortgages. The 11th District Cost of Funds Index was first introduced in December of 1982. It is a National Monthly Median Cost of Funds defined as interest (dividends) paid or accrued on deposits for Western American Financial Institutions. It is calculated on the last day of the month.

  • Credit

    1. A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company.

    2. An accounting entry that either decreases assets or increases liabilities and equity on the company’s balance sheet. On the company’s income statement, a debit will reduce net income, while a credit will increase net income

  • Credit history

    A record of a consumer’s ability to repay debts and demonstrated responsibility in repaying debts. A consumer’s credit history consists of information such as: number and types of credit accounts, how long each account has been open, amounts owed, amount of available credit used, whether bills are paid on time, and number of recent credit inquiries. It also contains information regarding whether the consumer has any bankruptcies, liens, judgments or collections. This information is all contained on a consumer’s credit report.

  • Credit report

    A detailed report of an individual’s credit history prepared by a credit bureau and used by a lender to in determining a loan applicant’s creditworthiness, including:

    1. Personal data (current and previous addresses, social security number, employment history)
    2. Summary of credit history (number and type of accounts that are past-due or in good standing)
    3. Detailed account information
    4. Inquires into applicant’s credit history (number and type of inquiries into applicant’s credit report)
    5. Details of any accounts turned over to credit agency (such as information about liens, wages garnishments via federal, state or county records)
    6. Information on how to dispute any of the above information.

  • Credit repository

    Companies that collect, update, and store both financial and public information about the payment records of individuals who have applied for credit.

  • Creditor

    An entity (person or institution) that extends credit by giving another entity permission to borrow money if it is paid back at a later date. Creditors can be classified as either “personal” or “real.” Those people who loan money to friends or family are personal creditors. Real creditors (i.e. a bank or finance company) have legal contracts with the borrower granting the lender the right to claim any of the debtor’s real assets (e.g. real estate or car) if he or she fails to pay back the loan

  • Debt

    An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

  • Deed

    A legal document that grants the bearer a right or privilege, provided that he or she meets a number of conditions. In order to receive the privilege – usually ownership, the bearer must be able to do so without causing others undue hardship. A person who poses a risk to society as a result of holding a deed may be restricted in his or her ability to use the property.

  • Deed of trust

    In real estate in the United States, a deed of trust or trust deed is a deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender. The equitable title remains with the borrower. The borrower is referred to as the trustor, while the lender is referred to as the beneficiary.

  • Deed-in-lieu

    A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith.

  • Default

    1. The failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or are unwilling to honor the debt.

    2. The failure to perform on a futures contract as required by an exchange.

  • Delinquency

    The failure to accomplish what is required by law or duty, such as the failure to make a required payment or to perform a certain action. A delinquent is an individual or corporation with a contractual obligation to make payments against a loan in a timely manner, such as through a mortgage, but payments are not made on time. In the case of a mortgage, the lender can initialize foreclosure proceedings if the mortgage is not brought up to date within a certain amount of time.

  • Deposit

    1. A transaction involving a transfer of funds to another party for safekeeping.

    2. A portion of funds that is used as security or collateral for the delivery of a good.

  • Depreciation

    1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes.

    2. A decrease in an asset’s value caused by unfavorable market conditions.

  • Discount points

    A type of prepaid interest mortgage borrowers can purchase that lowers the amount of interest they will have to pay on subsequent payments. Each discount point generally costs 1% of the total loan amount and depending on the borrower, each point lowers your interest rate by one-eighth to one one-quarter of your interest rate. Discount points are tax deductible only for the year in which they were paid.

  • Down payment

    A type of payment made in cash during the onset of the purchase of an expensive good/service. The payment typically represents only a percentage of the full purchase price; in some cases it is not refundable if the deal falls through. Financing arrangements are made by the purchaser to cover the remaining amount owed to the seller.

  • Due-on-sale provision

    A provision in a mortgage contract that requires the mortgage to be repaid in full upon a sale or conveyance of partial or full interest in the property that secures the mortgage. Mortgages with a due-on-sale clause are not assumable. This clause helps protect lenders against below-market interest rates.

