Real Estate Glossary of Terms

Back fill
Soil placed next to a foundation. Keep dry to prevent ground swelling in the metro area!

Backup contract
A secondary offer for a property that is contingent on the defeat of a prior contract.

Balance sheet
A statement that shows the assets, liabilities and net worth of business or individual. Often required by a lender if a borrower is self-employed.

Balloon loan
A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. The final payment will be a larger lump sum of the remaining principal.

Balloon payment
The final lump sum payment due at the end of a balloon mortgage.

Balustrade
A railing held up by a set of posts on a porch or stairway.

Bankruptcy
A proceeding in which an insolvent debtor can obtain relief from payment of certain obligations. Bankruptcies remain on a credit record for seven years and can severely limit a person's ability to borrow.

Baseboard
A board or molding found at the bottom of an interior wall.

Baseboard electric heat
Electric heating units installed along a baseboard.

Basement
The area of a home below ground level.

Basis Point
A lending term that is one one-hundredth of one percentage point. For example, the difference between a loan at 7.125% and one at 7.37% is 12 basis points.

Bay window
A window that projects outward in a curve.

Bearing wall
A wall that supports its own weight in addition to other parts of a structure.

Before-tax income
Total income received before taxes are deducted.

Bill of sale
A document that transfers ownership of personal property. In a real estate transaction, most everything except the land and building (stove, refrigerator, drapes, carpet, etc.) is considered personal property.

Binder
A report issued by a title insurance company that details the condition of a home's title. and provides guidelines for a title insurance policy.

Biweekly mortgage
A mortgage that requires payments every two weeks and helps repay the loan over a shorter term.

Blueprint
A building plan for a home or other structure.

Board foot
A measurement of lumber that is the equivalent of 144 cubic inches.

Boilerplate Language
Standardized form language used in deeds, mortgages and other documents. Specific details can be added by individual parties.

Bona fide
A legal term that refers to actions or persons that are honest and in good faith.

Bond
An agreement that insures one party against loss by acts or defaults of another party.

Book value
The value of a property as a capital asset based on its cost plus any additions, minus depreciation.

Boundary
The dividing line between two adjacent properties.

Breach of contract
The failure to perform provisions of a contract without a legal reason.

Break-even point
The amount in which the dollars of rental income matches expenses and debt.

Breezeway
A roofed passageway with open sides, usually found between a home and garage.

Bridge loan
A short-term loan that allows a buyer to buy a home before selling their home.

Brokerage
The act of bringing together two or more parties in exchange for a fee or commission.

Broker
A person licensed by the state to deal in real estate.

Broom clean
The expected condition of a home when it is turned over to the buyer. This usually means that the floors are swept and vacuumed, all trash removed, and sinks and facilities cleaned. This should not be confused with spotless!

Buffer strip
A parcel of land that separates two or more properties

Building code
A comprehensive set of laws that controls the construction or remodeling of a home or other structure. These may be from the city or county.

Building inspector
A city or county employee who enforces the building code and ensure that work is correctly performed.

Building permit
A permit issued by the city or county that allows the construction or modification of a house.

Builder upgrades
Optional extras offered by a builder for more money. Some builder’s standard features are other builder’s upgrades.

Building setback
Regulations that limit how close an owner can build to the edge of their property.

Building restrictions
Regulations that limit the manner in which property can be used.

Built-ins
Appliances or other items that are framed into a home or permanently attached.

Bungalow
A small one-story house or cottage.

Butterfly roof
A roof formed by two gables that dip in the middle (and looks like a butterfly's wings!)

Buy-down mortgage
A mortgage that requires a one time up-front additional payment by the borrower to secure a lower than normal interest rate during the first few years of the loan.

Buyer broker
A real estate broker who has a signed Buyer Agency contract with their client and therefore a fiduciary responsibility. The broker’s commission may be paid by the buyer or the seller.

Buyer's market
A slower real estate market in which buyers have an advantage over sellers.

Buyer's remorse
An emotional response (I don’t think that I’m doing the right thing!) sometimes felt by homebuyers after signing a sales contract or closing the purchase of a home.

Bylaws
The rules and regulations that a homeowners association adopt to govern activities.

Can lights
Cylindrical chambers with bulbs recessed into the ceiling.

Cancellation clause
A clause that details the conditions under which each party may terminate the agreement.

Cantilever
A projecting structure supported on one end, such as a balcony.

Cap
A limit on the amount that an interest rate or monthly payment can increase in an adjustable rate mortgage.

Cape Cod style
A wood-frame or shingled house with a steep roof and several windows projecting from the second floor.

Capital
Money used to create income, such as funds invested in rental property.

Capital expenditure
The cost of making improvements on a property.

Capital gains
Profits made from the sale of real estate or investments.

Capital gains tax
A tax on the profits from the sale of real estate or investments.

Capital improvement
Any improvement that extends the life or increases the value of a piece of property.

Capitalization
A mathematical formula used to compute the value of a property based on net income.

Capitalization rate
The percentage rate of return estimated from the net income of a piece of property.

Carport
A roof that covers a driveway or parking area.

Casement window
A window that is hinged on its sides to allow it to swing open vertically.

Cash flow
The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income (may be positive or negative).

Cashier's check
A check the bank draws on itself rather than on an individual account. A type of "good funds".

Cash-out refinance
The refinancing of a mortgage in which the money received from the new loan is greater than the amount required to pay off the old loan.

Cathedral ceiling
A high open ceiling with finished exposed roof rafters.

Caulk
A sealant (usually acrylic or silicon) used to fill cracks, crevices and holes in a home.

Caveat emptor
A legal principle derived from Latin than means "let the buyer beware."

Central air conditioning
A device that generates cold air through an outside unit that is connected to ductwork inside the house,

Certificate of eligibility
A document issued by the Veterans Administration that verifies the eligibility of a veteran to obtain a VA loan.

