Abstract of Title:
A summary of the public records relating to the ownership of a
particular piece of land. It represents a short legal history of
an individual piece of property, and traces the ownership of that
property from the time of the first recorded transfer to present.
Acceptance:
Consent to an offer to enter into contract.
Adjustable-rate mortgage (ARM):
A mortgage that allows the interest rate to be changed periodically.
Agency:
A legal relationship in which an owner-principal engages a broker-agent
in the sale of property or a buyer-principal engages a broker-agent
in the purchase of property.
American Society of Home Inspectors (ASHI):
A professional trade association that provides training and education
in home inspections. Members must meet qualification requirements
to join.
Amortization:
The gradual repayment of a mortgage by periodic installments.
Annual percentage rate (APR):
The total finance charge (interest, loan fees, points) expressed
as a percentage of the mortgage amount.
Appraisal:
An evaluation of a piece of property to determine its value.
Appreciation:
Increase in value due to any cause.
Asbestos:
A mineral fiber used in some building materials such as flooring,
siding, insulation and roofing. It is presently banned for most
uses in real property.
Assessed value:
The valuation placed on property by a public tax assessor as the
basis of property taxes.
Assumption of mortgage:
An agreement whereby the buyer assumes responsibility for a mortgage
owed by the seller.
Balloon mortgage:
A mortgage where the amount financed is not fully amortized over
the period of the loan. When the loan becomes due, a large sum or
“balloon” payment is required to satisfy the mortgage.
Bridge loan:
A short-term mortgage made until a longer-term loan can be made;
it’s sometimes used when a person needs money to build or
purchase a home before the present one has been sold.
Broker:
A person licensed by a state real estate commission to act independently
in conducting a real estate brokerage business. Although requirements
vary from state to state, an individual must usually have at least
one year of experience in the industry and pass an examination to
earn a broker’s license.
Building codes:
State and local laws that regulate the construction of new property
and the rehabilitation of existing property.
Cap:
The maximum amount an interest rate or monthly payment can change,
either at adjustment time or over the life of the mortgage.
Closing:
The final step in the sale and transfer of ownership of a property.
The title is transferred from the seller to the buyer; the buyer
signs the mortgage and pays costs of settlement; any money due the
seller and purchaser are paid.
Closing costs:
Fees and expenses, not including the price of the home, payable
by the seller and the buyer at the closing (e.g., brokerage commissions,
title insurance premiums, and inspection, appraisal, recording,
and attorney’s fees).
Closing Statement:
A financial statement rendered to the buyer and seller at the time
of transfer of ownership, giving an account of all funds received
or expended.
Cloud on the title:
Any condition which affects the clear title to real property.
Commercial bank:
A financial institution authorized to provide a variety of financial
services, including consumer and business loans (generally short-term),
checking services, credit cards, and savings accounts.
Comparables:
Properties similar in size and character to the one being bought
or sold.
Condominium:
Ownership of a unit only, rather than of the entire building with
the land.
Consideration:
Anything of value to induce another to enter into a contract (i.e.
money, services, a promise).
Contingency:
A condition that must be satisfied before a contract is binding.
Contract:
An agreement to do or not to do a certain thing.
Conventional mortgage:
A fixed rate, fixed-term mortgage not insured by the federal government.
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