Abstract of Title: the history of the title to a parcel of real estate consisting of a summary of the original grant and all subsequent conveyances and encumbrances.
Acceleration Clause: a clause in your mortgage which allows the lender to demand “payment-in-full” of the outstanding loan balance. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
Adjustment Date: a loan with a variable interest rate that may change at scheduled dates. The interest rate is normally tied to a national index (i.e. Treasury Bills).
Adjustable-Rate Mortgage (“ARM”): a loan with a variable interest rate that may change at scheduled dates. The interest rate is normally tied to a national index (i.e. Treasury Bills).
Adjustments: in the appraisal process, an “adjustment” is a dollar amount either added to or subtracted from each comparable property to equalize the value of an amenity difference between your property and another.
When determining your equity, it works essentially the same way. It is a dollar adjustment for any outstanding liens or repairs that have not been satisfied prior to the settlement date.
Agent: in the real estate community, the word “agent” is referring to a licensed real estate agent. This person may or may not be a Realtor®, and more recently, could be either a “buyers” or “sellers” agent.
Agreement of Sale: a written instrument or “contract” used to purchase real estate.
Amended Value: a relocation industry term referring to the modification (amending) of the appraised value offer amount to match an offer received from a third-party buyer. The process is used to avoid taxable reimbursements to an employee.
Amortization: the payment schedule of a loan combining the repayment of the principal amount and the interest charged. Normally associated with a time period: e.g., 30 years.
Amortization Schedule: a table displaying how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the original loan balance until it reaches a zero balance.
Annual Percentage Rate (“APR”): the value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage (not the actual rate of your loan). The APR is always higher than the actual not rate on your loan.
Application fee: a fee, varying by lender, charged for processing an application for a loan.
Appraisal: a formal method of determining the value of real estate by an independent, licensed real estate appraiser. Historical and forecasted data is taken into consideration.
Appraiser: an individual qualified by education, training, experience and generally licensed to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent “fee appraisers.”
Appraised Value: the value of real estate as determined by an appraisal. The appraiser is commonly directly to determine a value in which the property would most likely sell for in 90-120 days. Typically, more than one appraisal is completed, and the value is established based on their average.
Appreciation: the increase in the value of a property due to changes in demand, market conditions, inflation, and/ or other causes.
Appraised Value Offer: an offer to purchase real estate based on its “appraised” value.
Assessment: the placing of a value or amount on property for the purpose of taxation.
“As is:” an offer to sell real estate in its present condition with no expressed or implied warrantees.
Assumable Mortgage: a mortgage with terms in the original note, which allows the assumption of responsibility of repayment to another party (e.g., a purchaser).
Balloon Mortgage: a mortgage with terms which allow payments for a predetermined amount of time, and a “payment in full” for the remaining non-amortized balance at the end of the term.
Broker (Real Estate): a state-licensed representative generally having several years of real estate selling experience. Most real estate representatives are “agents” who work for a “broker.”
Broker’s Commission: the payment of money or other valuable consideration to a real estate broker for their participation in bringing together a buyer and seller to the sale of a property.
Broker’s Market Analysis: research completed by a licensed real estate representative (an agent or broker), leading to an “opinion of value” for the property. Similar to appraisal, the value is established based on a comparison of the subject property to others that have recently sold and closed.
Buydown: an advancement of funds to a lender, generally in the form of “points,” which reduces the effective rate of the loan -- therefore, reducing the amount of the monthly payment.
Cap: a term utilized in an Adjustable Rate Mortgage (ARM) referring to the maximum interest rate or payment amount for a specific time period.
Capital Improvements: investments in property that either increases the value or the remaining life (e.g., replacing carpet; adding a room; replacing air conditioning or heating system; adding a swimming pool).
Closing: the settlement or conclusion of a real estate transaction in which the transfer of property ownership takes place.
Closing Costs/(Settlement Costs): costs incurred at the transaction’s closing (i.e. unpaid mortgage interest; taxes; title fees; recording fees; etc.).
Commission: a fee charged by a licensed real estate broker for services rendered (listing and/or selling a property). Usually a percentage of the sales price.
Common Area: portions of a building, land and/or amenities owned (or sometimes managed) by a planned unit development (“PUD”) or condominium project's homeowners' association that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas frequently include: swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.