Certificate of occupancy
A document which states that a home or other building has met all building codes and is suitable for habitation. Required on new home construction prior to closing.

Certificate of sale
A document issued at a judicial sale, which entitles the buyer to receive a deed after court confirmation of the purchase of the property.

Chain of title
The official record that details the ownership history of a piece of property.

Chair railing
Decorative molding installed on a wall about 32 inches above the floor which protects against scuffs from furniture.

Change order
A modification of a construction contract that authorizes a change in the work.

Chattel
Personal property such as furniture, clothing or a car.

Chimney flue
The passage inside a chimney that channels smoke and heat to the outside.

Chimney pot
A short pipe at the top of a chimney that increases ventilation to the fireplace and reduces smoke.

Cinder block
A block (usually gray in color) made of ash and cement used in construction.

Circuit breaker
An electric fuse that trips during an electrical overload to prevent damage.

Cistern
A tank used to store rainwater.

Clear title
A property that does not contain liens, defects or other legal encumbrances.

Closing
The final procedure (or celebration!) in which documents are signed and recorded, and the property is transferred. The should not be any surprises at closing.

Closing costs
Expenses required to transfer (close) the sale of real estate, including loan, title and appraisal fees.

Closing statement
A financial document which details the costs and credits between a buyer and seller to effect the closing.

Cloud on title
An invalid encumbrance on real property.

Collateral security
Additional security a borrower supplies to obtain a loan.

Collection
A series of steps a lender takes to bring a delinquent mortgage up to date.

Collusion
Actions of two or more people to break the law.

Column footing
The support base for a load-bearing column. The footing is usually made of reinforced concrete.

Co-maker
A person who signs a promissory note with the borrower and assumes responsibility for the loan (co-borrower).

Commingling
The illegal mixing of money held in trust accounts with other funds.

Commission
A percentage of the sales price of a home that is paid to the agents of the buyer and seller.

Commitment
A promise by a lender to make a loan with specific terms for a specified period.

Commitment fee
The fee some lenders charge for promising to make a loan.

Common area
An area inside a housing development that is owned by all residents.

Common-area assessments
Fees paid by the owners of a condominium, townhome or planned-unit development to maintain, repair, improve or operate common areas.

Common-interest development
A development composed of individually owned units that share usage and financial responsibility for common areas.

Common law
A body of laws based on custom, usage and rulings by courts in various jurisdictions.

Community Reinvestment Act
A federal law that encourages financial institutions to loan money in the neighborhoods where minority depositors live.

Comparables
Properties used as comparisons to determine the value of an individual property.

Comparative market analysis
An estimate of the value of a property based on an analysis other similar properties

Compound interest
The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.

Condemnation
The process the government uses to take private property for public use without the consent of the owner.

Conditional loan commitment
A promise by a lender to make a loan if the borrower meets certain conditions.

Condominium
Individually owned units in a building or development in which owners hold title to the interior space while common areas (parking lots, recreational areas, etc.) are owned by all the residents.

Condominium conversion
The change in a building from one owner to multiple owners of individual units.

Conduit
A pipe (metal or other material) that houses electrical wiring.

Consent judgment
A binding written agreement between two parties to have a judgment entered and recorded.

Conservator
A court-appointed guardian.

Consideration
Anything that is legal, has value and induces a person to enter into a contract.

Construction loan
Short-term loans a lender makes for the construction of homes and buildings. The lender usually disburses the funds in stages.

Construction to permanent loan
The conversion of a construction loan to a longer-term traditional mortgage after construction has been completed.

Consumer Credit Counseling Service (CCCS)
A nationwide, nonprofit organization that helps consumers get out of debt and improve their credit profile. Sometimes an alternative to bankruptcy.

Contiguous lots
Adjoining property.

Contingency
A condition that must be met for a contract to continue. Examples including a buyer getting final loan approval, inspection objection resolution, etc.

Contract
An agreement between two or more parties that creates a legal relationship.

Contract for deed
A contract in which the seller agrees to defer all or part of the purchase price for a specified period of time.

Contract to purchase
A contract that the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller.

Contractor
The individual who contracts for the construction of a home or project.

Conventional loan
A long-term loan a lender makes for the purchase of a home.

Convertible adjustable rate mortgage
A mortgage which starts as an adjustable rate loan, but allows the borrower to convert the loan to a fixed rate mortgage during a specified period of time.

Conveyance
The transfer of title of property.

Cooperating broker
A real estate broker who finds a buyer for a property that another broker has listed

Cornice
A horizontal molding that projects from the top of a structure or wall.

Corporate relocation
An arrangement by which employers assist an employee to transfer to another location.

Cosigner
A second party who signs a promissory note and takes responsibility for a debt.

Counter Proposal
A response to an offer to purchase that modifies the original offer.

Corner bead
A reinforcement (usually metal) placed in the corner where two walls intersect.

Corrective work
Necessary or desired repairs to remedy problems uncovered by a home inspection.

Cost-plus contract
A construction contract that determines the builder's profit based on a percentage of the cost of labor and materials.

Cottage
A small, one-story house.

Covenant
A legal assurance or promise in a deed or other document, or implied by the law.

Covenants, conditions and restrictions (CC&Rs)
Rules and regulations for a development, such as acceptable landscaping or improvements that can be made to individual units.

Crawl space
The space between the ground and the first floor of a home, usually no higher than four feet.

Creative financing
Innovative home-financing arrangements that help sell a property.

Credit history
A record of current and past debt payments of an individual.

Creditor
An individual or institution to whom a debt is owed.

Credit rating
A rating of credit worthiness assigned to a person based on their credit history and financial status.

Credit report
A credit bureau report that shows an individuals history of payments made on previous debts. The largest three bureaus are Trans Union Corp., Equifax and Experian (formerly TRW).

Credit union
Nonprofit cooperative organizations that provide banking and financial services, including mortgages, home improvement loans and home equity loans, to their members.

Cul-de-sac
A street that is closed at one end.

