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Abstract of title. A summary of all of the recorded instruments and proceedings that affect the title to property. A person who is going to buy real estate or lend money on it wants assurance of ownership. Usually an attorney or title insurance company prepares an abstract or title, based on documents in the county courthouse, to be certain of ownership and property bought or the loan made. Typically, title insurance also is required.

Accelerated depreciation. Allocating the cost of a wasting asset over time, with larger deductions in early years. For tax purposes, accelerated depreciation allows greater deductions to be taken sooner than doe’s straight-line depreciations, thereby reducing taxable income in early years.

Acceleration clause. A loan provision giving the lender the right to declare the entire amount immediately due and payable upon the violation of a different loan provision, such as failure to make payments on time, without an acceleration clause, a missed payment is just that- one overdue payment. The acceleration clause means the entire loan is due, and the real estate may be foreclosed.

Acceptance. The act of agreeing to accept an offer. A valid contract must include an offer and an acceptance. The acceptance may be from either party to the other, such as buyer-seller or landlord-tenant.

Access right. The right of owners to get to and from their property. Property may be or become encircled by other property. The access right gives an easement by necessity, which allows the owner of landlocked property to cross over adjacent property to get to a street. Not all property in Texas has an access right.

Accession. Additions to property that are not created by the owner’s efforts, such as fixtures left by a tenant or alluvial deposits.

Accrued taxes. Property taxes that have been assessed against the property for a past time period, though payment is not necessarily due.

Acre. A measure of land containing 46,560 square feet, approximately .405 of a hectare.

Actual eviction. Expulsion of a tenant from the property.

Addendum. An attachment to a contract. In Texas, promulgated forms for residential earnest money contracts include a property conditions addendum and addenda for various financing arrangements.

Address. The locations of a property indicated by number, street, city and postal code. The address of the property being purchased should appear in all legal documents, including the sales contract, the deed and the mortgage contract.

Adjacent. Lying near to but not necessarily adjoining. See adjoining and contiguous. When describing the physical proximity of a property, adjacent includes touching property and other parcels such as property across the street.

Adyacente. Situado en la inmediación o proximidad. Véase colindante y contiguo, al describir la proximidad física de propiedades, las adyacentes comprenden propiedades colindantes y otras propiedades cercanas, por ejemplo propiedades al otro lado de la calle.

Adjoining. Contiguous; attaching; in actual contract with. See adjacent and contiguous. In describing the proximity of land, adjoining means actually touching.

Adjustable rate mortgage (ARM). Mortgage land that allows the interest rate to vary at specific intervals dirking the land term; there may be caps or limits on the amount the interest rate can change annually and during the loan term, ARMs are often a viable alternative to fixed rate mortgages and are especially desirable to the borrower who expects that rates will decline, often, the initial rate is lower that a fixed rate mortgage, and there are caps on the ceiling rate that can be charged should interest rates rise.

Adjustments, appraisals. A real estate appraiser selects of a comparable property to consider in estimating the value of the subset property. From the selling price of the comparables, adjustments are added or subtracted for each salient difference from the subject to estimate the price of the comparable property as if it had the same features as the subject.

Administrator. A person appointed by a court to administer the estate of a deceased person dies leaving Hill; an ejector is usually named to carry out the provisions of the Hill. When there is not executor, an administrator is appointed by the court, the administrator is appointed by the court, and the administrator receives a fee.

Administrator’s deed. A deed conveying the property of one who died without a Hill (intestate). If a person owned real estate and without leaving a will, the administrator will give a deed. However, the administrator does not want the potential liability associated with a general warranty deed; son an administrator’s deed is used.

Adult. One who has attained the age of majority. In Texas, one who is 18 years of age is considered an adult, also, some who are married or in military service may be adults though not yet 18. A contract with a minor is voidable by the minor or shortly after the person becomes an adult.

Ad valorem. Latin for “according to value” sees ad valorem tax. Used in describing a property tax rate.

Ad valorem tax. A tax based the value of the thing being taxed. For example, if the effective tax rate is 1 percent, the tax would be $1 per $100 of property value. Texas has several taxing jurisdictions that levy ad valorem taxes. Tax districts include cities, counties and school districts.

Adverse possession. A jeans of acquiring title to real estate where an occupant has been in actual, open, notorious, exclusive and continuous occupancy for the period required by state law. A person can gain or lose title to real estate by acting in a certain way for a specified time, in Texas this may take three, five, ten or 25 years, depending on the circumstances.

