An amount equal to the replacement value of damaged property minus depreciation is the actual cash value.

Also known as a variable-rate loan, an ARM usually offers a lower initial rate than a fixed-rate loan. The interest rate can change at a specified time, known as an adjustment period, based on a published index that tracks changes in the current finance market.

The time between interest rate adjustments for an ARM is called the adjustment period. There is usually an initial adjustment period. This often begins from the start date of the loan and varies from 1 to 10 years.

An agent is a person who legally represents another, called a principal, and from whom they derive express or implied authority. For example, a real estate agent acts on behalf of the homeowner or homebuyer.

Amortization refers to the process of gradually paying off a debt or an expense over time through a series of regularly scheduled payments. The term is often used in the context of loans, where a borrower is required to make regular payments, usually, monthly, that include both interest and principal amounts. As each payment is made, a portion of it goes towards paying off the principal amount of the loan, while the remainder goes towards paying off the interest.

Amortization schedules typically outline the details of each payment, including the amount due, the amount that goes towards interest, the amount that goes towards the principal, and the outstanding balance of the loan. The schedule also shows how the loan balance gradually decreases over time as payments are made, until the entire debt is fully paid off at the end of the loan term.

Annual percentage rate (APR) is a standardized measure used to express the total cost of borrowing money over the course of one year. It is expressed as a percentage and takes into account not only the interest rate charged on a loan or credit card, but also any fees, points, or other charges that may be associated with the loan. It’s important to note that the APR may not always be the same as the interest rate advertised by the lender, as it takes into account other costs and fees associated with the loan.

The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.

A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.

An appraiser is a professional who provides an opinion of the value of a particular asset. Real estate appraisers provide valuations of properties in order to help determine their fair market value for various purposes, such as mortgage lending, tax assessment, estate planning, and buying or selling property.

Appreciation is an increase in the market value of a home due to changing market conditions and/or home improvements.

Arbitration is a process for resolving disputes between two or more parties in a private, out-of-court setting. It is a form of alternative dispute resolution (ADR) that is often used as an alternative to litigation in court. In arbitration, a neutral third party, called an arbitrator, is appointed to hear the dispute and render a decision, called an award.

Asbestos is a naturally occurring mineral that was widely used in the past for its insulating and fire-resistant properties. It is composed of microscopic fibers that are resistant to heat, fire, and chemicals, and was commonly used in construction materials such as insulation, flooring, and roofing. The use of asbestos has been severely restricted.

An assessment is a value assigned to real property (your house and land) that is used to determine real property taxes. Assessment can also refer to the process of reaching an assessed value of real property. Additionally, it can be an add-on amount to raise money for a special purpose such as an HOA or Condo assessment that is imposed based on the need and/or desire to make repairs and/or to add features or amenities.

Anything of value owned by an individual.

An assumable loan is one where the buyer assumes responsibility for repaying the unpaid balance of the original loan.

A homebuyer's agreement to take on the primary responsibility for paying an existing mortgage from a home seller.

Your debt-to-income ratio compares your monthly debt payments to your monthly income and is a widely used measure of your creditworthiness. You compute your debt-to-income ratio by dividing your monthly minimum debt payments, excluding your rent or mortgage, by your monthly take-home pay.

A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years).

This is a scheduled payment (usually the last payment) on a secured loan that is larger than any of the previous payments. Lenders do this to make the regular monthly payments more affordable. Carefully check any lending agreement to ensure you can afford to pay any balloon payments.

Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.

The recipient of benefits, often from a deed of trust; usually the lender in a real estate situation. Could also be the beneficiary of a trust.

A buyer’s agent is someone who acts on behalf of and solely represents a buyer in a real estate transaction. If you plan to buy a house, it may be wise for you to contact a real estate agent to act as your buyer’s agent who will have your best interests.

An interest cap is a consumer safeguard on an ARM that limits the amount the interest rate can change per year and over the life of the loan.

A payment cap is a consumer safeguard on an ARM that limits the amount monthly payments can change.

A lender’s requirement that the borrower has, after settlement, at least two months’ mortgage payment saved.