Cupola
A dome-like structure that sits on top of a roof.

Curable defect
A deficiency in a property that is easy or inexpensive to fix.

Curb appeal
The first impression of a house as seen from the street.

Custom builder
A builder who constructs a home based on plans created by the owner.

Custom home
A structure designed by an architect hired by the owner.

Damper
A movable plate in a fireplace that allows smoke to travel up the chimney's flue but can be closed to prevent a draft..

Days on the market
The number of days a property is listed for sale until it is sold or taken off the market

Deadbolt lock
A lock that require a key to open.

Debt
Any amount one person owes to another.

Deck
A roofless, floored area that adjoins a house.

Deed
The legal document that transfers ownership of a piece of property.

Deed of trust
A document recorded with the county that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.

Default
The failure to fulfill an obligation, such as making monthly mortgage payments.

Deferred maintenance
Delayed repairs or maintenance that results in a decline in property value.

Delinquent mortgage
A mortgage that involves a borrower who is behind in making payments. The lender may begin foreclosure if the mortgage is not brought current.

Deposit
Money given by the buyer with an offer to purchase property. Also called earnest money.

Depreciation
The decline in value of a piece of property.

Discount points
Fees that a borrower may pay to a lender in exchange for a lower interest rate. One point equals one percent of the total loan amount.

Distressed property
Property that is in poor condition.

Dormer
A window set upright in a sloping roof.

Double-hung window
A window that consists of two sashes that slide up and down.

Dovetail joints
Joints that lock two pieces of wood together with meshed teeth.

Down payment
The amount of money a buyer gives to a seller to purchase a property. The balance may be brought by the lender.

Down spouts
A vertical gutter that empties water from the roof to the ground.

Draw
A payment made to subcontractors or suppliers from a construction loan.

Dropped ceiling
A flat ceiling built lower than the original ceiling. Often used in basements.

Drywall
Wallboard composed of gypsum or plaster wrapped in paper and produced in large sheets that can be nailed to wall studs.

Dual agency
A relationship in which a real estate agent represents both parties in a transaction.

Duct
A pipe or channel that carries water, wiring or conditioned air through a house.

Due-on-sale clause
Standard language in a mortgage which states that the loan must be paid when a house is sold.

Duplex
A structure that consists of two separate family units.

Early occupancy
A situation where the buyers can occupy the property before the sale is completed.

Earnest money
Money a buyer gives with an offer to purchase a property. Also called a deposit.

Easement
A right given to a third party to use a portion of the property for certain purposes, such as allowing access to underground utilities.

Eaves
The projecting overhang at the lower edge of a roof

Effective age
The age of a structure estimated by its condition rather than its actual age.

Electric service panel
A panel that transfers power from the utility line into a house to be distributed through fuses or circuit breakers. Also called the "breaker box".

Elevations
An exterior view of a home design that shows what the home will look like. A new home may have several optional elevations available for the same floorplan.

Eminent domain
The government's right to condemn private land for public use.

Empty nesters
Individuals who have raised their families and want to move into a smaller home.

Encroachment
Fences or other structures that extend into the property of another owner.

Encumbrance
A lien on a property which claims a right to the property.

Environmental impact statement
A government-mandated evaluation of the effects a development will have on the environment of a proposed site.

Equal Credit Opportunity Act.
A federal law that prohibits a lender or other creditor from refusing to grant credit based on the sex, marital status, race, religion, national origin or age.

Equifax
Equifax Credit Information Services, Inc., is one of the largest credit-reporting bureaus.

Equity
The remaining value in a property after all existing liens are deducted.

Errors and omissions insurance
A policy that pays for mistakes made by a builder, real estate agent or others.

Escrow
A neutral third party that holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met.

Escrow account
An account established by a lender to hold funds for the payment of homeowners insurance and property taxes. Also known as an impound account.

Estate
The assets of a person at the time of death.

Eviction
A legal procedure to remove a tenant for reasons including failure to pay rent.

Examination of title
An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Executor
A person appointed to carry out the instructions in a will. If there is no will, a probate court will appoint an executor.

Experian
One of the largest credit reporting agencies, formerly known as TRW Information Systems & Services.

Façade
The part of a building facing the street or a courtyard.

Fair Credit Billing Act.
A federal law that governs credit and charge-card billing errors. If a credit or charge card company violates any provision, , consumers can sue to recover damages.

Fair Credit Reporting Act.
A federal law passed in 1971 that regulates the activity of credit bureaus. It is designed to prevent inaccurate or obsolete information from staying in a consumer's credit file.

Fair Debt Collection Practices Act.
A federal law passed in 1977 which outlaws debtor harassment and other types of collection practices.

Fair Housing Act
A federal law passed in 1965 and amended in 1988 that makes it illegal to deny rent or refuse to sell to anyone based on race, color, religion, sex or national origin. The 1988 amendment expanded the protections to include family status and disability.

Fannie Mae
The Federal National Mortgage Association, a congressionally chartered, shareholder owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Farmer's Home Administration
A U.S. Department of Agriculture agency that provides credit to farmers and rural residents.

Fascia
A board that connects the ends of the roof rafters and provides a surface to support gutters.

Federal Home Loan Mortgage Corp.
"Freddie Mac". This company buys mortgages from lending institutions, pools them with other loans and then sells shares to investors.

Federal Housing Administration
"FHA" A government agency operates a variety of home-loan programs. The most popular programs require only a 3% down payment and allow the borrower to have more debt than conventional loans.

Federal National Mortgage Association
"Fannie Mae" a federally chartered agency that buys mortgages from lending institutions, pools them with other loans and sells shares to investors.

Federal Reserve Board
A group of economists and other experts who set the nation's monetary policy. Their adjustment of interest rates is used to control inflation.

Fee simple
Complete ownership of a piece of real estate.

FHA loans
Mortgages that are insured by the Federal Housing Administration. They generally allow as little as a 3% down payment.