  • Earnest money deposit

    A deposit made to a seller showing the buyer’s good faith in a transaction. Often used in real estate transactions, earnest money allows the buyer additional time when seeking financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow account.

  • Earthcraft

    EarthCraft House is one of five programs within the EarthCraft suite of regional green building standards. The EarthCraft Program was created in 1999 as a partnership between the Greater Atlanta Home Builders Association and Southface Energy Institute and teaches builders the latest methods of resource and energy-efficient construction.

  • Easement

    The right of one party to use the property of another party. A fee is paid to the owner of the property in return for the right of easement. Easements are often purchased by public utility companies for the right to erect telephone poles or run pipes either above or beneath private property.

  • Effective age

    A calculation of the age of a building or other asset, based on its physical condition at a particular time, rather than on the actual time since it was built or made

  • Eminent domain

    The power the government has to obtain the property of an individual even without the person’s full consent. In most countries, including the U.S., the land owner will be compensated for the land at fair market value. This power allows the government to seize land to be used in public enterprises such as roads, schools, or utilities installations. Eminent domain is generally found in some form in most common law nations.

  • Encroachment

    A situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor’s land or by allowing something to hang over onto the neighbor’s property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbor’s boundaries.
    This is also known as structural encroachment.

  • Encumbrance

    A claim against a property by another party. Encumbrance usually impacts the transferability of the property and can restrict its free use until the encumberance is removed. The most common instances of an encumbrance occurs in real estate such as an outstanding mortgage or unpaid property taxes. However, encumbrance can also be used in an accounting context to refer to restricted funds inside an account that are to be used only for a specific liability.

  • Equal Credit Opportunity Act (ECOA)

    A regulation created by the U.S. government that aims to give all legal individuals an equal opportunity to apply for loans from financial institutions and other loan granting organizations. Individuals cannot be discriminated upon via factors that are not directly related to their creditworthiness.

  • Equity

    A stock or any other security representing an ownership interest.

  • Escrow

    A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. Securities, funds and other assets can be held in escrow.

  • Escrow account

    (1) A separate bank account for keeping money that is the property of others. Attorneys and real estate agents are required to keep escrow accounts for client money and not commingle client money with their own funds.

    (2) An accounting entry by a mortgage lender showing the amount on hand from the borrower’s monthly budget loan payments to pay real estate taxes and insurance when those bills become due.

  • Escrow analysis

    A lender’s periodic examination of an escrow account to determine if the lender is withholding enough funds from a borrower’s monthly mortgage payment to pay for expenses such as property taxes and insurance.

  • Escrow disbursements

    The dispensing of escrow funds for the payment of real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they are due.

  • Estate

    All of the valuable things an individual owns, such as real estate, art collections, collectibles, antiques, jewelry, investments and life insurance.

  • Eviction

    A landlord’s legal removal of a tenant from his rental property. Eviction may occur when rent has not been paid, when the terms of the rental agreement have been breached or in certain other situations, such as the conversion of the rental unit to a condo.

  • Examination of title

    An examination of public records to determine and confirm a property’s legal ownership, and find out what claims are on the property. A title search is usually performed by a title company or an attorney, who researches the vested owner, the liens or other judgments on the property, the loans on the property and the property taxes due.

  • Exclusive listing

    A real estate sale transaction in which a specified real estate agent stands to gain a commission if a property sells within a specified number of months, no matter how a buyer is found. The purpose of an exclusive listing is to motivate the agent to sell the property quickly and at the highest price possible. However, if a homeowner signed an exclusive listing agreement with an agent and also placed an ad for the property, and if the buyer found out about the property from the ad, the real estate agent would still earn a commission unless the seller has also established exclusive agency (the right of the seller to sell the property himself and avoid paying a commission despite the exclusive listing agreement)

  • Executor

    An individual appointed to administrate the estate of a deceased person. The executor’s main duty is to carry out the instructions and wishes of the deceased. The executor is appointed either by the testator of the will (the individual who makes the will) or by a court, in cases where there was no prior appointment.

  • Fair Credit Reporting Act

    The act that regulates the collection of credit information and access to your credit report. It was passed in 1970 to ensure fairness, accuracy and privacy of the personal information contained in the files of the credit reporting agencies. It requires that any person or entity requesting your report must demonstrate a permissible purpose for the information before it is released. It also designates the Federal Trade Commission (FTC) as the enforcement authority for the provisions of the act.

