Glossary of Terms

ABSORPTION RATE   
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

ABSTRACTION METHOD   
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

ACCELERATION CLAUSE   
A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. Usually when the borrower defaults on the loan.

ACCESSORY BUILDING   
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

ACCRETION   
The natural growth of a piece of land resulting from forces of nature

ACRE  
43,560 square feet. A measurement of area.

ACTUAL AGE   
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE

ADJUSTMENT DATE   
The date the interest rate changes on an adjustable rate mortgage.

AD VAL OREM TAX   
Taxes assessed based on the value of the land and improvements

ADDENDUM   
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

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

ADJUSTED BASIS   
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

ADJUSTED SALES PRICE   
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

AESTHETIC VALUE  
The additional value a property enjoys based on subjective criteria such as look or appeal.

AFFIRMATION   
A declaration that a certain set of facts are truthful.

AFFORDABILITY ANALYSIS
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT  
A person who has been appointed to act on behalf of another for a particular transaction.

AMENITY   
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

AMERICAN SOCIETY OF APPRAISERS   
An organization of appraisal professionals and others interested in the appraisal profession.

AMORTIZATION  
The repayment of a loan through regular periodic payment.

AMORTIZATION SCHEDULE   
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM   
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

AMPERAGE   
A measure of electric current describing the magnitude.

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

ANNUITY   
A sum of money paid at regular intervals, often annually.

APPLICATION   
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.

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

APPRAISAL FOUNDATION   
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAISAL INSTITUTE   
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAISAL PRINCIPLES   
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAISAL REPORT   
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

APPRAISAL STANDARDS BOARD (ASB)   
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

APPRAISED VALUE  
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER   
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECIATION   
The natural rise in property value due to market forces.

ARMS LENGTH TRANSACTION  
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

ASSESSED VALUE   
The value of a property according to jurisdictional tax assessment.

ASSESSMENT   
The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATIO   
The comparative relationship of a property's assessed value to its market value.

ASSESSOR   
The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET   
Any item of value which a person owns.

ASSIGNMENT   
Transfer of ownership of a mortgage usually when the loan is sold to another company.

ASSUMABLE MORTGAGE   
A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTION   
When a buyer takes over, or "assumes" the sellers mortgage.

ATTACHED HOUSING   
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.

BACKFILL   
The slope of the ground around a house.

BALL COCK VALVE   
The valve inside a toilet tank that controls the filling of the tank.

BALLOON MORTGAGE   
A mortgage loan in which the monthly payments are not large enough to repay the loan by the end of the term. So at the end of the term, the remaining balance comes due in a single large payment.

BALLOON PAYMENT   
The final large payment at the end of a balloon mortgage term.

BANKRUPTCY   
When a person or business is unable to pay their debts and seeks protection of the state against creditors. Bankruptcies remain on credit records for up to ten years and can prevent a person from being able to get a loan.

BEAM   
A structural supporting member.

BILL OF SALE   
A physical receipt indicating the sale of property.

BIWEEKLY MORTGAGE   
A mortgage where you make "half payments" every two weeks, rather than one payment per month. This results in making the equivalent of 13 monthly payments per year, rather than 12, significantly reducing the time it takes to pay off a thirty year mortgage.

BLIGHTED AREA   
Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

BONA FIDE   
Any genuine offer, made without intent to defraud or deceive.

BRIDGE FINANCING   
An interim loan made to facilitate the purchase of a new home before the buyer's current residence sells and its equity is available to fund the new purchase.

BRIDGING   
Structural members used between beams to strengthen the structure.

BROKER  
An individual who facilitates the purchase of property by bringing together a buyer and a seller.

BTU   
British Thermal Unit. A unit of measurement used to describe heating or cooling capacity.

BUFFER ZONE   
A segment of land between two disparate municipal zones which acts as a shield to keep one zone from encroaching upon the other. Often used to separate residential districts from commercial areas.

BUILDING CODE   
Regulations that ensure the safety and material compliance of new construction within a municipality. Building codes are localized to ensure they are adequate to meet the risk of common hazards.

BUILDING LINE OR SETBACK 
The statutory distance between buildings and the property line, imposed by municipalities, home associations, or other agreements.