Affidavit. A written statement or declaration sworn to an affirmed before an officer authorized to administer an oath or affirmation. Some statements, such as a contractor’s lien, must be in the form of an affidavit before they can be recorded.

Affirm. To confirm; to ratify; to verify.

Affordable housing. Special home financing programs aimed at helping those with low or moderate income to buy homes, often, such programs are targeted to first- time homebuyers, houses in specified areas and to ethnic minorities. Affordable housing plans may offer opportunities to homebuyers who would not have access to a loan otherwise. Common elements found in these plants, are reduced cash down payments, special loans or grants to defray closing costs, relaxed underwriting standards and special counseling. Among those offering such programs are state and local housing finance agencies, Fannie Mae and the regional Federal Home Loan Banks.

Agency. The legal relationship between a principal and an agent arising from a contract in which the principal employs the agent to perform certain acts on the principal’s behalf. The law of agency governs the rights and obligations of a broker to the principal and a licensed real estate salesman to the broker.

Agency Disclosure. The legal requirement that a sales agent make known which party he or she represents in the transactions. Agents represent sellers unless there is a written agreement for the seller is legally obligated to convey all information relevant to the sale to the seller. A buyer unaware of the agent’s allegiance to the seller might share information that compromises the buyer’s negotiating ability. Disclosure ensures that buyers do not mistakenly assume the agent represents them.

Agent. One who undertakes to transact some business or to manage some affair for another, with the authority of the alter, in real estate brokerage, a property owner or buyer employs a broker to act as his or her agent in selling or buying real property; the broker in turn may employ salespersons to act as agents. An agent has certain duties to the principal, including loyalty. The agent is to act in the best interest of the principal, even when it is not in the agent’s best interest.

Agreement of sale. A written agreement between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms and conditions of the agreement.
Describes rights and obligations of each party. Also called offer and acceptance or contract of sale. An agreement of sale describes the rights and obligations of a buyer or seller of property. It should be accepted only after each party is satisfied that it contains what will be agreed upon in a final transaction.

AKA. Abbreviations of also known as, a term used when a party is known more that one name.

a.    Abreviatura de alias, término que se usa tratándose de una persona que emplea varios nombres.

Alienation. The transfer of property and possession of lands, voluntary as in a sale or involuntary as in condemnations, from one person to another. In Texas, property may be transferred by voluntary alienation, such as in sale for cash, or involuntary, as in a condemnation.

Allowable debt payments. Total monthly payments for long- term debt, including mortgages and other loans running longer those six to ten months, allowed for the borrower to qualify for a loan. To qualify for a mortgage loaned, a borrower must have sufficient income that the projected mortgage payment and total debt payment are less than a specified percentage of income. For example, for an FHA loan, the mortgage interest and principal plus taxes and insurance cannot be greater than 29 percent of income. Total allowable debt payments cannot exceed 41 percent income.

Alluvion. Addition to land, as by deposit of alluvium, the increase in land area generally belongs to the owner of land where the soil is deposited.

Alluvium. Gravel, sand, silt, clay or similar material deposited by running water.

Alternative mortgages instrument. A type of mortgage is having terms other that fixed rate, fixed term, self amortizing. Important examples are those with adjustable interest rates, variable payments or shared appreciations.

Amenities. In appraisal, the tangible and intangible benefits derived from property ownership, such as a swimming pool or pride of homeownership. Ownership of real estate may add to one’s self-esteem and community involvement.

Amortizations. A gradual paying off of a debt though periodic installments. Most mortgages require the payment of at least some principal amortization with interest so that the loan is eventually retired.

Annexation. Incorporations of additional land by a city, extra territorial jurisdiction (ETJ)) in Texas allows cities to exercise some control over adjacent land use without annexation.

Annual percentage rate (APR). An estimate of the actual rate interest charged for a loan, the federal Truth- in- Landing Act requires mortgage lenders to disclose the APR to borrowers before the loan is closed. The APR s higher that the contract interest rate (the nominal rate quoted for the loan) if discount points are charged, the APR provides a true measure of the cost of the loan can be used to compare one loan with another,

Annuity. A series of equal or nearly equal periodic payments or receipts. For example, the receipt of $100 per year for the next five years constitutes a $100 five- year annuity.

Appraisal. An opinion or estimate of a property’s value. If a buyer is unfamiliar with the value of real estate in an area, it is prudent to require that, as conditions of the earnest money contract, the property appraise for at least the price being paid, also, lenders require an appraisal of property as a requirement of making a loan, and the borrower will pay the appraisal fee.