  • Fair market value

    The price that a given property or asset would fetch in the marketplace, subject to the following conditions:

    1. Prospective buyers and sellers are reasonably knowledgeable about the asset; they are behaving in their own best interests and are free of undue pressure to trade.

    2. A reasonable time period is given for the transaction to be completed.

    Given these conditions, an asset’s fair market value should represent an accurate valuation or assessment of its worth.

  • Fannie Mae (FNMA)

    A government-sponsored enterprise (GSE) that was created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae is a publicly traded company which operates under a congressional charter that directs Fannie Mae to channel its efforts into increasing the availability and affordability of homeownership for low-, moderate- and middle-income Americans.

  • Fannie Mae’s Community Home Buyer’s Program

    A community lending model based on borrower income in which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase the buying power for a low- or moderate-income family and to decrease the total amount of cash needed to purchase a home.

  • Federal Housing Administration (FHA)

    A United States government agency that provides mortgage insurance to qualified, FHA-approved lenders. FHA mortgage insurance helps protect lenders from losses associated with mortgage default; if a borrower defaults on a loan, the FHA will pay a specified claim amount to the lender.

  • Fee simple

    In English law, a fee simple (or fee simple absolute) is an estate in land, a form of freehold ownership. It is the way that real estate is owned in common law countries, and is the highest ownership interest possible that can be had in real property. Allodial title is reserved to governments under a civil law structure. Fee simple ownership represents an ownership interest in real property, though it is limited by government powers of taxation, eminent domain, police power, and escheat, and it could also be limited further by certain encumbrances or conditions in the deed, such as, for example, a condition that required the land to be used as a public park, with a reversion interest in the grantor if the condition fails; this is a fee simple conditional.

  • Fee simple estate

    The law recognizes this form of estate (ownership) in real estate as the highest form. The property owner is entitled to full enjoyment of the property, limited only by zoning laws, deed or subdivision restrictions or covenants.

    The duration of this ownership is not limited and can be passed along in a will to the owner’s heirs.

  • FHA mortgage

    A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loans allow the borrower to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers.

  • Firm commitment

    1. A lending institution’s promise to enter into a loan agreement with a specific entity within a certain period of time.

    2. An underwriter’s agreement to assume all inventory risk and purchase all securities directly from the issuer for sale to the public at the price specified.

  • First mortgage

    A mortgage in a first lien position on the property that secures the mortgage. A first mortgage has priority over all other liens or claims on a property in the event of default.

  • Fixed-rate mortgage

    A mortgage that has a fixed interest rate for the entire term of the loan. The distinguishing factor of a fixed-rate mortgage is that the interest rate over every time period of the mortgage is known at the time the mortgage is originated. The benefit of a fixed-rate mortgage is that the homeowner will not have to contend with varying loan payment amounts that fluctuate with interest rate movements.

  • Fixture

    Movable furniture, fixtures or other equipment that are have no permanent connection to the structure of a building or utilities. These items depreciate substantially but definitely are important costs to consider when valuing a company, especially in liquidation.

  • Flood insurance

    A financial instrument that protects real property owners from water damage to the structure and/or contents of their property. While flood insurance can be purchased through many different insurance companies, all policies are federally regulated so that the same policy costs the same amount no matter which company it is purchased through.

  • Foreclosure

    A situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. One month after the homeowner misses a mortgage payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, assuming the mortgage is still delinquent and the homeowner has not made up the missed payments within a specified grace period, the lender will begin to foreclose. The farther behind the borrower falls, the more difficult it becomes to catch up, since lenders add fees for payments that are 10 to 15 days late.

  • Government loan (mortgage)

    A mortgage loan insured or backed by the Department of Veterans Affairs, the Rural Housing Service, or the Federal Housing Administration.

  • Government National Mortgage Association (Ginnie Mae)

    A U.S. government corporation within the U.S. Department of Housing and Urban Development (HUD). Ginnie May aims to:

    1. Ensure liquidity for government-insured mortgages, including those insured by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Rural Housing Administration (RHA).
    2. Bring investors’ capital into the market for these types of loans, so that the issuers have the means to issue more.