BUILT-INS   
Specific items of personal property which are installed in a real estate improvement such that they become part of the building. Built-in microwave ovens and dishwashers are common examples.

BUNGALOW   
A one-story, home-style dating from the early twentieth century. Often characterized by a low-pitched roof.

BUY DOWN   
Extra money paid in a lump sum to reduce the interest rate of a fixed rate mortgage for a period of time. The extra money may be paid by the borrower, in order to have a lower payment at the beginning of the mortgage. Or paid by the seller, or lender, as incentive to buy the property or take on the mortgage.

BX CABLE  
Electrical cable shrouded in a galvanized steel outer cover.

CALL OPTION   
A clause in a mortgage which allows the lender to demand payment of the outstanding balance at a specific time.

CAP   
Associated with Adjustable Rate Mortgages. A limit on how high monthly payments or how much interest rates may change within a certain time period or the life of the mortgage.

CAPE COD COLONIAL   
A single-story house style made popular in New England. Often characterized by a steep roof with gables.

CAPITAL   
Accumulated goods and money which is most often used to generate additional income.

CAPITAL EXPENDITURE   
An outlay of funds designed to improve the income-producing capabilities of an asset or to extend its economic life.

CASH-OUT REFINANCE   
Refinancing a mortgage at a higher amount than the current balance in order to transform a portion of the equity into cash.

CAULKING   
A pliable material used to seal cracks or openings such as around windows.

CAVEAT EMPTOR   
Literally translated: ''Let the buyer beware.'' A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

CERTIFICATE OF DEPOSIT   
A document showing that the bearer has a certain amount of money, at a particular amount interest, on deposit with a financial institution.

CERTIFICATE OF DEPOSIT INDEX   
An index based on the interest rate of six month CD's. Used to set interest rates on some Adjustable Rate Mortgages.

CERTIFICATE OF ELIGIBILITY   
A document issued by the Veterans Administration that certifies eligibility for a VA loan.

CERTIFICATE OF OCCUPANCY   
Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

CERTIFICATE OF REASONABLE VALUE (CRV)   
Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

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

CERTIFIED GENERAL APPRAISER   
Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

CERTIFIED RESIDENTIAL APPRAISER   
A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

CHAIN OF TITLE   
The complete history of ownership of a piece of property.

CHATTEL   
Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

CIRCUIT BREAKERS   
Electrical devices which automatically open electrical circuits if they are overloaded.

CLEAR TITLE   
Ownership of property that is not encumbered by any counter-claim or lien.

CLOSING   
A torturous process designed to induce cramping in a home buyer's hands by requiring signature on countless pieces of documentation that nobody has ever read. Or, the process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).

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.

CLOSING STATEMENT   
The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.

CO-BORROWER   
A second person sharing obligation on the loan and title on the property.

COLLATERAL   
An asset which is placed at risk to secure the repayment of a loan.

COLLECTION   
The process a lender takes to pursue a borrower who is delinquent on his payments in order to bring the mortgage current again. Includes documentation that may be used in foreclosure.

CO-MAKER   
A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

COMMON LAW   
As opposed to statute law. Laws that have been established by custom, usage and courts over many years.

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.

COMMON AREA ASSESSMENTS  
Fees which are charged to the tenets or owners of properties to cover the costs of maintaining areas shared with other tenets or owners. Commonly found in condominium, PUD or office spaces.

COMMON AREAS   
Any areas, such as entryways, foyers, pools, recreational facilities or the like, which are shared by the tenets or owners of property near by. Commonly found in condominium, PUD or office spaces.

COMMUNITY PROPERTY   
In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

COMPARABLES   
An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property whose value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

COMPOUND INTEREST   
Interest paid on the principal amount, as well as any accumulated interest.

CONCESSIONS   
Additional value granted by a buyer or seller to entice another party to complete a deal.

CONDEMNATION   
The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions.

CONDENSATION   
The transition of water vapor to liquid. Typically forms in areas of high humidity.

CONDOMINIUM   
A development where individual units are owned, but common areas and amenities are shared equally by all owners.