Generally the date the buyer becomes the legal owner and title insurance becomes effective.

This is a loan of a specific amount of money for a specific period of time. You repay this type of loan in a set number of equal payments, which are usually made monthly. A mortgage and a home equity loan are examples of closed-ended credit.

A person who coordinates closing-related activities, such as recording the closing documents and disbursing funds.

The completion of the real estate transaction between buyer and seller. The buyer signs the mortgage documents and the closing costs are paid, funds are exchanged and the transaction is recorded. Also known as the settlement date.

These are the costs to complete a real estate transaction. These costs are in addition to the price of the home and the down payment. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed, commissions if you are a seller, etc. Your lender will provide a complete list of closing cost items if you are a buyer. Your real estate and escrow agents can provide you with a list if you are a seller.

The Closing Disclosure form is designed to provide disclosures that will be helpful to borrowers in understanding all of the costs of the transaction. This form must be acknowledged by the consumer three business days before closing.

In real estate, co-operative housing is a form of multiple ownership where a corporation or business trust entity holds title to a property (usually an apartment complex) and grants occupancy rights to shareholder tenants through proprietary leases.

Property that is used as security for a debt. In the case of a mortgage, the collateral would be the house and property.

A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.

This is an analysis done during the appraisal process or price evaluation process to determine a list price or a fair purchase price. Properties with similar characteristics are compared to other properties that have recently sold.

Comparable sales are sales that have similar characteristics as the subject real property, used for analysis in the appraisal or in a broker market analysis. Commonly called “comps.”

Something that is given up in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs. This would be an example of a seller concession.

A form of homeownership in which the home buyer receives exclusive title to the interior space of a multi-unit structure (usually an apartment building or a townhouse), and shares title to the common areas of the residential property (for example, parking lots or a swimming pool).

Occurs when the borrower becomes contractually obligated to the creditor on the loan, not, for example when the borrower becomes contractually obligated to a seller on a real estate transaction. The point in time when a borrower becomes contractually obligated to the creditor on the loan depends on applicable State laws.

A contingency refers to a condition or event that must be met or fulfilled in order for a contract, agreement, or transaction to proceed. A contingency allows one party to back out of the agreement or transaction if the condition is not met, or if the event does not occur.

A contract of sale is a contract between a buyer and seller of real property to convey title after certain conditions have been met and payments have been made.

A loan that is not guaranteed or insured by a government agency.

A counteroffer is a response to an initial offer made in a negotiation or transaction, in which the original terms of the offer are changed by the recipient and presented back to the original offeror. The counteroffer essentially rejects the original offer and proposes new or modified terms for consideration.

The ability of a person to borrow money, or buy goods and pay over time. Credit is extended based on a lender's good opinion of the person's financial situation and reliability.

A company that gathers information on consumers who use credit. These companies sell that information to credit lenders in the form of a credit report. There are three main Credit Bureaus- Experian, Equifax, and TransUnion.

Your credit score is a numerical index used by credit grantors to decide if you are a good credit risk. The information is based solely on your past credit performance and not on your race, gender, or other factors. When you get your credit report, you won’t receive this rating.

A record of the history of individual consumer debts and the payment history on those debts.

A request for a copy of your credit report. An inquiry occurs every time you fill out a credit application and/or request more credit. Too many inquiries on a credit report can hurt your credit score. Often referred to as a credit pull.

Your credit limit is the maximum amount of money that can be loaned to you or the maximum amount of credit you can use in an open-ended credit account.

A credit report is a record of your personal credit history. It is compiled by credit bureaus/credit reporting agencies based on information submitted by lenders and contained in public records. It contains very extensive information on your credit history and is probably the single most important document creditors use when deciding whether to grant you credit.

Your credit score is a numerical index used by credit grantors to decide if you are a good credit risk. The information is based solely on your past credit performance and not on your race, gender, or other factors. When you get your credit report, you won’t receive this rating. Remember, credit bureaus don’t extend credit; they provide credit information to prospective lenders.

Your ability to qualify for credit and repay debts.

