Real Estate Glossary

abstract of title.

A condensed version of the title history to a piece of land or property. Lists any transfers in ownership and any liabilities attached to it, such as mortgages.

adjustable rate mortgage (ARM)

Mortgage loans in which the interest rate is adjusted periodically based on predetermined factors such as an assigned index or designated market factor (such as the weekly average of US Treasury Bills over a one-year period). There is typically a limit to how often and by how much the interest rate can fluctuate. Also known as renegotiable rate mortgages or variable rate mortgages. The adjustment date is the date the interest rate changes. The adjustment interval (or adjustment period) is the time between changes in the interest rate and/or the monthly payment (typically one, three or five years).

annual percentage rate (APR)

An interest rate reflecting the cost of a mortgage as a yearly rate. Because it takes into account points and other credit costs, the APR is likely to be higher than the mortgage rate. It is a basis of comparison for mortgage loan costs.

appraisal, appraised value

An appraiser's estimate of the value of the property. Banks require appraisals to determine how much money it will lend you.

bill of sale

A written document that attests the transfer of the ownership (title) of personal property.

chain of title

The history of all of the title transfers (conveyances and encumbrances) to a piece of real estate.
closing costs

Expenses incurred by buyers and sellers in transferring ownership of a property, such as an origination fee, taxes, title insurance, transfer fees, points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, appraisals, prepayments for property taxes, deed recording fee, and homeowners insurance.

cloud on title

Anything found by the title search which indicates that a property is not owned free and clear by the purported owner.

conventional loan

A mortgage loan not insured by the FHA or guaranteed by the VA.

conveyance

A written document (such as a deed or lease) that transfers ownership interest in a property from one person to another.

earnest money

Money given by a buyer to a seller as a form of deposit (part of the purchase price) in order to bind a transaction or to ensure payment.

escrow

Funds that are set aside and held in trust. Usually used for payment of taxes, insurance, etc.

market value

The amount that a seller may expect to obtain in the open market.

points

Prepaid interest assessed at closing by the lender. Each point equals 1 percent of the loan amount. (2 points on a $100,000 mortgage would cost $2,000 )

private mortgage insurance (PMI)

Default insurance for conventional loans, normally required with smaller down-payment loans.

quit claim deed

A document that transfers a title, right or claim to another person, giving up all claims to a possession.

survey

A detailed measurement of a property, including the location of the land in reference to known points, its dimensions, and the location and dimensions of any structures on the land. Prepared by a registered land surveyor.

sweat equity

Equity created by a purchaser performing work on a property being mortgaged.

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