CONDOMINIUM CONVERSION   
Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

CONDUIT   
The pipe through which electric wiring is run.

CONSTRUCTION LOAN   
A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

CONTIGUOUS  
Connected to or touching along an unbroken boundary.

CONTINGENCY  
Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer that requires a complete home inspection before it becomes official.

CONTRACT   
A legally binding agreement, oral or written, between two parties.

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.

COOPERATIVE (CO-OP)   
A form of ownership where each resident of a multiunit property owns a share in a cooperative corporation that owns the building. With each resident having rights to a specific unit within the building.

CORPORATE RELOCATION   
A situation where a person's employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee's primary residence.

COST OF FUNDS INDEX (COFI)   
An index of financial institutions costs used to set interest rates for some Adjustable Rate Mortgages.

COVENANT  
A stipulation in any mortgage that, if not met, can be cause for the lender to foreclose.

CREDIT  
A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

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

CREDITOR   
A person to whom money is owed.

CREDIT REPORT   
A detailed report of an individuals credit, employment and residence history prepared by a credit bureau. Used by lenders to determine credit worthiness of individuals.

CREDIT REPOSITORY   
Large companies that gather and store financial and credit information about individuals who apply for credit.

CUL-DE-SAC   
A dead-end street. One with only one entrance/exit.

DATE OF APPRAISAL  
The specific point in time as of which an appraiser designates the value of a home. Often stipulated as the date of inspection.

DEBT   
An obligation to repay some amount owed. This may or may not be monetary.

DEBT EQUITY RATIO   
The ratio of the amount a mortgagor still owes on a property to the amount of equity they have in the home. Equity is calculated at the fair-market value of the home, less any outstanding mortgage debt.

DEED   
A document indicating the ownership of a property.

DEED-IN-LIEU (OF FORECLOSURE)   
A document given by a borrower to a lender, transferring title of the property. Often used to avoid credit-damaging foreclosure procedures.

DEED OF TRUST   
A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.

DEED OF RECONVEYANCE   
A document which transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.

DEED OF RELEASE   
A document which dismisses a lien or other claim on a property.

DEED OF SURRENDER   
A document used to surrender any claim a person has to a property.

DEFAULT   
The condition in which a borrower has failed to meet the obligations of a loan or mortgage.

DELINQUENCY  
The state in which a borrow has failed to meet payment obligations on time.

DEPOSIT   
Cash given along with an offer to purchase property, Also called EARNEST MONEY.

DEPRECIATION   
The natural decline in property value due to market forces or depletion of resources.

DETACHED SINGLE-FAMILY HOME   
A single building improvement intended to serve as a home for one family.

DISCOUNT POINTS   
Points paid in addition to the loan origination fee to get a lower interest rate. One point is equal to one percent of the loan amount.

DISTRESSED PROPERTY   
A mortgaged property which has been foreclosed on.

DOWNSPOUT   
The pipe that water moves through to reach the ground from the rain gutter.

DUE-ON-SALE PROVISION   
A clause in a mortgage giving the lender the right to demand payment of the full balance when the borrower sells the property.

DUPLEX   
A single-building improvement which is divided and provides two units which serve as homes to two families.

DWELLING   
A house or other building which serves as a home.

DOWN PAYMENT   
An amount paid in cash for a property, with the intent to mortgage the remaining amount due.

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.

EASEMENT   
The right of a non-owner of property to exert control over a portion or all of the property. For example, power companies often own an easement over residential properties for access to their power lines.

EAVE  
The part of the roof that extends beyond the exterior wall.

ECONOMIC DEPRECIATION   
The decline in property value caused by external forces, such as neighborhood blight or adverse development.

ECONOMIC LIFE   
The amount of time which any income-producing property is able to provide benefits to its owner.

EFFECTIVE AGE   
The subjective, estimated age of a property based on its condition, rather than the actual time since it was built. Excessive wear and tear can cause a property's effective age to be greater than its actual age.

EMINENT DOMAIN   
The legal process whereby a government can take ownership of a piece of property in order to convert it to public use. Often, the property owner is paid fair-market value for the property.

ENCROACHMENT   
A building or other improvement on one property which invades another property or restricts its usage.