    Most of the mortgages securitized as Ginnie Mae mortgage-backed securities (MBSs) are those guaranteed by FHA, which are typically mortgages for first-time home buyers and low-income borrowers.

  • Grantee

    The recipient of some type of property. In its most literal sense, a grantee is the recipient of a grant, a sum of money intended to fund a specific undertaking (like a college education or a research project). In real estate, the grantee is the recipient of a property – the person who will be taking title, as named in the the legal document used to transfer the real estate. The person who is relinquishing the property is called the grantor.

  • Grantor

    1. A seller of either call or put options who profits from the premium for which the options are sold. Synonymous with option writer.

    2. The creator of a trust, meaning the individual whose assets are put into the trust.

  • Gross Lease

    A type of commercial lease where the landlord pays for the building’s property taxes, insurance and maintenance. A gross lease can be modified in a number of ways to best meet the needs of a particular building’s tenants (for example, a gross lease may or may not require the tenant to pay utility bills).

  • Growing-equity mortgage (GEM)

    A fixed rate mortgage on which the monthly payments increase over time according to a set schedule. The interest rate on the loan does not change, and there is never any negative amortization. In other words, the first payment is a fully amortizing payment. As the payments increase, the additional amount above and beyond what would be a fully amortizing payment is applied directly to the remaining balance of the mortgage, shortening the life of the mortgage and increasing interest savings.

  • Home equity loan

    A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home. The loan is based on the difference between the homeowner’s equity and the home’s current market value. The mortgage also provides collateral for an asset-backed security issued by the lender and sometimes tax deductible interest payments for the borrower.

  • Homeowner’s insurance policy

    A form of property insurance designed to protect an individual’s home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.

  • Homestead

    A homestead consists of a dwelling, often a farm house together with other buildings and associated land. Historically it referred to land claimed by settler or squatter under the Homestead Act (USA) or Dominion Lands Act (Canada). A homestead may be a ranch, station or a large agricultural operation of some other designation. In Old English the term was used to mean a human settlement, and in Southern Africa the term is used for a cluster of several houses normally occupied by a single extended family.

  • Independent contractor

    A self-employed taxpayer that controls his or her own employment circumstances, including when and how work is done. Independent contractors are not considered to be employees and must pay their own Social Security tax.

    It is up to the employer to correctly classify each worker as either an independent contractor or an employee.

  • Involuntary lien

    Claim imposed against a property without the consent of its owner(s). Involuntary liens are placed usually by government revenue authorities for unpaid duties or taxes.

  • Joint tenancy

    A type of property right where two or more people own or rent a property together, each with equal rights and obligations, until one owner dies. Upon an owner’s death, that owner’s interest in the property passes to the survivors without the property having to go through probate.

  • Land contract

    An agreement between a buyer and seller of property in which the buyer makes payments toward full ownership (as with a mortgage), but in a land contract, the title or deed is held by the owner until the full payment is made. This type of contract is technically not a legally binding agreement and, therefore, many different types of payment formats can be found.

  • Lease option

    An agreement that gives a renter the choice to purchase a property during or at the end of the rental period. As long as the lease option period is in effect, the landlord/seller may not offer the property for sale to anyone else.

  • Lease purchase

    A Lease-Purchase Contract, also known as a Lease Purchase Agreement, is the heart of Rent-To-Own properties. It combines elements of a traditional rental agreement with an exclusive right of first refusal option for later purchase on the home. It is a shortened name for Lease with Option to Purchase Contract.

  • LEED

    Leadership in Energy and Environmental Design (LEED) is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods.

    Developed by the U.S. Green Building Council (USGBC), LEED is intended to help building owners and operators be environmentally responsible and use resources efficiently. Proposals to modify the LEED standards are offered and publicly reviewed by USGBC’s member organizations, which number almost 20,000

  • Liquidated damages

    Present in certain legal contracts, this provision allows for the payment of a specified sum should one of the parties be in breach of contract.

