| A Abstract of title
A history of ownership of a property and any documents that affect the title during that
ownership.
Acceptance of sale/Sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that
outlines all details of the property transaction. (Same as "offer to
purchase/contract of sale/sales contract.")
Adjustable Rate Mortgage (ARM)
A loan with an interest rate that fluctuates according to the movements of a predetermined
index.
Agent/Sales associate
A person licensed by the state to sell real estate through a real estate broker.
Amortization
The paying off of a debt such as a mortgage in periodic installments for the term of the
loan.
Appraisal
An opinion by a licensed real estate appraiser about the fair market value of a home.
Appreciation
The increase in value of a home.
Assumable loan
An existing mortgage that can be taken over by the buyer -- usually on the same terms
given to the original buyer.
Assumption
Taking over responsibility for payments on a mortgage and meeting any of the other
requirements. Typically, a buyer assumes a mortgage from the seller.
Back to
top
B
Balloon payment
A loan with monthly payments too low to pay off the balance in the specified term. The
balance must be paid in full when the loan comes due -- typically within three to five
years.
Broker
A person who has a real estate broker's license, who may not only make real estate
transactions for others in exchange for a fee (or other consideration), but also may
operate a real estate business and employ sales associates and other brokers.
Buy down
A method of lowering the interest rates on a mortgage, either temporarily or for the
entire term of the loan. Often points are paid up front to make up the difference between
the rate actually charged on the mortgage and the rate at which the buyer pays.
Practically anyone -- sellers, buyers, home builders, relatives, etc. -- can buy down
rates.
Buyer pool
The entire market of prospective home buyers in a specific area or looking for a type of
home.
Back
to top
C
Caps
A safeguard against excessively high payment increases, some ARMs place a cap on the
amount by which either the interest rate or payment may rise at any single adjustment,
over the life of the loan, or both. Look at the cap as "the worst case scenario"
to determine if the ARM suits your financial capabilities.
Clear or marketable title
A title that doesn't have any liens or claims against it that would keep it from being
transferred, put the buyer in a position to sue for property rights or be obligated for
claims.
Closing costs
Expenses above the purchase price that buyers and sellers pay at closing.
Closing or settlement
The meeting between seller and buyer when the property legally changes hands. The contract
of sale.
Contract of purchase
A document that lists the price, conditions and terms under which the buyer is willing to
purchase the property. (Each of these means the same thing: offer to purchase, or purchase
offer, or earnest money agreement, or contract of purchase, or deposit receipt.)
Contract of sale/Sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that
outlines all details of the property transaction. (Same as "offer to
purchase/acceptance of sale/sales contract.")
Back
to top
D
Deed
The legal document that is used to transfer the title from one owner to another.
Deposit receipt
A document that lists the price, conditions and terms under which the buyer is willing to
purchase the property. (Each of these means the same thing: offer to purchase, or purchase
offer, or earnest money agreement, or contract of purchase, or deposit receipt.)
Due-on-sale clause
A restriction in a mortgage that has the effect of stopping assumptions. The clause states
that the entire balance of the mortgage is due and payable immediately if the property is
sold or conveyed.
Back
to top
E
Earnest money
Money deposited by potential buyers to show their seriousness about buying.
Earnest money agreement
A document that lists the price, conditions and terms under which the buyer is willing to
purchase the property. (Each of these means the same thing: offer to purchase, or purchase
offer, or earnest money agreement, or contract of purchase, or deposit receipt.)
Equity
- Equity is the sale price minus selling costs and the remaining principal on the
mortgage.
- The money you are left with after selling your home and paying off the mortgage, selling
costs and any other liens.
- The amount of ownership that one has in a home. Ownership value is built up by paying
down the principal on your mortgage plus the increase in value (appreciation) of your home
in the market place.
Exclusive agency listing
A listing contract in which the agent has the sole right to sell your home for you, though
you are not bound to pay the commission if you produce the buyer. See listing
agreements.
Exclusive right-to-sell contract
A listing contract in which you give the real estate broker the sole right to sell; the
person receives a commission, regardless of who produces the buyer. See listing
agreements.
Back
to top
F
Federal Housing Administration (FHA)
A federal agency that insures first mortgages, enabling lenders to lend a very high
percentage of the sale price.
Fixed-rate mortgage
A loan with an interest rate and monthly payments that do not vary.
Back
to top
G
General warranty deed
The type of deed considered to provide the most protection to an owner, since the seller
guarantees that he or she is the true owner of the property and that no claim will be
brought against the property.
Back
to top
H
Home Buying Program
Home Buying Program shows how Advantage Real Estate Network sales associates can
provide the assistance necessary for buyers to find and purchase the home that best fits
their needs. Sales associates will have a variety of tools and techniques allowing them to
act as consultants focusing on the buyer's wants, goals, needs and objectives.
Home Market Analysis
The Home Market Analysis presents an opportunity to review and evaluate the facts before
you decide the price you will ask for your home. It also helps you look at your home from
a buyer's perspective. This process will establish a realistic listing price and increase
the percentage of qualified buyers who look at your property.
Home Marketing Program
Our Home Marketing Program is designed to show listing prospects the many compelling
reasons why they should list with Advantage Real Estate Network sales
professionals. It explains how the real estate business really works and helps set goals,
enhance a home's perceived value and marketability, mobilize the real estate community and
aggressively market a home. Quite simply, it provides the consumer with a step-by-step
marketing plan resulting in more listings sold and increased satisfaction.
Home Merchandising Program
Preparing a home to sell is different than preparing it to be lived in. Merchandising will
help sellers see their home through the eye of potential buyers and identify possible
areas of improvement -- homes that are properly prepared are seen as more desirable, worth
more money, and consequently more marketable. It is the better way to sell your home.
