Adjustable Rate Mortgage (ARM): a type of mortgage loan whose interest rate is tied to an economic index, which fluctuates with the market. Typical ARM period are one, three, five, and seven years.
Amended Value: the actual sale price after the seller successfully markets and sells their home through the broker of their choice. The sale is turned over to a third-part relocation company for closing, and the guaranteed offer is amended or changed
Annual Percentage Rate (APR): The total costs (interest rate, closing costs, fees, etc.) that are part of a borrower’s loan, expressed as a percentage rate of interest. The total costs are amortized over the term of the loan.
Application Fees: Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.
Appraisal: A document of opinion of property value at a specific point in time
Appraised Price (AP): The price of the third-party relocation company offers (under most contracts) the seller for his or her property. Generally, the average of two or more independent appraisals.
Assumable Mortgage: One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.
Balloon Mortgage: A type of mortgage that is generally paid over a short period of time, but is amortized over a longer period of time. The borrower typically pays a combination of principal and interest. At the end of the loan term, the entire unpaid balance must be paid.
Broker: A state licensed individual who acts as the agent for the seller or buyer
Broker of Record: The person registered with their state licensing authority as the managing broker of a specific real estate sales office
Buyer: The purchaser of a property
Buyer Agency: A real estate broker retained by the buyer who has a fiduciary city to the buyer
Buyer Agent: The agent who shows the buyer’s property, negotiates the contract or offer for the buyer, and works with the buyer to close the transaction
Carrying Costs: Cost incurred to maintain a property (taxes, interest, insurance, utilities, and so on).
Closing: The end of a transaction process where the deed is delivered, documents are signed, and funds are dispersed.
Comparative Market Analysis: A study done by real estate sales agents and brokers using active, pending, and sold comparable properties to estimate a listing price for a property.
Competitive Market Analysis: The analysis used to provide market information to the seller and assist the real estate broker in securing the listing
Contingency: A provision in a contract requiring certain acts to be completed before the contract is binding
Conventional Mortgage: A type of mortgage that has certain limitations placed on it to meet secondary market guidelines. Mortgage companies, banks, and savings and loans underwrite conventional mortgages.
Credit Report: Includes all of the history for a borrower’s credit accounts, outstanding debts, and payment timelines on past or current debts.
Credit Score: A score assigned to a borrower’s credit report based on information contained within.
Disclosures: Federal, state, county, and local requirements of disclosure that the seller provides and the buyer acknowledges.
Down Payment: The amount of cash put toward a purchase by the borrower.
Escrow Account for Real Estate Taxes and Insurance: An account into which borrowers pay monthly prorations for real estate taxes and property insurance.
Exchange Account: A brokerage expense account that accrues charges for marketing.
Fee Simple: A form of property ownership where the owner has the right to use and dispose at will.
Fixture: Personal property that has become part of the property through permanent attachment
Flat Fee: A predetermined amount of compensation received or paid for a specific service in a real estate transaction.
For Sale By Owner (FSBO): A property that is for sale by the owner of the property.
Good Faith Estimate: Under the Real Estate Settlement Procedures Act, within three days of an application submission, lenders are required to provide in writing to potential borrowers a good faith estimate of closing costs.
Gross Sale Price: The sale price before any concessions.
Guaranteed Offer: The amount, after appraisals, the employer offers the transferring employee for his or her property.
Hazard Insurance: Insurance that covers losses to real estate from damages that might affect its value.
HELOC (Home Equity Line of Credit): A loan, using your house as collateral, that allows you to borrow up to a certain amount, rather than a set dollar amount. It acts as a credit card and has a credit limit. You can borrow against it, pay all or part of the balance, and borrow again up to the credit limit.
Homeowner’s Insurance: Coverage that includes personal liability and theft insurance in addition to hazard insurance
Inclusions: Fixtures or personal property that are included in a contract or offer to purchase.
Installment Land Contract: A contract in which the buyer takes possession of the property while the seller retains the title to the property until the loan is paid.
Interest Rate Float: The borrower decides to delay locking their interest rate on their loan. They can float their rate in expectation of the rate moving down. At the end of the float period they must lock a rate.