Community Property: in some states, most commonly the southwest, property acquired by a married couple during their marriage is considered to be owned “jointly,” and therefore referred to as community property, except under special circumstances.
Contingency: a term incorporated in an agreement on which the transaction is conditional.
Conventional Mortgage: a mortgage with terms that remain fixed over the entire period of the loan.
Credit History: a record of an individual's repayment of owned debt. Credit histories are reviewed by mortgage lenders as one of the criteria in determining credit risk. A history of timely credit payments generally leads to a higher credit rating and qualification for a more lower interest rate.
Deed: a written document used to convey title (ownership) of real estate.
Disclosure Statement: a document furnished by the seller to a prospective purchaser disclosing the known condition and history of the property.
Down Payment: the portion of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Discount Points: discount points refer to any amounts paid (in addition loan origination fee) to obtain a loan or reduce the loan’s interest rate. A "point" is one percent of the loan amount.
Earnest Money: the money paid by a prospective purchaser to the seller to show “good faith” intentions to purchase the property. The funds are normally held “in escrow” at a title company or attorneys office.
Easement: an area of land that someone in addition to the actual land owner may use or have access to for specific purposes. An easement may also limit the usage of the property.
Encroachment: an improvement on land that intrudes illegally onto another’s property.
Equity: the remaining value after the deduction of any mortgages, liens, or other obligations related to the property.
Equity Advance: an advancement of a portion (or all) of the equity in a property prior to the accepting of an offer to purchase.
Escrow Account: an account held by your lender to collect impounds for future payment of taxes, insurance, etc. Your monthly payment amount will be increased to an amount above what would have been required if you were only paying your principal and interest. An escrow account is sometimes required by a lender.
Exclusive Listing: a written contract that gives a licensed real estate broker the exclusive right to sell a property for a specified period of time.
Gross-Up: a mathematical calculation developed for the purpose of covering the state, local or federal taxes imposed on the reimbursement of costs incurred during the completion of a relocation.
Homeowner’s Warranty: a guarantee or warranty program that can be obtained on most properties that typically covers major mechanical or structural problems that occur for a specified time period.
Homefinding Trip: a trip to your new or destination location for the purpose of identifying an area in which to live and obtain new housing.
Incidental Expenses: miscellaneous expenses incurred during the completion of a relocation (i.e. utility deposits, renewing/replacing driver’s license, etc.).
Interest rate: the cost of money charged by a lender for the use of their funds for a pre-determined period of time.
Inventory Transaction: referring to a transaction in which the employee was unsuccessful in generating an outside sale (Amended Value transaction) and accepted third-party’s Appraised Value Offer. AOM accepts management responsibility for the property through the marketing and sales process.
Lien: a claim placed against a property that must be cleared prior to a new title policy will be issued to a prospective buyer.
Loan-to-Value ratio: the ratio resulting from the comparison of the outstanding principal balance of a loan to the property value. Normally expressed as a percentage (i.e. 85% “LTV”).
Loss-on-Sale: occurs when the current value of a property is less than the original purchase price. Could result in a “Negative Equity.”
Mortgage Insurance: an insurance policy provided to a lender, typically paid for by the borrower, insuring the lender against a loss in the event of a default on the loan.
Multiple Listing (Agreement): a real estate network providing all member real estate agents information to properties “listed” for sale in the coverage area.
Negative Equity: this occurs when the sales price on a property is less than the mortgage balance and any other unpaid interest or other expenses.
Offer Period: the time period from the date the third-party provides an Appraised Value Offer amount, to the date of its expiration.
Points: a percentage fee charged by a lender for providing a loan at a specific interest rate (i.e., 1 point is 1% of the loan amount). Also referred to as “Discount Points.”
Power of Attorney: a written, signed and notarized document that authorizes an individual to act (including signing documents) on behalf of another.
Rate Lock: an interest rate “commitment” from a lender for a loan closed within a specified time period.
Real Estate Commission: a fee charged by a licensed real estate broker for services rendered (listing and/or selling a property). Usually a percentage of the sales price.
Survey: a graphical measurement of a parcel of land and any improvements. The primary purpose is to confirm a home is situated properly on its lot and identify any easements. Most lenders will require a survey to be completed.
Title Policy/Insurance: an insurance policy insuring and protecting the lender and owner of the property against any unforeseen claims against the title on the property.