Appraisal approach. One of three, methods used in estimating the value of property. See income approach market comparison approach and cost approach. Having three separate methods to estimate the value of property will add confidence to an appraiser’s approaches are applicable for all properties.

Appraisal by summation. See const approach.

Appraisal contingency. A clause in the sales contract that allows the buyer to reject the sale if the appraisal is too low to support the loan. A mortgage lender bases the amount loaded on the lesser of the house’s price or appraised value. If the appraisal is lower that the price, the buyer may have to increase the cash down payment or raise the loan-to- value ratio to purchase the home. A buyer may reassess the transaction if this occurs.

Appraisal report. A document that describes the results of a property valuation. The report should indicate the property being appraised, the purpose of the appraisal, the type of value estimated and information about the appraisal process, in additions on the estimate of value. When a mortgage loan is made by a lender (mortgage banker, banker, bank or saving association), an appraisal may be required. A report is the written results of the appraisal.

Appraiser. A professional who estimates the value of property. Appraisers prepare value estimates for a fee. An appraisal often is prepared when a borrower applies for a mortgage loan.

Appreciate. To increase in value as a result of market forces or inflation. Every homeowner wants the home to appreciate. A certain amount of appreciation is caused by inflation, but property may become more valuable because it is more desirable (being in the right location) or more scarce (as when population is growing faster than construction). An increase in value because the home has been remodeled or enlarged is not considered appreciation.

Appreciation. An increase in the value of property such as through inflation or real income. Appreciation in one of the most significant benefits from real estate.

Appurtenance. Something that is outside the property itself but is considered a part of the property and adds to its greater enjoyment, such as the right to cross another’s land. The right to use another’s land. The right to use another’s land for a special purpose can affect the value of the subject property.

As Is. An offer of the property in its present conditions with no guarantee of soundness. If a property is advertised “as is”, the seller will not repair defects revealed by a buyer’s inspection. Consequently, such properties are listed at discounted process. Sellers of “as is” properties are liable for mandatory disclosure of material defects.

Assessed valuation. A valuation placed on property by a public officer or a borrad as a basis for taxation. A property’s assessed value is typically a reasonable estimate by the tax assessor; echo must periodically review all property in the jurisdiction. By contrast, an appraisal of a single property is more likely to approximate its market value.

Assessed value. Estimate of property value to witch property taxes are applied.

Assessment. A charge by a government against real estate for taxes or to cover the cost o fan imprudent, such as a street or sewer line. See ascended valuation. Property buyers and owners need to recognize that they may have to pay extra amounts for municipal improvements that affect their property. Frequently, the owner has little or no input in the decision.

Assessment ratio. The ratio of assessed value market value. For example, if a country requires a 40 percent assessment ratio on all property to be taxed, then property with a $10,000 value is assessed at $4,000 (40 percent of $10,000) and the tax rate is applied to $4,000. In Texas, all taxing jurisdiction are expected to assess al 100 percent of market value.

Assessor. An official who has the responsibility of placing an assessed value on property. The assessor estimate the value of each piece of real estate in the tax jurisdiction but does not fix the tax rate or amount.

Asset. Something that has a value. Ann asset can be tangible or intangible. Assets can be sold to raise cash and may be used to produce income.

Assignee. Al legal term for the person to whom an agreement or contract is sold or transferred.

Assignment. The method or manner by which a right or contract is transferred from one person to another. Contracts for the sale of real estate are generally assignable, except when there is financing to be arranged or certain conditions are imposed on party. In a lease, an assignment gives all rights of the original tenant to the new one.

Assignor. A party who assign or transfers an agreement or contract to another. While many contracts can be assigned, the assignor is not necessarily relived of the obligation. For example, debt cannot be assigned. Another party can assume a debt, but the original borrower remains liable.

Association fee. A periodic charge levied by a homeowners’ association for the purpose of maintaining common areas in a subdivision or condominium development. Nearly all condominiums and some subdivisions of detached homes have homeowners’ associations. Membership often is mandatory for by the association. A fee may be charged to pay for the association’s activities.

Assumable mortgage. A mortgage loan in which the lender agrees to substitute the buyer for the seller when the property is sold. An assumable mortgage is an asset to a seller when the mortgage has an interest rate below that currently available in the market. The seller may be able to charge a premium for such financing. For assumable loan, the mortgage contract must not have a “due on sale” clause, or the clause must allow a change in loan terms.