  • Lis pendens

    An official notice to the public that a lawsuit has been filed. Lis Pendens refers to the concept that any buyer of property must assume any litigation that exists pertaining to the property. If a buyer purchases a lot that a bank was suing the former owner for, then the new owner must face the lawsuit. Sale of the property will not prevent the plaintiff from seeking redress via litigation.

  • Listing agreement

    A document in which a property owner (as principal) contracts with a real estate broker (as agent) to find a buyer for the owner’s property. A listing agreement is executed by an owner to give a real estate broker the authority to act as the owner’s agent in the sale of the owner’s property, for which service the owner agrees to pay a commission. Unlike a real estate contract, a listing agreement is an employment contract in which the broker is hired to represent the principal, but no real property is transferred between the two.

  • Listing broker

    A licensed real-estate agent that contractually secures the right to sell a property on behalf of the property owner. Listing brokers are different from selling brokers, but may share in the same commission. also called listing agent.

  • Loan origination fee

    An up-front fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. Origination fees are quoted as a percentage of the total loan and are generally between 0.5% and 1% on mortgage loans in the United States.

  • Loan-to-value ratio

    A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. Typically, assessments with high LTV ratios are generally seen as higher risk and, therefore, if the mortgage is accepted, the loan will generally cost the borrower more to borrow or he or she will need to purchase mortgage insurance.

  • Market value

    Market value or OMV (Open Market Valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.

  • Marketable title

    Marketable title (real estate) is a title that a court of equity considers to be so free from defect that it will legally force its acceptance by a buyer. Marketable title does not assume that absolute absence of defect, but rather a title that a prudent, educated buyer in the reasonable course of business would accept. For real estate practitioners, the most complete reference to title issues is found in the preprinted wording contained within an agreement/contract. If you cannot produce a clear title of deed to the property then the prospective buyer should expect to lose in a specific performance action.

  • Mechanic’s lien

    A guarantee of payment to builders, contracters and construction firms that build or repair structures. Mechanic’s liens also extend to suppliers of materials and subcontractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of liquidation.

    A mechanic’s lien is also known as “artisans’ liens” or “materialmen’s liens” .

  • Mortgage

    A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as “liens against property” or “claims on property.” If the borrower stops paying the mortgage, the bank can foreclose.

  • Mortgage banker

    A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages. After a mortgage is originated, a mortgage banker might retain the mortgage in portfolio, or they might sell the mortgage to an investor. Additionally, after a mortgage is originated, a mortgage banker might service the mortgage, or they might sell the servicing rights to another financial institution. A mortgage banker’s primary business is to earn the fees associated with loan origination. Most mortgage bankers do not retain the mortgage in portfolio.

  • Mortgage broker

    An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or a yield spread premium from the lender as compensation for its services.

  • Mortgage lien

    A mortgage lien is a a form of conditional ownership of your property claimed by your home loan provider. Since your lender has a claim on your home, you need to keep up with your payment obligations or risk losing your property to foreclosure. When you complete your repayment commitment as set out in your mortgage contract, the lien goes away and you own your home free and clear.

  • Mortgagee

    A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as “liens against property” or “claims on property.” If the borrower stops paying the mortgage, the bank can foreclose.

  • Mortgagor

    An individual or company who borrows money to purchase a piece of real property. By granting the lender an interest in the property, which allows it to lend the funds with an accurate assessment of risk, the mortgagor provides the lender with a guarantee for the full repayment of the loan. Also known as a “chargor”.

  • Multiple-listing service (MLS)

    A service provided by a group of real estate brokers. They band together to create a Multiple Listing Service that allows each of them to list each other’s houses. Under this arrangement, the listing broker and the selling broker split the commission for each sale.

  • Open listing

    A property listing that uses multiple real estate agents in order to sell it and get it off the market. With an open listing, the agent that sells the property collects the commission.
    An open listing can also refer to an owner who sells his/her home or property on his/her own without paying a commission to a real estate agent.