Listing Agreement: A document that establishes the real estate agent’s agreement with the sellers to represent their property in the market.
Loan: An amount of money that is lent to a borrower who agrees to repay the amount plus interest.
Loan Application: A document that buyers who are requesting a loan fill out and submit to their lender.
Loan Closing Costs: The costs a lender charges to close a borrower’s loan. These costs vary from lender to lender and from market to market.
Loan Package: The group of mortgage documents that the borrower’s lender sent to the closing or escrow.
Mortgage Banker: One who lends the bank’s funds to borrowers and brings lenders and borrowers together.
Mortgage Broker: A business that or an individual who unites lenders and borrowers and processes mortgage applications.
Mortgage Loan Servicing Company: A company that collects monthly mortgage payments from borrowers.
Multiple Offers: More than one buyer’s broker present an offer on one property where the offers are negotiated at the same time.
Net Sales Price: Gross sales price, less concessions, to the buyers
Niche: A special area or interest
Off Market: A property listing that has been removed from the sale inventory in a market. A property can be temporarily or permanently off market.
Offer to Purchase: When a buyer proposes certain terms and presents these terms to the seller.
Parcel Identification Number (PIN): A taxing authority’s tracking number for a property.
Payoff Letter: A written document from a seller’s mortgage company stating the amount of money needed to pay the loan in full.
Pending: A real estate contract that has been accepted on a property but the transaction has not been closed.
Pre-approval: A higher level of buyer/borrower pre-qualification required by a mortgage lender. Some pre-approvals have conditions the borrower must meet.
Prepaid Interest: Funds paid by the borrower at closing based on the number of days left in the month of closing.
Prepayment Penalty: A fine imposed on the borrower by the lender when the loan is paid off before it comes due.
Pre-qualification: The mortgage company tells a buyer in advance of the formal mortgage application, how much money the borrower can afford to borrow. Some pre-qualifications have conditions that the borrower must meet.
Principal: The amount of money a buyer borrowers.
Principal, Interest, Taxes, and Insurance (PITI): The four parts that make up a borrower’s monthly mortgage payment.
Private Mortgage Insurance (PMI): A special insurance paid by a borrower in monthly installments, typically of loans of more than 80% of the value of the property.
Promissory Note: A promise-to-pay document used with a contract or an offer to purchase.
Release Deed: A written document stating that a seller or buyer has satisfied his or her obligation on a debt. This document is usually recorded.
Rider: A separate document that is attached to a document in some way. This is done so that an entire document does not need to be rewritten.
Sale Price: The price paid for al listing or property.
Secondary Market: An institutional investment market that purchases mortgages from mortgage lenders.
Seller (owner): The owner of a property who has signed a listing agreement or a potential listing agreement.
Showing: When a listing is shown to prospective buyers or the buyer’s agent (preview).
Special Assessment: A special and additional charge to a unit in a condominium or cooperative. Also a special real estate tax for improvements that benefit a property.
Temporarily Off Market (TOM): A listed property that is taken off the market due to illness, travel, repairs, and so on.
Third-party Company: A relocation company hired by a employee’s employer to coordinate the employee’s move to a new location.
Transaction: The real estate process from offer to closing or escrow.
Transaction Fee: A fixed amount in addition to commission charged to sellers.
Transaction Management Fee (TMF): A fee charged by listing brokers to the seller as part of the listing agreement.
Transaction Sides: The two sides of a transaction, sellers, and buyers. The term used to record the number of transactions in which a real estate sales agent or broker was involved during a specific period.
Under Contract: A property that has an accepted real estate contract between seller and buyer.
Vacate Date: The date on which the seller (transferee) vacates the property (generally the date when responsibility for property expense by the transferee ends) and the third-party company assumes ownership for the property through a buyout.
VOWs (Virtual Office Websites): An internet based real estate brokerage business model that works with real estate consumers in same way as a brick and mortar real estate brokerage.
Walk-through: A showing before closing or escrow that permits the buyers one final tour of the property they are purchasing.
Work Sheet (transaction): The real estate sales company form that records all information relevant to a transaction.