Real Estate Glossary
Adjustable-rate mortgage (ARM)
A mortgage that permits the lender to adjust the interest rate
periodically on the basis of changes in a specified index.
ALTA title policy
Title insurance policy with extended coverage that is issued for
the benefit of the lender.
A timetable schedule showing the amount of each payment applied
to interest and principal and the remaining balance after each payment
Annual percentage rate (APR)
The cost of a mortgage stated as a yearly rate; includes such
items as interest, mortgage, and loan origination fee (points).
A written analysis of the estimated value of a property prepared
by a qualified appraiser.
Association transfer fee
Paid to the homeowner’s association (if applicable).
Biweekly payment mortgage
A mortgage requiring payments every two weeks instead of the
standard monthly payment. The result for the borrower is a substantial
savings in interest.
A person who, for a commission or a fee, brings parties together
and assists in negotiating contracts between them.
Certificate of title
A statement provided by an abstract company title or
attorney stating that the title to real estate is legally held by the
A meeting at which a sale of a property is finalized by the
buyer signing the mortgage documents and paying closing costs.
An asset (such as a car or a home) that guarantees the repayment
of a loan.
The fee charged by a broker or agent for providing services
related to a real estate transaction such as procuring the property,
bringing the parties together, and negotiating a purchase contract or
A report on the past ability of a loan applicant to pay
The legal document conveying title to a property.
Also known as “points”, 1 point equals 1% of the loan amount.
The more points you pay, the lower your interest rate will be & vice
Earnest money deposit
A deposit made by the potential home buyer to show that he or
she is serious about buying the house.
A homeowner’s financial interest in a property.
A fee charged by the escrow company to handle the paperwork in
transferring title, adjusting taxes, distributing funds, etc. The fee is
based on the sales price & is usually split between the Buyer and Seller
Funds held by the lender for payment of taxes and insurance
when due usually does not include maintenance fees
A written contract that gives a licensed real estate agent
the exclusive right to sell a property for a specified time, but
reserving the owner’s right to sell the property himself without the
payment of a commission.
Fair Credit Reporting Act
A consumer protection law that regulates the disclosure of
consumer reports by consumer/credit reporting agencies and establishes
procedures for correcting mistakes on one’s credit record.
A thorough inspection that evaluates the structural and
mechanical condition of a property.
Cost of loan funds – always paid in arrears
The legal claim against a property that must be satisfied
before the property may be sold.
A written agreement in which the lender guarantees a
specified interest rate if a mortgage goes to closing within a set
period of time.
Charged by the homeowner’s association as set out in the
A legal document that pledges a property to the lender as
security for payment of a debt.
A contract that insures the lender against loss caused by a
mortgagor’s default on a government mortgage or conventional mortgage.
Mortgagee’s title policy
Required by the lender to insure that the lender has a valid
lien – does not protect the buyer, only the lender
The value of all of a person’s assets, including cash, minus
A fee the buyer pays the lender to originate a new loan
Owner’s title policy
Insures that the buyer has title to the property
1% of loan amount
The lender will require prepaid interest from the day of
funding to the first day of the following month
Charged by the lender for premature payment of a loan
The interest that banks charge to their preferred customers.
The amount borrowed or remaining unpaid.
Private mortgage insurance (PMI)
Insurance against a loss by a lender (mortgagee) in the
event of default by a borrower (mortgagor).
Real estate agent
A person licensed to negotiate and transact the sale of real
estate on behalf of the property owner.
A registered collective membership mark which identifies
real estate professionals who are members of the NATIONAL ASSOCIATION OF
REALTORS® and subscribe to its strict Code of Ethics.
An amount paid to the realtor as compensation for his/her
Charged by the county clerk to record documents in the
Certified copy of deed restrictions required by a lender
A drawing or map showing the precise legal boundaries of a
property, the location of improvements, easements, rights of way,
encroachment, and other physical features.
Certificates issued by taxing authorities showing the
current year’s taxes, the last year the taxes were paid, and any
delinquencies to be collected at closing
An account held by the lender to pay future taxes. Typically
a few months worth of taxes is collected by the lender at the close of
A check of the title records to ensure that the seller is
the legal owner of the property and that there are no liens or other
Truth in Lending
A federal law that requires lenders to fully disclose, in
writing, the terms and conditions of a mortgage, including the annual
percentage rate and other charges.
The process of evaluating a loan application to determine
the risk involved for the lender.