ENCUMBRANCE   
A claim against a property. Examples are mortgages, liens and easements.

ENERGY EFFICIENCY RATIO   
An efficiency rating system for air conditioning units that corresponds to the number of BTU's output per watt of electricity used.

EQUAL CREDIT OPPORTUNITY ACT (ECOA)   
U.S. federal law requiring that lenders afford people equal chance of getting credit without discrimination based on race, religion, age, sex etc

EQUITY   
The difference between the fair market value of a property and that amount an owner owes on any mortgages or loans secured by the property.

EQUITY BUILDUP   
The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

ERRORS AND OMISSIONS INSURANCE   
An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.

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.

ESCROW ACCOUNT   
An account setup by a mortgage servicing company to hold funds with which to pay expenses such as homeowners insurance and property taxes. An extra amount is paid with regular principal and interest payments that go into the escrow account each month.

ESCROW ANALYSIS   
An analysis performed by the lender usually once each year to see that the amount of money going into the escrow account each month is correct for the forecasted expenses.

ESCROW DISBURSEMENTS   
The payout of funds from an escrow account to pay property expenses such as taxes and insurance.

ESTATE   
The total of all property and assets owned by an individual.

EXAMINATION OF TITLE   
The report on the title of a property from the public records or an abstract of the title.

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

EXECUTOR   
The person named in a will to administer the estate.

FACADE   
The front exposure of any building. Often used to describe an artificial or false front which is not consistent with the construction of the rest of the building.

FAIR CREDIT REPORTING ACT   
A federal law regulating the way credit agencies disclose consumer credit reports and the remedies available to consumers for disputing and correcting mistakes on their credit history.

FAIR MARKET VALUE   
The price at which two unrelated parties, under no duress, are willing to transact business.

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 nation's largest source of financing for home mortgages.

FASCIA   
The boards that enclose the eaves.

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

FEDERAL HOUSING ADMINISTRATION (FHA)   
A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930's to facilitate the purchase of homes by low-income, first-time home buyers. It currently provides federally-subsidized mortgage insurance for private lenders.

FEE APPRAISER   
A certified, professional appraiser who forms an opinion of the fair market value of property and receives a set fee in exchange.

FEE SIMPLE   
A complete, unencumbered ownership right in a piece of property.

FEE SIMPLE ESTATE   
A form or ownership, or holding title to real estate. It is the most complete form of title, having an unconditional and unlimited interest of perpetual duration.

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

FINAL VALUE ESTIMATE   
The opinion of value of a piece of property resulting from an appraisal following the USPAP guidelines.

FIRST MORTGAGE   
The primary loan or mortgage secured by a piece of property.

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

FIXTURE   
Any piece of personal property which becomes permanently affixed to a piece of real property.

FLASHING   
The metal used around the base of roof mounted equipment, or at the junction of angles used to prevent leaking.

FLOOD INSURANCE   
Supplemental insurance which covers a home owner for any loss due to water damage from a flood. Often required by lenders for homes located in FEMA-designated flood zones.

FLOOR PLAN   
The representation of a building which shows the basic outline of the structure, as well as detailed information about the positioning of rooms, hallways, doors, stairs and other features. Often includes detailed information about other fixtures and amenities.

FLUE   
The furnace exhaust pipe, usually going through the roof.

FLUSH VALVE   
The valve between the toilet bowl and the tank.

FOOTING   
The partially buried support for a vertical structural member such as a post.

FORECLOSURE   
The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.

FORFEITURE   
The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

FOUNDATION   
The solid structural element upon which a structure is built.

FRONTAGE   
The segment of a property that runs along a point of access, such as a street or water front.

FUNCTIONAL OBSOLESCENCE   
A decrease in the value of property due to a feature or lack thereof which renders the property undesirable. Functional obsolescence can also occur when the surrounding area changes, rendering the property unusable for its originally intended purpose.

GABLE ROOF   
A steeply angled, triangular roof.

GALVANIZED PIPE   
Iron pipe with a galvanized (zinc) coating.

GAMBREL ROOF   
A ''barn-like'' roof, where the upper portion of the roof is less-steeply angled than the lower part.