Feng shui
An ancient Chinese belief that the physical characteristics of a house and the positioning of the home will affect the fortunes of the owner.

Fiduciary duty
The relationship of trust that buyers and sellers expect from a real estate agent or attorney.

Finish grade
A final grading of a lot to prepare it for landscaping.

Fire wall
A wall composed of fire-resistant material.

First mortgage
The primary mortgage on a property that has priority over all other voluntary liens.

Fixed rate mortgage
A home loan with an unchanging interest rate over the term of the loan.

Fixer-upper
A property that needs serious work.

Fixture
Personal property that is permanently attached to a house, such as drapery rods, toilets or a furnace.

Flashing
Metal strips placed around chimneys, skylights, vents, and other areas to prevent water leakage.

Flat fee
A set fee charged by a broker instead of a commission.

Floating wall
Walls built so that they are unaffected by movement of a basement floor.

Flood insurance
Insurance that is required in designated flood areas.

Footings
Concrete foundations that support a structure.

Forbearance
A course of action a lender may pursue to delay foreclosure or legal action against a delinquent borrower.

Foreclosure
The legal process used by a lender to terminate a borrower's interest in a property after a loan has been defaulted on. When the process is completed, the lender may sell the property and keep the proceeds to satisfy its mortgage and any legal costs. Any excess proceeds may be used to satisfy other liens or be returned to the borrower.

Forfeiture
The relinquishing of property rights by a delinquent borrower.

For Sale By Owner (FSBO)
An owner who sells their property without the assistance of a real estate agent.

Foundation
The support structure of a house.

Foyer
The entrance area in a home or building.

Framing
The construction of the skeletal framework of a house.

Freddie Mac (Federal Home Loan Mortgage Corp.)
A congressionally chartered institution that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

French doors
Two adjoining doors inlaid with glass that open from the middle.

Fully amortized mortgage
A mortgage that amortizes, or pays down, the entire balance of a loan.

Gable
A triangular decorative feature enclosed by the sloping ends of a ridged roof.

Gable roof
A ridged roof forming a triangle at each end.

Gambrel roof
A roof with two slopes, often seen on barns.

General contractor
The person or company that hires all of the subcontractors and suppliers for a project.

General plan
A government's long-range land-use plan.

Geodesic dome
A domed structure constructed of lightweight bars forming a grid of polygons.

Girders
Crossbeams that support floor joists.

Good-faith estimate
An estimate from a lender that shows the costs and interest rate a borrower will incur to obtain a specific loan.

Government National Mortgage Association (Ginnie Mae)
An agency that buys home loans from lenders, pools them with other loans and sells shares to investors. Ginnie Mae differs from Fannie Mae & Freddie Mac because it only purchases loans backed by the federal government.

Grace period
A specified amount of time to make a loan payment after its due date without penalty.

Grade
The elevation of land above level ground.

Graduated-payment mortgage (GPM)
A mortgage that requires a borrower to make larger monthly payments over the term of the loan. The payment is unusually low for the first few years but gradually rises until it remains at a fixed level.

Grantee
A person who receives an interest in a piece of property.

Grantor
A person who gives an interest in a piece of property.

Greenbelt
A stretch of park, open space or other natural setting in a community.

Gross income
The total income of a household before taxes or expenses are subtracted.

Ground fault circuit interrupter (GFI)
A safety device that detects leakage of electrical current to the ground and prevents accidental shock.

Gutters
Horizontal channels installed at the edge of a roof to carry rainwater or melted snow away from the house.

Half-bath
A half-bath has a toilet and a sink but no bathtub or shower. Also called a powder room.

Hazard insurance
Homeowners insurance that covers damage by fire, wind or other disaster.

Header
A crossbeam above a window and door.

Heat pump
An electric cooling and heating system.

Hectare
A unit of measurement equal to 2.471 acres.

High density
A high concentration of housing units in a specific area or on a specific property.

High-rise
A building higher than six stories.

Hip roof
A pitched roof with sloping sides.

Historic structure
A home or building listed in the National Register of Historic Places and certified as historic by the U.S. Secretary of the Interior.

Home equity loan
A loan that allows owners to borrow against the equity in their homes.

Home inspection
An examination of a home's construction, condition and internal systems by an inspector.

Homeowners association
A group that governs a subdivision or planned community. The association collects monthly fees from all owners to pay for maintenance of common areas, handle legal and safety issues, and enforce the covenants.

Homeowners insurance
This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.

Homeowners warranty
Special insurance policies that cover certain home repairs for a specified amount of time.

Hose bib
A threaded faucet connection for a hose.

Housing expense ratio
The percent of gross monthly income devoted to housing costs.

House wrap
A polyethylene barrier wrapped around a house to save energy.

HUD-1 Uniform Settlement Statement
A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.

Impact fees
Fees collected from a developer to pay for schools, parks and other facilities.

Implied warranty of habitability
Court cases have determined that all new homes are assumed to be fit for human habitation and meet all building codes.

Impounds
A portion of the monthly mortgage payment that is placed in an account and used to pay for hazard insurance, property taxes and private mortgage insurance.

Income property
Property that is not occupied by the owner but is used to generate income.

Incurable defect
A defect in a property that cannot be fixed, such as an adjacent hazardous waste site, or would cost too much to repair relative to the value of the property.

Index
The Financial item used by a lender to calculate interest rates on adjustable mortgages, such as the yield on one year Treasury bills.

Individual Retirement Account
Tax-deferred savings accounts that allow people to accrue retirement funds.

In-file credit report
Quicker, less detailed credit reports.

In-fill development
New home construction in an established area.

Inflation
A situation where more money is available than there are goods and services to be purchased. Mortgage rates are sensitive to inflation fears.

Infrastructure
The roads, schools, parks, utilities, etc. in a community.

Initial interest rate
The starting interest rate on an adjustable mortgage.

