Homestead Realty Group

Real Estate Glossary

ADJUSTABLE-RATE MORTGAGE (ARM)
A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ANNUAL PERCENTAGE RATE (APR)
The rate of annual interest charged on a loan.

APPRAISAL
A defensible and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

CERTIFICATE OF TITLE
A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

CLOSING COSTS
All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

COMMISSION
A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.

CONVENTIONAL MORTGAGE
A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

CONVERTIBLE ARM
A mortgage that begins as and adjustable, that allows the borrower to convert the loan to a fixed rate within a specific timeframe.

CREDIT HISTORY
A record of debt payments, past and present. Used by mortgage lenders in determining credit worthiness of individuals.

DEED
A document indicating the ownership of a property.

EARNEST MONEY DEPOSIT
A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.

ESCROW
An amount retained by a third party in a trust to meet a future obligation. Often used in the payment of annual taxes or insurance for real property.

EXCLUSIVE LISTING
An agreement between the owner of a property and a real estate agent giving the agent exclusive right to sell the property.

FANNIE MAE
A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nationís largest source of financing for home mortgages.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nationís financial system by insuring deposits and promoting safe and sound banking practices.

FHA MORTGAGE
A mortgage that is insured by the Federal Housing Administration (FHA).

FIXED-RATE MORTGAGE (FRM)
A mortgage which has a fixed rate of interest over the life of the loan.

GINNIE MAE Back to top
A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income homebuyers.

GOVERNMENT MORTGAGE
Any mortgage insured by a government agency, such as the FHA or VA.

HOMEOWNERíS INSURANCE
A policy which covers a home owner for any loss of property due to accident, intrusion or hazard.

HUD-1 STATEMENT
A standardized, itemized list, published by the U.S. Department of Housing and Urban Development (HUD), of all anticipated CLOSING COSTS connected with a particular property purchase.

INSURABLE TITLE
The title to property which has been sufficiently reviewed by a title insurance company, such that they are willing to insure it as free and clear.

LIEN
Any claim against a piece of property resulting from a debt or other obligation.

LOCK-IN
An agreement between a lender and a borrower, guaranteeing an interest rate for a loan if the loan is closed within a certain amount of time.

MORTGAGE
A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.

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

ORIGINATION FEE
Refers to the total number of points paid by a borrower at closing.

OWNER FINANCING
A transaction where the property owner provides all or part of the financing.

PRE-APPROVAL
The process of applying for a mortgage loan and becoming approved for a certain amount at a certain interest rate before a property has been chosen. Pre-approval allows the borrower greater freedom in negotiations with sellers.

PRE-QUALIFICATION
Less formal that pre-approval, pre-qualification usually means a written statement from a loan officer indicating his or her opinion that the borrower will be able to become approved for a mortgage loan.

PRIVATE MORTGAGE INSURANCE (PMI)
A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is less that 20%.

QUITCLAIM DEED
A legal document which transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear.

RIGHT OF FIRST REFUSAL
An agreement giving a person the first opportunity to buy or lease a property before the owner offers it for sale to others.

THIRD PARTY ORIGINATION
When a lender uses a third party to originate and package loans for sale to the secondary market (Fannie Mae, Freddie Mac).

TITLE
A specific document which serves as proof of ownership.

TITLE SEARCH
The process whereby the TITLE COMPANY researches a properties title history and ensures that no outstanding claims exist.

VA MORTGAGE
A mortgage that is guaranteed by the Department of Veterans Affairs (VA).

VETERANS AFFAIRS, DEPARTMENT OF (VA)
The successor to the Veteranís Administration, this government agency is responsible for ensuring the rights and welfare of our nationís veterans and their dependents. Among other duties, the VA insures home loans made to veterans.