Money owed from one person or institution to another person or institution.

The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments, and other installment debts, and payments on revolving or open-ended accounts such as credit cards.

This document shows that an owner of a piece of real property has title to that property. Once a deed is filed and recorded by your local government, the deed becomes a public record.

A deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer the title of your property to your mortgage company. Usually, you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.

An instrument used in many states in place of a mortgage. A deed of trust is a document showing that a borrower conveys title to real property to a third party (trustee) to be held as security for a lender, with the provision that the trustee will return the title once the debt is paid. The trustee will sell the property and pay the debt if the borrower defaults. In other words, when you buy a house, a trustee will hold your Deed of Trust for your lender until you pay off your mortgage or default on the loan.

Stated limitations in the deed regarding a parcel of real property that governs certain uses of real property.

Default is the failure to make payments on a timely basis or in accordance with the terms of your promissory note. The default may also result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe.

This is the failure of a borrower to make timely payments under a loan agreement.

HUD is a governmental entity responsible for the implementation and administration of housing and urban development programs.

A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

A disbursement date refers to the date on which funds or payments are released or distributed from one party to another.

A discount point is an amount of money a borrower pays to a lender, or seller pays to a lender, to increase the lender’s effective yield. One point is equal to one percent of the loan. What a discount point effectively does is pay the lender upfront in exchange for a reduced interest rate.

A down payment is a portion of the sales price you pay to the seller to close a sale, with the understanding that the balance will be paid at settlement. It is also the difference between the sale price of real estate and the mortgage amount.

Due-on-sale is a clause in a mortgage contract that states that if the mortgagor sells, transfers, or in any other way encumbers the property, then the mortgagee has the right to implement an acceleration clause making the balance of the mortgage due. In other words, if you sell your home, you must pay off the mortgage immediately. Any money that’s left over you can use any way you choose.

Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.

A right, privilege, or interest limited to a specific purpose that one party has over the land of another.

An encumbrance is anything that affects or limits the fee simple title to property, such as mortgages, leases, easements, or restrictions.

A part of a title insurance policy, a rider or attachment forming a part of the insurance policy expanding or limiting coverage of that policy.

The ECOA is a federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs. It is also called “Regulation B.”

Equity is net ownership. In other words, it’s the difference between how much your property is worth and how much you still owe on your mortgage (Market value – Mortgage balance = Equity). Equity is also sometimes called owner’s interest.

Escrow is money placed with a third party for “safekeeping.” During a real estate purchase, the buyer is typically required to place a portion of their down payment in an escrow account where it is held until the closing. After the home is purchased, a portion of each mortgage payment is typically held in an “escrow” account to pay for the property’s taxes and insurance.

Fannie Mae is the nation’s largest mortgage investor. It is a private, stockholder-owned company. The U.S. President appoints some of the members of its Board of Directors. It supports the secondary residential mortgage market.

The FHA is a federal agency in the Department of Housing and Urban Development (HUD) that provides mortgage insurance for residential mortgages and sets standards for construction and underwriting. The FHA DOES NOT lend money or plan or construct housing.

Home mortgage loans insured by the Federal Housing Administration are referred to as “FHA or FHA-Insured Loans.”

Your ability to make your mortgage payments on time based on credit history, and income-to-debt ratio. Your financial capacity is dependent on your income, job history, security, assets, and savings. It is the amount of your income each month that is left over after you’ve paid for your housing costs, debts, and other obligations.

A first mortgage gives the lender a security right over all other mortgages on the mortgaged property.

A fixed interest rate is one that never changes over the life of a loan. For example, if you have a fixed rate, 30-year mortgage, you will pay the same interest rate for the entire 30-year repayment schedule.

Forbearance is a lender’s act of not taking legal action despite the fact that a loan is delinquent. It is usually granted only when a borrower makes satisfactory arrangements to pay the amount owed at a future date.

A foreclosure is a legal proceeding that allows your creditor to sell your house to pay off your unpaid mortgage. Your house can be foreclosed on if you don’t make your required house payments.