Inspection report
An report of a home's exterior, foundation, plumbing, electrical system, etc. by an inspector.

Installment contract
A purchase agreement in which the buyer does not receive title to the property until all installments are paid.

Insulation
Materials that slow heat transfer such as cellulose, glass fiber and polystyrene.

Insurable title
Title to property that a company agrees to insure against defects and disputes.

Insurance
A policy that guarantees compensation for specific types of losses.

Insurance binder
A temporary insurance arrangement put in force until a permanent policy can be obtained.

Interest
The fee borrowers pay to obtain a loan calculated on a percentage of the total loan.

Interest accrual rate
The rate at which interest accrues on a mortgage.

Interest-only loan
A loan where the borrower pays only the interest that accrues on the loan balance each month. Because each payment goes toward interest, the outstanding balance of the loan does not decline with each payment .

Interest rate
The sum, expressed as a percentage, charged for a loan.

Interest rate caps
A limit on the amount that an interest rate can change at each adjustment period.

Interest rate ceiling
The highest interest a lender can charge for an adjustable rate mortgage.

Investment property
Property that generates income, such as an apartment building or a rental house.

Joint tenancy
Ownership by two or more people that gives equal shares of a piece of property. In the event of death, the property automatically passes to the surviving owners.

Joist
A floor or ceiling support member supported by walls or beams. Subflooring is connected to floor joists.

Judgment
A financial decision of a court of law. If a court decides that a person must repay a debt, a lien may be placed against that person's property.

Jumbo mortgage
Loans that exceed dollar limits set by Fannie Mae and Freddie Mac.

Junior mortgage
A loan that is subordinate to the primary loan.

Landscape
Plantings that surround a home.

Landscape architect
A professional who holds a degree in landscape architecture, which involves training in horticulture, landscape design and planning.

Landscape designer
A landscape designer has training in horticulture and landscape planning, but does not necessarily hold a degree.

Landscape contractor
A professional who carries out the plans of a landscape architect or a landscape designer.

Late charge
A fee a lender imposes when a borrower does not make a payment on time.

Late payment
A payment a lender receives after the due date.

Lead
A poisonous metal present in older dwellings, primarily in the form of lead-based paint and lead plumbing. Exposure to lead has been found to be a health risk.

Lease
A binding agreement that contains the terms and conditions of a renter's occupancy.

Leasehold estate
An arrangement in which the borrower does not own a specific piece of property but possesses a long-term lease .

Lease option
A lease that contains the right to purchase the property for a specific price within a certain time frame.

Lender
A bank, savings institution or mortgage company that offers home loans.

Legal blemish
Legal problems on a piece of property, such as a zoning violation or fraudulent title claim.

Legal description
A specific way of identifying and locating a piece of real estate.

Letter of intent
A formal statement by a buyer that they intend to purchase the property for a certain price on a certain date.

Leverage
The use of a small amount of cash to buy a piece of property.

Liabilities
A borrower's debts and financial obligations.

Liability insurance
A policy that protects owners against claims of negligence, personal injury or property damage.

Lien
A claim by one person (or company) on the property of another as security for money owed.

Lifetime cap
A limit on the amount that a loan rate can move during the term of the mortgage.

Life-cycle cost analysis
An analysis of a building project's expected operating, maintenance and replacement costs.

Limited partnership
A real estate syndicate or other investment group where a general partner makes the investment decisions, oversees the investment and is may be liable for any losses.

Liquid assets
Cash and other assets that can be converted to cash relatively quickly.

Liquidated damages
An amount of money that is agreed to be paid in the case of a default in a real estate contract.

Listing
A piece of property placed for sale by a real estate agent.

Load-bearing wall
A wall that supports not only its own weight, but the weight of other parts of a home.

Loan application
An application for a home loan.

Loan application fee
A fee charged by some lenders to process a loan application. Do not pay!

Loan commitment
A promise by a lender to make a loan for a specified amount and on specific terms.

Loan officer
A representative of a lending institution who is empowered to act on behalf of the lender within certain limits.

Loan origination fee
A fee charged by lenders to obtain and process a loan.

Loan processing fee
A fee charged by some lenders for processing the loan.

Loan term
The amount of a time (often 30 or 15 years) for a buyer to repay a mortgage.

Loan -to-value ratio
A measure used by lenders to identify the amount of the loan to the value of the property.

Lock-in
The act of actually guaranteeing the interest rate for a specific loan.

Loft
An unpartitioned living space or a small space built above a larger room.

Low-ball offer
An offer made to a seller that is substantially below market value. The longer a property stays on the market, the more likely there are to be such offers.

Low density
A low concentration of housing units in a specific area.

Low-documentation loan
Mortgages that require only minimal verification of income and assets.

Low-down-payment loan
A home loan that requires the borrower to make only a small down payment to obtain a loan.

Main water shut-off valve
The primary valve that controls the flow of water from the water meter into a home.

Manufactured housing
A prefabricated home built in a factory then delivered to a property.

Mantel
A facing of stone, marble or other material around a fireplace.

Maintenance fee
A monthly fee assessed to members of a homeowners association pay for the repair and maintenance of common areas.

Margin
The percent added to an index to determine the interest rate for an adjustable rate mortgage. For example, if the index rate for an adjustable rate mortgage is 5 percent and the margin is 2.5%, the interest rate on the loan is 7.5%.

Market conditions
Factors affecting the sale and purchase of homes at a particular point in time.

Market value
The fair price that a property can sell for at a particular point in time.

Masonry
Brick or stone work on a building.

Mechanical systems
A home's plumbing, wiring, heating and cooling systems.

Mechanic's lien
An encumbrance against a property filed by a subcontractor or supplier.

Mediation
A dispute-resolution process in which a neutral party works to resolve contract differences.

Metes and bounds
A land surveying method describing land in terms of shape and boundary dimensions.

Mixed-use development
A project that combines several different types of uses such as residential and commercial.