  • Payment cap
    The maximum periodic payment a borrower may be charged on a contract or agreement. For example, an adjustable-rate mortgage may have a payment cap stating that a payment will not rise over a certain level, even if the formula used to calculate the payment would have it do so. A payment cap reduces the risk of the party making the payments.
  • Percolation test

    A percolation test (from percolation, colloquially called a perc test) is a test to determine the absorption rate of soil for a septic drain field or “leach field”. The results of a percolation test are required to properly design a septic system. In its broadest terms, percolation testing is simply observing how quickly a known volume of water dissipates into the subsoil of a drilled hole of known surface area. While every jurisdiction will have its own laws regarding the exact calculations for the length of line, depth of pit, etc., the testing procedures are the same.

  • Power of attorney

    A legal document giving one person (called an “agent” or “attorney-in-fact”) the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal’s property and finance. The power of attorney is frequently used in the event of a principal’s illness or disability, or when the principal can’t be present to sign necessary legal documents for financial transactions.

  • Pre-Approval

    An evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend. The pre-approval process involves a thorough look into the income and expenses of the borrower, including a look at the borrower’s credit report and score.

  • Pre-Qualification

    An initial evaluation of the credit worthiness of a potential borrower that is used to determine the estimated amount that the person can afford to borrow. Pre-qualification is a relatively simple and quick process of examining the potential borrower’s income and expenses in order to generate an estimated borrowing range that they would likely be able to repay to the lender

  • Prepayment penalty

    DEFINITION of ‘Prepayment Penalty’

    A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed. The penalty is usually based on percentage of the remaining mortgage balance or a certain number of months worth of interest.

    A prepayment penalty that applies to both the sale of a home and a refinancing transaction is called a “hard” prepayment penalty. A prepayment penalty that applies to refinancing only is called a “soft” prepayment penalty.

  • Primary mortgage market

    The market where borrowers and mortgage originators come together to negotiate terms and effectuate mortgage transaction. Mortgage brokers, mortgage bankers, credit unions and banks are all part of the primary mortgage market.

  • Primary mortgage market

    The market where borrowers and mortgage originators come together to negotiate terms and effectuate mortgage transaction. Mortgage brokers, mortgage bankers, credit unions and banks are all part of the primary mortgage mark

  • Private mortgage insurance (PMI)

    A risk-management product that protects lenders against loss if a borrower defaults. Most lenders require private mortgage insurance (PMI) for loans with loan-to-value (LTV) percentages in excess of 80% (the buyer put down less than 20% of the home’s value upon purchase). This allows borrowers to make a smaller down payment of 3% to 19.99%, instead of 20%, allowing them to obtain a mortgage sooner since they don’t have to save up as much money. Borrowers pay their PMI monthly until they have accumulated enough equity in the home that the lender no longer considers them high risk.

  • Procuring cause

    The legal definition of procuring cause would be “the cause that results in the attainment of a stated goal”. In real estate it would take on the meaning of the real estate agent or broker who, by their actions in producing a buyer, brought about the sale of a property.

  • Promissory note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date. A promissory note typically contains all the terms pertaining to the indebtedness by the issuer or maker to the note’s payee, such as the amount, interest rate, maturity date, date and place of issuance, and issuer’s signature. The 1930 international convention that governs promissory notes and bills of exchange also stipulates that the term “promissory note” should be inserted in the body of the instrument and should contain an unconditional promise to pay.

  • Prorations

    A situation during a corporate action in which the available cash or shares are not sufficient to satisfy the offers tendered by shareholders. Therefore, a proportion of both cash and shares is granted for each offer tendered.

  • Quiet title

    A lawsuit filed to establish ownership of real estate when ownership is in question. Real estate owners want to ensure that they have a clear title, meaning that there are no liens or levies against the title and no disputes over the property’s ownership. These possible problems are known as clouds on the title and can be resolved by an action to quiet title.

  • Quitclaim deed

    A deed releasing a person’s interest in a property without stating the nature of the person’s interest or rights, and with no warranties of that person’s interest or rights in the property. A quitclaim deed neither states nor guarantees that the person relinquishing their claim to the property had valid ownership, but it does prevent that person (the grantor) from later claiming he/she has an interest in the property. A quitclaim deed usually includes a legal description of the property, the name of the person who is transferring his/her interest, the name of the person who is receiving that interest (the grantee), the date and both parties’ notarized signatures.

  • R-Value

    Is a measure of thermal resistance used in the building and construction industry.  The efficiency of insulation of a house.