Freddie Mac is a stockholder-owned corporation that supports the secondary market in mortgages on residential property with mortgage purchase and securitization programs. The President of the United States appoints a portion of its board of directors. It is also known as the Federal Home Loan Mortgage Corporation (FHLMC).

Your debt-to-income ratio compares your monthly debt payments to your monthly income and is a widely used measure of your creditworthiness. You compute your debt-to-income ratio by dividing your monthly minimum debt payments, including your rent or mortgage, by your monthly take-home pay.

For Sale By Owner is a term used to describe a home that is being sold by the owner, without assistance from a real estate agent or a broker. The seller is attempting to save money by avoiding agent’s and broker’s fees.

A letter written by a family member verifying that a certain amount of money was given to you as a gift and that does not need to be repaid. You can use this money toward a portion of your down payment with some mortgages.

This document tells borrowers the approximate costs they’ll pay at or before closing, based on common local real estate practices. Under RESPA, your mortgage lender or mortgage broker must deliver the GFE to you within three days of accepting your mortgage loan application.

A type of flexible payment mortgage where the payments increase for a specified period of time, then level off. This usually results in negative amortization.

This is your total monthly income before any deductions such as taxes, 401(k) contributions, Medicare, or Social Security contributions. The income you earn in a month before taxes and other deductions. It may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

Real estate insurance that protects your home against fire, some natural causes, vandalism, etc. A buyer often adds liability insurance and extended coverage for personal property.

A home equity line of credit is a revolving loan where your home is used as collateral. You are given a credit limit and can borrow as much or as little as you want against the limit. This type of loan acts much like a checking account. Your lender provides you with checks and you can draw on the account any time you like as long as you don’t exceed your credit limit.

A home equity loan, also known as a second mortgage, is a closed-ended, secured loan with your home used as collateral. It can have fixed or adjustable (ones that fluctuate based on a key index) terms, interest rates, and payments. You usually borrow a prearranged amount from your lender and pay it back in installments (usually monthly).

A physical examination by a licensed professional of a home to evaluate its plumbing, electrical, heating, and cooling systems, as well as its appliances, roof, foundation, and structural stability. The inspection should be completed before you purchase a home and your offer contract should state that the purchase is contingent on the home inspection results.

An HOA is a nonprofit corporation or association that manages common areas and services of a planned unit development or condominium project. In a condominium project, it has no ownership interest in the common areas; in a planned unit development, it holds title to common areas.

A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes, or appliances.

The percentage of your gross monthly income that goes toward paying for your housing expenses.

A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security.

The published index of interest rates used to calculate the interest rate for an adjustable-rate mortgage. The index is usually an average of the interest rates on a particular type of security such as the LIBOR.

A tax-deferred plan that can help you build a retirement nest egg.

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. In other words, it refers to a situation where the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods or services than it could before. Inflation is often measured by the percentage increase in the Consumer Price Index (CPI) or the Producer Price Index (PPI) over a given period of time. There are various factors that can contribute to inflation, such as an increase in the money supply, a decrease in the supply of goods and services, an increase in demand for goods and services, or a decrease in the supply of labor. High inflation rates can have a negative impact on the economy, including reduced purchasing power, increased interest rates, and decreased economic growth.

An inspection certificate is a document that verifies that a property is as described. The inspection is usually performed by a designated agent and may be accepted in place of a survey.

The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.

An interest rate is the percentage of the outstanding balance of a loan that you are charged for borrowing money, usually expressed as an annual percentage rate.

A jumbo loan is a loan that exceeds the statutory size limit eligible for purchase or securitization by federal agencies.

A tax-deferred retirement-savings plan for small business owners or self-employed individuals who have earned income from their trade or business. Contributions to the Keogh plan are tax-deductible.

This is a method of purchasing property by making gradual payments over the required rent for a set period. At the end of this period, the renter uses a mortgage loan to finance the purchase of the property.

A description of land recognized by law, based on government surveys, stating the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

A financial institution, individual or agency that loans money.

Your debts and other financial obligations.

A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, and deeds of trust.