Molding
Decorative trim applied to walls, ceilings, and window and door openings.

Mortgage
A legal document specifying a borrowed amount of money and using property as collateral.

Mortgagee
A financial institution that lends money to a borrower. The borrower is considered the mortgagor.

Mortgagor
A person who borrows money to purchase a house. The lender is called the mortgagee.

Mortgage acceleration clause
A clause which allows a lender to demand that the entire balance of the loan be repaid in a lump sum under certain circumstances. The acceleration clause is usually triggered if the home is sold, title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.

Mortgage banker
A lender that provides home loans using its own money. The loans are usually sold to investors such as insurance companies and Fannie Mae.

Mortgage broker
A company that works as a lending matchmaker, linking lenders with prospective borrowers who meet the lender's criteria. The mortgage broker does not make the loan, but receives payment from the lender for services.

Mortgage insurance
Often required by lenders when a borrower puts less than a 20 percent down payment in a property.

Move-in condition
A house that is in excellent condition, ready for a new buyer.

Move-up buyer
A buyer who has purchased a home before and is looking for a larger or more expensive home.

Multiple listing service (MLS)
A service that shows listings for properties for sale from all local real estate companies.

Negative amortization
The situation that occurs when a monthly payment is not large enough to cover both the principal and interest of a loan. As a result, the outstanding balance of the loan actually grows larger with each payment rather than smaller.

Neo-traditional planning,
The planning of a community that favors the return of new-home development with such traditional features grid-street patterns, prominent front porches, backyard garages, multi-use buildings and housing clustered near commercial service areas.

Net cash flow
Investment property that generates income after expenses such as principal, interest, taxes and insurance are subtracted.

Net worth
The total wealth of a person or company after all liabilities (debts) are subtracted from assets.

New Urbanism
A community design philosophy that favors the return of new-home development with such traditional features as prominent front porches, backyard garages, multi-use buildings and housing clustered near commercial service areas.

Niche
A small recessed area in a wall, traditionally arched at the top.

NIMBY (Not In My Back Yard)
A response sometimes given by a neighborhood or community to proposed changes or development.

No-documentation loan
A loan program that does not require verification of income. Typically requires a large down payment.

Non-assumption clause
A loan provision that prohibits the transfer of a mortgage to another borrower without lender approval.

Non-liquid asset
An asset (such as a house) that is not easily turned into cash.

Non-recurring closing costs
One-time only fees for such items as an credit report, appraisal, or title insurance.

Note
A legal document that requires a borrower to repay a mortgage at a certain interest rate over a specified period of time.

Note rate
The interest rate specified in a mortgage note.

Notice of default
A lender's initial action when a mortgage payment is late and attempts to settle the issue out of court have failed.

Open house
A marketing tool where an agent invites the public to view a property.

Open space
Undeveloped land or common areas reserved for parks, or other natural uses.

Option
A situation in which a buyer puts down money for the right to purchase a piece of real estate within a set time period but does not have an obligation to buy.

Oral agreement
Contractual arrangements that are not in writing and are usually not legally binding.

Original principal balance
The amount of principal owed on a loan before a borrower makes any payments.

Origination fee
A fee charged by most lenders to obtain a loan.

Owner financing
A sale where the seller of a property agrees to finance all or part of the purchase.

Parcel
An officially described parcel of land.

Passive loss
A tax term that refers to any loss from a passive activity, such as the ownership but not the operation of a piece of rental real estate.

Passive solar system
An energy system that supplies solar heat without the use of electric fans or pumps.

Patent defect
A visible deficiency in a piece of property, such as a cracked basement slab or a sagging porch.

Payment cap
A legal limit on the amount a monthly payment can increase on an adjustable rate mortgage.

Percolation test
A test used to determine the ability of soil to accommodate a septic system.

Per-diem interest
Interest charged or accrued daily.

Paneling
Strips of wood or wood material applied as a finish to a wall.

Patio
A courtyard or paved backyard area.

Perennial
A plant that produces leaves, flowers and seeds from year to year

Personal property
Property not generally attached to a house (furniture, appliances, etc.)

Pier
A rectangular masonry support column.

PITI (Principal, Interest, Taxes, Insurance)
The figure designed to represent the borrower's actual monthly mortgage-related expenses.

Planned communities
A concept that describes a neighborhood built within certain guidelines and goals.

Planned-unit development
A development where residents own their home and share the use and financial responsibility for common areas.

Pocket door
A sliding door that retreats into the wall when opened.

Point
A fee charged by a lender to reduce the interest rate charged on a loan.

Portfolio lender
A lender who makes loans with its own funds and keeps the loans on the company's books. Portfolio lenders sometimes have more flexibility in the guidelines used to grant a loan.

Portico
A porch supported by a row of columns.

Power of attorney
A document that authorizes an individual to act on behalf of someone else.

Pre-approval letter
A letter from a lender that states a buyers ability to qualify for a loan.

Prepaid expenses
The amount paid for taxes, insurance and assessments (usually at closing) before the due date.

Prepaid interest
Interest paid before it is due.

Prepayment penalty
A penalty imposed by some lenders because the borrower paid off the loan before it was due.

Pre-qualification
A lenders opinion of the ability of a borrower to qualify for a loan.

Pressure relief valve
A safety valve on a water heater that relieves excess pressure.

Primer
An initial coat of paint that is applied before the final topcoat.

Principal
The amount of money that the borrower owes on a mortgage.

Principle of conformity
The concept that a property is more likely to appreciate in value if its size, age, condition and style are similar to other properties in the area.

Principle of progression
An appraisal term which states that real estate of lower value is enhanced by the proximity of higher-end properties.

Principle of regression
An appraisal term which states that the value of higher-end real estate can be brought down by the proximity of lower-end properties.

Privacy fence
A structure erected between two pieces of property.

Private mortgage insurance (PMI)
A type of loan insurance required by many lenders if the borrower's down payment is less than 20 percent of the home's purchase price.