GENERAL LIEN   
A broad-based claim against several properties owned by a defaulting party.

GEORGIAN   
A classic, English-style hose characterized by simple rectangular shape and multiple stories.

GFI   
Ground Fault Interrupter. A type of circuit breaker required in areas where water is present.

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

GIRDER   
A main supporting beam.

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

GRADE   
The slope of land around a building. Also ground level.

GRANTEE   
Any person who is given ownership of a piece of property.

GRANTOR   
Any person who gives away ownership of a piece of property.

GROSS AREA   
The sum total of all floor space, including areas such as stairways and closet space. Often measured based on external wall lengths.

GROUTING   
Material used around ceramic tile.

GUTTER   
The trough around the edge of the roof that catches and diverts rain.

HALF-SECTION   
320 acres.

HAZARD INSURANCE   
Insurance covering damage to a property caused by hazards such as fire, wind and accident.

HEADER   
The framing elements above an opening such as a window or door.

HEARTH   
The floor of a fireplace or the area immediately in front of it.

HEIGHT ZONING   
A municipal restriction on the maximum height of any building or other structure.

HIDDEN AMENITIES   
Assets of a property which contribute to its value, but are not readily apparent. Examples might include upgraded or premium building materials.

HIGHEST AND BEST USE   
The most profitable and likely use of a property. Selected from reasonably probable and legal alternative uses, which are found to be physically possible, appropriately supported and financially feasible to result in the highest possible land value.

HOME EQUITY CONVERSION MORTGAGE (HECM)   
Also known as a reverse annuity mortgage. It allows home owners (usually older) to convert equity in the home into cash. Normally paid by the lender in monthly payments. HECM's typically do not have to be repaid until the borrower is no longer occupying the home.

HOME EQUITY LINE OF CREDIT   
A type of mortgage loan that allows the borrower to draw cash against the equity in his home.

HOME INSPECTION   
A complete examination of a building to determine its structural integrity and uncover any defects in materials or workmanship which may adversely affect the property or decrease its value.

HOME INSPECTOR   
A person who performs professional home inspections. Usually, with an extensive knowledge of house construction methods, common house problems, how to identify those problems and how to correct them.

HOMEOWNER'S ASSOCIATION   
An organization of home owners in a particular neighborhood or development formed to facilitate the maintenance of common areas and to enforce any building restrictions or covenants.

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

HOMEOWNER'S WARRANTY   
An insurance policy covering the repair of systems and appliances within the home for the coverage period.

HUD MEDIAN INCOME   
Median family income for a particular county or metropolitan statistical area (MSA), as estimated by the Department of Housing and Urban Development (HUD).

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.

IMPROVED LAND   
Any parcel of land which has been changed from its natural state through the creation of roads, buildings or other structures.

IMPROVEMENTS   
Any item added to vacant land with the intent of increasing its value or usability.

IMPROVEMENT RATIO   
The comparative value of an improved piece of land to its natural, unaltered state.

INCOME APPROACH   
The process of estimating the value of property by considering the present value of a stream of income generated by the property.

INCOME PROPERTY   
A piece of property whose highest and best use is the generation of income through rents or other sources.

INDEPENDENT APPRAISAL   
An estimation of value created by a professional, certified appraiser with no vested interest in the value of the property.

INSPECTION   
The examination of a piece of property, its buildings or other amenities.

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.

INTEREST RATE   
A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

INVESTMENT PROPERTY   
Any piece of property that is expected to generate a financial return. This may come as the result of periodic rents or through appreciation of the property value over time.

JAMB   
The side of a door frame.

JOINT TENANCY   
A situation where two or more parties own a piece of property together. Each of the owners has an equal share, and may not dispose of or alter that share without the consent of the other owners.

JOISTS   
Horizontal beams laid on edge to support flooring or a ceiling.

JUDGMENT   
An official court decision. If the judgment requires payment from one party to another, the court may put a lien against the payee's property as collateral.

JUDICIAL FORECLOSURE   
A type of foreclosure conducted as a civil suit in a court of law.

JUMBO LOAN   
A mortgage loan for an amount greater than the limits set by Fannie Mae and Freddie Mac. Often called non-conforming loans.