A written statement from the lender itemizing the approximate costs and fees for the mortgage. A lender is required to provide potential borrowers with a loan estimate within three business days of receiving a loan application.

This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.

This is a fee charged by lenders to prepare documents, make credit checks, inspect, and sometimes appraise the property. It is usually stated as a percentage of the face value of the loan.

Loan servicing, simply stated, is the management of a loan. It includes the collection of loan payments, management of escrow accounts, and disbursements from escrow accounts.

LTV is the ratio of the amount borrowed compared to the appraised value or sales price of real property. LTVs are expressed as percentages.

The number of days during which a lender guarantees a borrower a specific interest rate and terms on a mortgage.

A written agreement that guarantees a specific mortgage interest rate for a certain amount of time.

A feature of some mortgages, usually fixed-rate mortgages, that helps you buy a home with as little as a 3% down payment. In some cases, it can be 0%.

Factory-built or prefabricated housing, including mobile homes.

A percentage added to the index for an ARM to establish the interest rate on each adjustment date.

The highest price that a buyer—ready, willing, and able would pay, and the lowest price a seller—ready, willing, and able would accept. True market value is what a buyer is willing to pay.

The instrument by which real property is pledged as security for repayment of a loan. A loan using your home as collateral. In some states, the term mortgage is also used to describe the document you sign [to grant the lender a lien on your home]. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage is normally the purchase price less your downpayment.

An individual, firm, or corporation that originates, sells, and/or services loans secured by mortgages on real property.

A firm or individual who, for a commission, matches borrowers and lenders. A mortgage broker takes applications and sometimes processes loans, but generally doesn’t use its own funds for closing.

Insurance written by a private company that protects the mortgage lender against financial loss occasioned by a borrower defaulting on the mortgage. Often referred to as Private Mortgage Insurance or PMI.

The lender provides funds for a mortgage. Lenders also manage the credit and financial information review, the property, and the loan application process through closing.

The cost or the interest rate you pay to borrow the money to buy your house.

The mortgage loan lender.

The mortgage loan borrower who pledges property as a security for a debt.

A service provided by the Board of Realtors® which renders access to real estate listings of properties for sale or lease.

A fund that pools the money of its investors to buy a variety of securities.

Your net income is your after-tax pay. It is the money you receive after all tax withholdings, including Social Security, have been made from your gross income.

Your take-home pay after taxes. It is the amount of money that you actually receive in your paycheck.

A formal bid from the homebuyer to the home seller to purchase a home.

This is a pre-approved loan of a specified amount of money for an unlimited period of time. You can use as little or as much of your credit line as you want. However, if you reach your credit limit, you must pay off some of your balance before you can charge any more to the account. A home equity loan is an example of open-ended credit.

When the seller's real estate agent or an associate opens the seller's house to the public. You don't need a real estate agent to attend an open house.

PITI stands for Principal, Interest, Taxes, and Insurance and refers to a mortgage payment.

A point is one percent of the dollar amount of the mortgage loan. For example, if your loan amount is $150,000, a point is $1,500. By paying points, you can generally lower the loan’s interest rate, however, not all lenders allow this. Points may be paid by the buyer or the seller or split between them.

A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”

A written agreement from a mortgage lender to grant a loan for a home purchase. The pre-qualification is based on the lender’s careful investigation and evaluation of the potential homebuyer’s income, credit history, employment history, personal assets, and debts. Pre-approval assures the seller that a buyer’s offer is valid. It also speeds up the buying process because, once an offer is made, there is no need to wait while the buyer finds a loan.

An evaluation of a potential borrower’s financial status to determine the size and type of mortgage available to him/her. An informal calculation to estimate the approximate amount of money a homebuyer can afford to spend on a home purchase. The pre-qualification compares the potential buyer’s income and assets to the buyer’s debts. A pre-qualification helps the realtor focus the home search on homes within a certain price range. A Pre-Approval is stronger as the lender has verified credit and income.

Costs paid at closing for taxes, interest, and insurance. Because prepaid items are recurring costs that don’t relate to the acquisition of the property itself, they can’t be financed.