  • Ranch

    A ranch is an area of landscape, including various structures, given primarily to the practice of ranching, the practice of raising grazing livestock such as cattle or sheep for meat or wool. The word most often applies to livestock-raising operations in Mexico, the western United States and Canada, though there are ranches in other areas. People who own or operate a ranch are called ranchers, or stockgrowers. Ranching is also a method used to raise less common livestock such as elk, American bison or even ostrich, emu, and alpacas.

  • Rate cap
    1. A provision of an adjustable rate mortgage limiting how much interest rates may increase in a single adjustment period.
    2. An options contract which puts an upper limit on a floating exchange rate. The writer of the cap has to pay the holder of the cap the difference between the floating rate and the reference rate when that reference rate is breached. There is a premium to be paid by the buyer of such a contract in order to gain the certainty of a maximum payout.
  • Real Estate Settlement Procedures Act (RESPA)

    The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

  • REALTOR®

    A registered trademark term reserved for the sole use of active members of local REALTOR boards affiliated with the National Association of REALTORS.

  • Recording

    The act of entering or recording documents affecting or conveying interests in real estate in the recorder’s office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers mortgagees.

  • Regulation Z

    Implements the Truth-in-Lending-Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.

  • Restrictive covenants

    A clause in a deed that limits the way the real estate ownership may be used. Otherwise known as “Protective Covenants”.

  • Reverse-annuity mortgage (RAM)

    A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.

  • Sales comparison approach

    The process of estimating the value of a property by examining and comparing it against actual sales of comparable properties.

  • Salesperson

    A person who performs real estate activities while employed by or associated with a licensed real estate broker. A salesperson may also hold a broker’s license, but acts as a salesperson under the direction of a brokerage.

  • Satisfaction of mortgage

    A document acknowledging the payment of a mortgage debt.

  • Secondary mortgage market

    A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called secondary money market. Mortgages are first originated in the primary mortgage market.

  • Setback

    The amount of space local zoning regulation requires between a lot line and a building line.

  • Severalty

    Ownership of real property by one person only; also called sole ownership.

  • Severance

    Changing an item or real estate to personal property by detaching it from the land; for example, cutting down a tree.

  • Special assessment

    A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.

  • Specific performance

    A legal action to compel a party to carry out the terms of a contract.

  • Square-foot method

    The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.

  • Steering

    The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.

  • Subagent

    One who is employed by a person already acting as an agent. Typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement. For further explanation, see Agency Relations.

  • Survey

    The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.

  • Tax deed

    An instrument, similar to a certificate of sale, given to a purchaser at a tax sale.

  • Tax lien

    A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

  • Tax sale

    A court-ordered sale of real property to raise money to cover delinquent taxes.
    Time is of the essence -A phrase in a contract that requires the performance of a certain act within a stated period of time.

  • Time-share

    A form of ownership interest that may include an estate interest in property an which allows use of the property for a fixed or variable time period.

  • Title insurance

    A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.

  • Title search

    The examination of public records relating to real estate to determine the current state of the ownership.

  • Transfer tax

    Tax stamps required to be affixed to a deed by state and/or local law.

  • Trust deed

    A deed executed by a trustee conveying land held in a trust.

  • Trust deed lien

    A lien on the property of a trustor that secures a deed of trust loan.

  • Trustor

    A borrower in a deed of trust loan transaction.

  • Tudor

    Identified by their steeply pitched rooflines & decorative half-timbering.  Ranging from elaborate mansions to modest suburban residences.  Tudors often contrasted with areas of stone, stucco, or wooden claddings on gables or upper stories.

  • Unilateral contract

    A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

  • VA loan

    A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs in order to limit the lender’s possible loss. Click here for more information about VA loans.

  • Victorian

    Built between 1840-1915.  Originally simple in style, but by 1890’s, the style became more or ornate characterized by steep gables, gingerbread wood detailing, and vibrant colors.  Interiors featured hardwood floors, fireplaces & 9-12 ft ceilings.  Large porches were common.

  • Wraparound loan

    A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.

  • Zoning ordinance

    An exercise of police power by a municipality to regulate and control the character and use of property.