LALLY COLUMN   
A concrete filled steel pipe used to support beams.

LATE CHARGE   
An extra charge, or penalty added to a regular mortgage payment when the payment is made late by an amount of time specified in the original loan document.

LATENT DEFECTS   
Any defect in a piece of property which is not readily apparent, but which has an impact of the value. Structural damage or termite infestation would be examples of latent defects.

LEASE   
A contract between a property owner and a tenant specifying the payment amount, terms and conditions, as well as the length of time the contract will be in force.

LEASEHOLD ESTATE   
A type of property ''ownership'' where the buyer actually has a long-term lease on the property.

LEASE OPTION   
A lease agreement that gives the tenant an option to buy the property. Usually, a portion of the regular monthly rent payment will be applied towards the down payment.

LEGAL DESCRIPTION   
The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

LENDER   
The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.

LIABILITIES    
A person's outstanding debt obligations.

LIABILITY INSURANCE   
Insurance that covers against potential lawsuit brought against a property owner for alleged negligence resulting in damage to another party.

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

LIFE CAP   
A limit on how far the interest rate can move for an Adjustable Rate Mortgage.

LIKE-KIND PROPERTY   
Any property which is substantially similar to another property.

LINE OF CREDIT   
An extension of credit for a certain amount for a specific amount of time. To be used by the borrower at his discretion.

LIQUID ASSET   
Any asset which can be quickly converted into cash at little or no cost, or cash itself.

LOAN    
Money borrowed, to be repaid with interest, according to the specific terms and conditions of the loan.

LOAN OFFICER   
A person that "sells" loans, representing the lender to the borrower, and the borrower to the lender.

LOAN ORIGINATION   
How a lender refers to the process of writing new loans.

LOAN SERVICING   
The processing of payments, mailing of monthly statements, management and disbursement of escrow funds etc Typically carried out by the company you make payments to.

LOAN-TO-VALUE RATIO (LTV)   
The comparison of the amount owed on a mortgaged property to its fair market value.

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.

LOCK-IN PERIOD   
The amount of time the lender has guaranteed an interest rate to a borrower.

MAJOR DEFICIENCY   
A deficiency that strongly impacts the usability and habitability of a house. Or a deficiency that may be very expensive to repair.

MANUFACTURED HOUSING   
Once known as ''mobile homes,'' manufactured housing is any building which has been constructed off site, then moved onto a piece of real property.

MARGIN   
The difference between the interest rate and the index on an adjustable rate mortgage.

MARGINAL LAND   
Land whose value has been diminished due to some internal defect or external condition. In most cases, the cost to correct the flaw or condition is as much or more than the expected return from the property.

MASTER ASSOCIATION   
An umbrella organization that is made up of multiple, smaller home owner's associations. Often found in very large developments or condominium projects.

MATURITY   
The date on which the principal balance of a financial instrument becomes due and payable.

MERGED CREDIT REPORT   
A credit report derived from data obtained from multiple credit agencies.

METES AND BOUNDS   
A traditional way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its origin.

METROPOLITAN AREA   
The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.

MINERAL RIGHTS   
The legal right to exploit and enjoy the benefits of any minerals located below the surface of a parcel of land.

MISREPRESENTATION   
A statement by one party in a transaction that is incorrect or misleading. Most misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.

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

MORTGAGE BANKER   
A financial institution that provides primary and secondary mortgages to home buyers.

MORTGAGE BROKER   
A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

MORTGAGEE   
The entity that lends money in a real estate transaction.

MORTGAGE INSURANCE   
A policy that fulfills those obligations of a mortgage when the policy holder defaults or is no longer able to make payments.

MORTGAGE INSURANCE PREMIUM (MIP)   
A fee that is often included in mortgage payments that pays for mortgage insurance coverage.

MORTGAGE LIFE INSURANCE   
A policy that fulfills the obligations of a mortgage when the policy holder dies.

MORTGAGOR   
The entity that borrows money in a real estate transaction.

MULTI-FAMILY PROPERTIES   
Any collection of buildings that are designed and built to support the habitation of more than four families.