This is a fee that may be charged if you repay all or part of your mortgage loan before the due date. FHA-insured loans and some loans made by state-chartered banks do not allow prepayment penalties.

The amount of money borrowed to buy your house or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

Insurance written by a private company that protects the mortgage lender against financial loss due to a borrower defaulting on the mortgage.

Property tax is the money you pay to your local and state government for the pleasure of owning property within their jurisdiction.

Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: housing expense as a percent of income ratio, and total debt obligations as a percent of income ratio.

A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

The limit on the amount an interest rate on an ARM can increase or decrease during an adjustment period.

A ratified sales agreement is a legally binding contract between a buyer and a seller that outlines the terms and conditions of a sale of a particular product or service. The agreement is considered “ratified” when both parties have signed it and any contingencies or conditions of the sale have been satisfied.

An individual who provides services for buying and selling homes.

RESPA is a federal law that requires disclosure of all known and/or estimated settlement costs a homebuyer will have to pay. You’ll get this information after you apply for a loan and again when you go to settlement.

Land and objects permanently attached to it, such as buildings and fences. In some states, this term is synonymous with the term “real estate.”

Filing documents affecting real property with the appropriate government agency as a matter of public record.

Refinancing is defined as repaying a debt with the proceeds of a new loan, using the same property as collateral. For example, you pay off your original mortgage with a new one. Most of the time, people refinance to take advantage of a lower interest rate to lower their monthly payments.

Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with reinstatement.

This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.

The cost to replace damaged personal property without a deduction for depreciation.

A second mortgage is a mortgage that has rights subordinate to a first mortgage. A home-equity loan is an example of a second mortgage.

A secured debt is one that is tied to a specific piece of property, such as a house. The property, called collateral, guarantees repayment of the debt. If you don’t pay, the creditor can take the property back.

An agent who acts solely on behalf of the seller of real property.

A complete breakdown of costs involved in a real estate transaction.

If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.

Housing that is built on the construction site. Although some of the house may be prefabricated off-site, the house is assembled on-site.

Written evidence of the right to or ownership of property. In the case of real estate, the documentary evidence of ownership is the title deed that specifies in whom the legal estate is vested and the history of ownership and transfers. The title may be acquired through purchase, inheritance, devise, gift, or through foreclosure of a mortgage.

A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest. Homebuyers usually must purchase a lender’s title insurance to protect the lender’s interest and may choose to purchase buyer’s title insurance to protect their own interest.

A two- or three-story house that shares a common wall with at least one other house. Rows of townhouses that are clustered in urban or suburban areas may also be called “rowhouses.”

TRID (TILA-RESPA Integrated Disclosures) refers to a set of rules established by the Consumer Financial Protection Bureau (CFPB) in the United States to provide consumers with more transparent and comprehensive information about the costs and terms associated with their mortgage loans. Under TRID, lenders are required to provide borrowers with two new disclosure forms: the Loan Estimate and the Closing Disclosure. The Loan Estimate must be provided to borrowers within three business days of their loan application, and the Closing Disclosure must be provided at least three business days before the loan closing.

Federal law that requires disclosure of a truth-in-lending statement for consumer loans. The statement includes a summary of the total cost of credit, such as the APR and other specifics of the loan.

Mortgage underwriting is the analysis of the risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves the evaluation of the property as outlined in the appraisal report, and the borrower’s ability and willingness to repay the loan.

A standard mortgage application your lender will ask you to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Upfront costs are fees and other costs that a buyer must pay before closing on a home. These fees can include an appraisal fee, credit report fee, hazard insurance, flood insurance, and other inspection fees.

A mortgage loan made by an approved lender and guaranteed by the Department of Veterans Affairs. VA loans are made to eligible veterans and those currently serving in the military and can have a lower down payment than other types of loans.

A variable interest rate is one that is adjusted, usually quarterly, based on an economic indicator. They are commonly based on an economic index such as the prime interest rate, Treasury Bill rate, or the Federal Funds rate.

Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.

Glossary of Real Estate Terms