Probate sale
A real estate sale triggered by the death of the owner, with proceeds to be divided among heirs or creditors.

Production home
Homes that are mass-produced by one builder in a project.

Property line
The official dividing line between properties.

Proration
A percentage of an expense, usually calculated on a daily basis, paid at closing by a buyer or seller.

Punch list
A list compiled by a buyer during a final walk-through prior to closing on a property. Often associated with new home construction.

Purchase agreement
A document which details the price and conditions of a purchase transaction.

Qualifying ratios
Percentages computed by a lender to determine how much a potential buyer can borrow.

Quit-claim deed
A document that releases a party from any interest in a piece of real estate.

R-value
A construction term that refers to the resistance of to heat loss. The higher the R-value, the slower the rate of heat loss and the more efficient the structure.

Radon
A radioactive gas that seeps into some homes from the ground.

Rafter
Rafters form the slope and support a pitched roof.

Ranch style
A one story home (may be with or without a basement).

Rate lock
A commitment from a lender that guarantees a specific interest rate for a specific amount of time.

Real estate
Land and anything permanently affixed to it, including buildings, fences and other items attached to the structure.

Real estate agent
A state licensed agent authorized to handle real estate transactions. An agent may represent a buyer, a seller, or no one individual in a transaction. A real estate agent may or may not be a Realtor.

Real estate attorney
Lawyers who specialize in real estate transactions.

Real estate investment trusts (REITs)
Publicly traded companies that own, develop and operate commercial properties.

Real Estate Settlement Procedures Act (RESPA)
A federal law designed to make sellers and buyers aware of settlement fees and other transaction-related costs. RESPA also outlaws kickbacks in the real estate business.

Real property
Land and any permanent fixtures on it, including buildings, trees and minerals.

Realtor
A designation for an agent or broker who is a member of the National Association of Realtors and agrees to abide by it’s code of ethics.

Recession
The cancellation of a contract by law or consent by the parties involved.

Reconveyance
The conveyance of a property from a lender to a borrower after the borrower has fully repaid the debt.

Recorder
A public official responsible for keeping the records of all real estate transactions.

Recording
The filing of a specific document to the appropriate government entity. Recording a document (such as a deed) places it in the official public record.

Recording fee
A fee charged by the local county to record a document.

Redlining
An illegal practice by a bank or insurance company to deny credit or insurance to people based on ethnic background or neighborhood.

Refinancing
The process of replacing an older loan with a new mortgage with better terms.

Regulation Z
The federal code issued under the Truth-in-Lending Act which requires that a borrower must be advised in writing of all costs associated with the credit portion of a financial transaction.

Relocation benefits
Benefits provided by employers which may cover moving, selling, lodging and other costs associated with relocating to a different area.

Relocation company
A third party firm that administers aspects of relocating employees to or from a community.

Remaining balance
The amount of unpaid principal on a home loan.

Remaining term
The original loan term minus the number of payments made.

Renter's insurance
An insurance policy that covers the replacement value of possessions.

Repayment plan
When a borrower falls behind in mortgage payments, many lenders will negotiate a repayment plan rather than go to court.

Repossession
A taking of a property by a lender holding a mortgage.

Reserve fund
An amount of money set aside by a homeowners association to pay for major repairs or improvements.

Return on investment
The amount of profit a property generates.

Reverse mortgage
A type of loan available sometimes used by older owners with substantial equity. No payments are made on the loan until the borrower sells or moves from the property.

Ridge vent
A vent located along the ridge board of the roof that allows heat and moisture to escape.

Right of first refusal
A right given to a buyer to purchase a property that is superior to other buyers.

Right to recession
A provision in the federal Truth-in-Lending Act that allows borrowers to cancel certain kinds of loans within three days of signing.

Rough-in plumbing
Pre-installed piping that allows the later addition of fixtures. Commonly found in a basement area.

Sale-leaseback
A transaction in which the buyer leases the property back to the seller for a specified period of time.

Sales contract
A contract between a buyer and seller that details the terms of a home purchase.

Sanitary sewer
The drain line in a house that carries wastewater away to a municipal sewer or septic system.

Sash
One of two windows in a double-hung window.

Schematic designs
Renderings of floor plans and the exterior of a house.

Second mortgage
A second loan placed upon a piece of property.

Secondary mortgage market
A market of packaged home loans that are resold as securities to investors. Fannie Mae and Freddie Mac are the major forces in this market.

Secured loan
A loan backed by collateral.

Security
A piece of property designated as collateral.

Selling Agent
An agent who works with a buyer in a transaction. The Listing agent works with the seller.

Seller carry-back
An agreement in which the seller provides financing for a home purchase.

Seller's market
A real estate market with rapid turnover in which sellers have the advantage.

Semi-custom home
A buyer may make some design changes to the builder’s plans in a semi-custom home.

Septic system
A self-contained sewage treatment system that distributes wastewater to an underground storage area and relies on bacterial action to decompose solid waste matter.

Servicer
A company that collects mortgage payments and manages borrowers' escrow accounts.

Setback
The minimum distance a house must be a property line.

Settlement statement
A document that details credits and debts in a real estate transaction.

Shared-equity transaction
A transaction in which two buyers purchase a property, one as a resident co-owner and the other as an investor co-owner. Profits from the eventual sale are split between the co-owners.

Shingles
Thin, wedge-shaped pieces of wood or other material (commonly asphalt composition) installed on a roof to prevent water seepage.

Sill plate
A horizontal piece of wood placed on top of the foundation.

Sill cock
An exterior threaded faucet that provides water outside a home for a water hose.

Skylight
A window in a roof that allows natural light to illuminate a room.

Slab foundation
A foundation built directly on soil with no basement or crawl space.

Slider window
Windows that are composed of two windows, or sashes, that glides open and closed on a metal track.

Soffit
The flat area under the overhang of a roof.

Soils test
A test of the subsoil on a property to determine the soil’s characteristics and identify the most appropriate foundation design.