Housing Market Index (HMI)
The HMI is based on a monthly survey of home builders that the National Association of
Home Builders (NAHB) has been conducting for over 16 years. Each month, the survey asks
builders to rate present sales of single-family detached homes and sales expectations over
the next six months as "good," "fair," or "poor." Traffic of
prospective buyers is rated as "high to very high," "average," or
"low to very low." The HMI is a weighted average of the three seasonally
adjusted components. On a scale of 0 to 100, with zero being the worst and 100 the best.
Back
to top
I
Index
The rate you pay directly related to a particular interest-rate index.
Back
to top
L
Lien
A monetary claim against your property. Usually liens must be settled before the seller
can take the title.
Listing agreements
Three types of listing agreements:
- With an exclusive right-to-sell agreement, the seller pays a fee regardless of who
produces the buyer. This fee covers many important services that the sales associate
performs above and beyond finding a qualified buyer.
- If the seller finds a buyer, he or she is not obligated to pay the fee in
exclusive-agency listing. If the sales associate finds a buyer, then the fee is paid to
the real estate company.
- An open listing is one in which you sign with several real estate firms and give each
authority to sell your home. It is typically less effective than exclusive listing because
the sales associate lacks the incentive to make and all-out effort to sell your home.
Listing contract
A contract with the broker or firm you hire to represent you in the sale of your home,
according to the terms of the sale that you specify. In exchange for producing a ready,
willing and able buyer for you, the sales associate is paid a commission. See listing
agreements.
Loan application fee
A lender's fee that you must pay when applying for a mortgage.
Loan origination fee
A fee, usually one to four points, charged by the lender for processing your mortgage.
Back
to top
M
Margin
Most lenders will offer adjustable-rate mortgages that state a margin which is added to
the index to get the rate upon which payments are based.
Multiple Listing Service (MLS)
A networking system, frequently on computer, in which a number of real estate firms share
information about their clients' houses that are for sale.
Back
to top
N
National Association of Home Builders
The National Association of Home Builders (NAHB) is a federation of more than 800 state
and local builders associations throughout the United States. The mission of this
Washington, D.C.-based trade association is to enhance the climate for housing and the
building industry, and to promote policies that will keep housing a national priority.
Chief among NAHB’s goals is providing and expanding opportunities for all consumers
to have safe, decent and affordable housing.
About one-third of NAHB’s 190,000 members are home builders and/or remodelers. The
remainder of the membership consists of associates working in closely related fields --
such as mortgage finance and building products and services -- within the housing
industry.
National Association of REALTORS®
Founded in 1908, NAR has grown from its original nucleus of 120 to today's 720,000
members. NAR is composed of residential and commercial REALTORS®, who are brokers,
salespeople, property managers, appraisers, counselors and others engaged in all aspects
of the real estate industry.
Members belong to one or more of some 1,700 local associations/boards and 54 state and
territory associations of REALTORS®. They can join one of many institutes, societies and
councils. NAR offers members the opportunity to be active in appraisal and international
real estate specialty sections. REALTORS® are pledged to a strict Code of Ethics and
Standards of Practice.
Negative amortization
The increasing of a debt. In the case of a mortgage, the principal is increased.
Back
to top
O
Offer to purchase
A document that lists the price, conditions and terms under which the buyer is willing to
purchase the property. (Each of these means the same thing: offer to purchase, or purchase
offer, or earnest money agreement, or contract of purchase, or deposit receipt.)
Offer to purchase of sale/Sales contract
An offer of purchase that has been signed by both buyer and seller. A firm contract that
outlines all details of the property transaction. (Same as "acceptance/contract of
sale/sales contract.")
Open listing
A listing contract in which you hire more than one firm or person to sell your home, and
only the one who produces the buyer is entitled to the commission. See listing
agreements.
Back
to top
P
Point
An amount equal to 1 percent of a mortgage (not sale price) that is paid at closing. A
point is usually considered to be prepaid interest -- interest paid up front that
represents the difference between the interest being charged on the mortgage and the rate
the lender wants to receive.
Points
Fees charged by lenders. One point equals one percent of the mortgage amount.
Preapproved buyer
Preapproval is more in-depth and gives the buyer more buying strength. The lender makes a
credit decision based on the information gathered from and about the buyer. The buyer is
then preapproved for a mortgage amount of "X," with maximum interest rate of
"Y". The buyer now has the strength of a cash buyer.
Prepayment penalties
A penalty charged for paying off a mortgage early.
Prequalified buyer
A buyer can be prequalified for a loan based on non-verified income and credit information
provided by the buyer. The prequalification, which is usually done over the phone, is the
opinion of the loan originator and does not represent a formal loan approval.
Purchase offer
A document that lists the price, conditions and terms under which the buyer is willing to
purchase the property. (Each of these means the same thing: offer to purchase, or purchase
offer, or earnest money agreement, or contract of purchase, or deposit receipt.)
Back
to top
R
Rate adjustment periods
With most ARMs, any periodic adjustment in the interest rate changes the payment.
Adjustment periods tend to reflect the period of the index of the most popular ARMs;
currently, annual adjustments are the most common.
REALTOR®
An active member of a local board of realtors. Local boards are affiliated with the National Association of REALTORS®.
Back to top
T
Title
The right to ownership in real estate, which is transferred by a deed. Evidence of
ownership in real estate.
Title insurance
Insurance, usually paid through a single premium at closing, that insures the owner
against loss because of a claim against the title that was not found in the title search.
Title search
The process of checking all the records relating to the title to see that it doesn't have
any liens or claims against it that would keep it from being transferred. |