Spanish Mission style
A Southwest design that is derived from the original missions established by the Spanish.

Special assessment
An additional amount of money required from homeowners when a homeowners' association requires extra funds for improvements or repairs.

Specifications
Written requirements for materials, equipment, and construction systems.

Spec home
A home that has been built without an identified buyer.

Splash block
A slanted block used to divert runoff water from a downspout away from the foundation.

Square footage
The amount of livable space in a home. In the metro area, generally this is the amount of space above ground level. Basements, even though finished, are not included.

Standard Metropolitan Statistical Area
Areas designated by the U.S. Office of Management and Budget that contain a city of 50,000 or more.

Starter home
Lower priced homes often purchased by a first time buyer.

Steel framing
A construction framing method used by commercial and residential builders.

Storm window
An additional window that is installed next to an older window.

Stucco
A mixture of sand and cement used to cover the exterior surface or interior walls of a home or building.

Studs
Upright pieces of lumber or steel in a wall to which drywall or other covering is attached.

Subcontractor
Contractors (plumbers, framers, roofers, etc.) hired by a general contractor to perform specific tasks.

Subdivision
An area or neighborhood of similar homes. Also the process in which the owner of a larger property divides it into smaller parcels.

Sub-flooring
The sheathing, often made of plywood or oriented strand board, placed on top of floor joists and covered by flooring.

Subordinate loan
A second or third mortgage.

Sump pump
A pump that evacuates water from a basement sump pit.

Survey
A precise measurement of a piece of property by a licensed surveyor.

Sweat equity
The non-cash value added to property through work completed by an owner.

Tap fees
Fees charged by utility companies to connect a property to their service

Tax lien
An encumbrance placed against a property for nonpayment of taxes.

Tax sale
The public sale of a property by a government agency for the nonpayment of taxes.

Tax shelter
Tax advantages obtained through some real estate and other investments.

Teaser rate
An artificially low, short-term rate offered on a mortgage to entice the borrower.

Tenants in common
Two or more owners who share interest in a specific property. If one owner dies, the property does not automatically pass to the other owners but passes to the party specified in a will.

Terrace
A terrace can be: an unroofed paved area right next to a house; a roofed balcony; a veranda; or a raised bed of earth constructed to enhance a landscape.

Title
The actual legal document conferring ownership of a piece of real estate.

Title company
A company that researches the chain of title and provides title insurance and closing services.

Title insurance
A policy issued to protect a buyer or lender against losses due to a dispute over the ownership of a piece of property.

Title search
A check of public title records to ascertain that the seller is the legal owner and identifies claims and liens against the property.

Townhouse
An attached home where the owner own the land below the home.

Tract home
A mass-produced house constructed by one builder in a project.

Transom
A small hinged window directly above a door.

Trans-Union
Trans-Union Corp. is one of the "Big Three" credit-reporting bureaus.

Tray ceiling
A ceiling that has edges that slant toward the middle from the walls.

Treasury bills
Securities issued by the Treasury Department that have the full backing of the U.S. government. "T-bills" mature over various lengths of time.

Trellis
A decorative landscape structure made of thin strips of wood or plastic.

Trim work
The finishing of doors, doorways, window frames and floors.

Truss
A prefabricated framework of girders and struts used to support a roof or other load-bearing elements.

Trust account
An account used by brokers and escrow agents to safeguard funds for a buyer or seller.

Trustee
A legally empowered person who holds or controls a piece of property for another person.

Truth-in-Lending Act
A federal law that provides lending protections to borrowers.

Tuck-point
The process of removing old mortar from between bricks and replacing it with new mortar.

Underlayment
A layer of wood between the subfloor and the floor.

Underwriting
An evaluating process by lenders to examine the risks posed by a particular borrower. The Underwriting will then decide whether to approve the loan and whether to attach certain conditions to it.

Undisclosed heir
A person who claims the right to a property after the owner dies without a will.

Unrecorded deed
An deed that transfers ownership from one party to another without being officially recorded.

U.S. Department of Housing and Urban Development
A federal agency that oversees a variety of housing programs including the Federal Housing Administration.

Unsecured loan
A loan that is not backed by collateral.

Upgrades
Additional options or improved fixtures offered by a home builder to a buyer.

Urban sprawl
The unplanned expansion of development over a large area.

Usury
An illegally excessive interest rate charged on a loan.

Variable interest rate
An interest rate that moves up and down based changes in the loan’s index (such as the one year Treasury Bill).

Variable rate mortgage
A loan with a variable interest rate.

Vaulted ceiling
A high sloped interior ceiling.

Verification of deposit
The process where a lender requires a borrower's bank to sign a statement verifying the borrower's account balances and history.

Verification of employment
The process where a lender requires a borrower's employer for confirmation of the borrower's position and salary.

Vestibule
A small entrance hall or room.

Veterans Administration (VA)
The U.S. Department of Veterans Affairs operates a many programs including the VA loan program, which allows a veteran to purchase a house without a down payment.

VA loan
A loan program offered to veterans that allows them to purchase a home without a down payment.

Wainscoting
Wood paneling or other material installed between a baseboard and a chair rail.

Waiver
A voluntary relinquishing of certain rights or claims.

Walk-out basement
A basement that allows a door to open directly onto ground level.

Walk-through
A final inspection of a home by a buyer to ensure that all property conditions in the purchase agreement have been satisfied.

Warranty
A legally binding promise to do something in the future.

Wetlands
A watery areas such as a marsh or floodplain.

Will
A legal document outlining the disposition of a person's estate in the event of death.

Window seat
A bench seat built under an interior window.

Window well
A curved, corrugated steel insert designed to hold back the dirt from a basement window located below the soil line.

Window well covers
Curved plastic covers designed to be installed on top of a window well to cover the opening.

Wraparound mortgage
A loan to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both loans are made to the lender who holds the wraparound loan.

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