Assume a loan. The act f taking on the obligation for existing mortgage financing when buying property, when interest rates are high or mortgage loans difficult to obtain, it may be an advantage to the buyer to assume an existing loan. The interest rate is unchanged, and the buyer may not have to qualify for the financing. However, if the property has appreciated or the loan has been paid down, there may be a large differential between the loan amount and the house price, requiring either a large cash payment or additional financing. When a loan is assumed, the buyer takes full responsibility for repaying the loan. However, when a property in taken subject to an existing loan, the seller remains responsible for the loan.

Assumption. Purchase financing based on the buyer’s assuming the existing mortgage loan. When an assumable loan exists on a home, loan assumption offers an alternative to new mortgage financing. An assumption may offer advantages in lower interest rate, easier loan arrangement, lower closing costs and a quicker sale. However, the seller may demand a higher prince when an assumption is available, and additional financing may be needed.

Assumption of mortgage. The purchase of mortgage property whereby the buyer accepts liability for any debt. The seller remains liable to the lender unless the lender agrees to release the seller. A party entering an agreement for the purchase or sale of real estate should check the mortgage is assumable. A mortgage that carries favorable terms and is assumable adds value to the transaction.

Attachment. Legal seizure of property to force payment of a debt. Property can be taken as security for a debt provided it is done with court approval.

Attest. To witness to; witness by observation and signature. Certain documents must be attested to as a condition for recording the country courthouse.

Attorney. A person designated to act for another. See lawyer. A buyer or seller of real estate may wish to hire a lawyer to review legal documents and provide advice on accepting the legal obligations of the sales contract.

Attorney- in- Fac. one who is authorized to act for another under a power of attorney, which may be general or limited in scope. A person may give another the right to act for him or her in some or all matters. The designated person, called an attorney-in-fact, need not be an attorney al law.

Auction. A method of selling a property in which interested buyers submit competitive bids, with the property going to the highest bidder, bidding usually takes place in an public session in which buyers enter their dibs and are allowed to increase those bids until no higher bids are entered, auctions offer a way to sell a will not return market value. In some countries, auctions are the favored way to sell real estate, but in the United States, auctions are used primarily for disposal of repossessed properties.

Avulsion. The sudden removal of land from one owner to another when a river or other body of water abruptly changes its channel. If a stream or river is a boundary line, the boundary may not change with the addition or removal of land, depending on respective state laws.

Backfill. The replacement of excavated Herat into a hole or against a structure.

Backup contract. An offer to purchase a property that already Ander contract for sale. Backup contracts are accepted while a sale is pending. If the original transaction is cancelled or the buyers fail to secure financing, the seller may accept the secondary offer without putting the property back on the market. In markets where there are more buyers that homes for sale, backup contracts are common.

Balloon payment. The final payment on a loan, when that payment is a greater than the preceding installment payments and pays the note in full. An example is a debt requiring interest- only payments annually for five years, at the end of which time the principal balance (a balloon payment) is due. If a balloon is involved in real estate financing, the borrower will need to plan for the large balance that comes due.

Bankruptcy. A legal declaration of insolvency, that is, the inability to pay debts. Bankruptcy offers a legal refuge to those who are unable to pay money owed to their creditors. There are several types of bankruptcy, but the method used by individuals provides a court-enforced plan for satisfying action of existing debts, usually calling for extended payment schedules and, possibly, the forgiveness of some debt.

Bargain and sale deed. A deed that coveys real estate, generally lacking a warranty. The grantor will thus claim to have ownership but will thus claim to have ownership but will not defend against all claims. Sometimes a property owner does not wish to offer a warranty deed but will give more assurance than is offered by a quitclaim deed. A bargain and sale deed is compromise between those two.

Base line. Part of the rectangular survey or government survey method of land description. The base line is the major east-west line to which all north – south measurements refer.

Beneficiary. The person who receives or is to receive the resulting from certain acts.

Bequeath. To give or hand down personal property through a will.

Bill of assurance. Recorded restrictions affecting a subdivision and a part of all deeds to lose therein.

Bill of sale. A written instrument that passes title of personal property from a seller to buyer. A real estate sales agreement in Texas is prepared on an earnest money contract. A bill of sales is used when furniture and portable appliances are sold.

Blinder. An agreement, accompanied by an earnest Money deposit, for the purchase of real estate, to evidence good faith on are used in Texas because of general agreement and requirements on brokers to use promulgates earnest money insurance companies prior to closing to demonstrate their willingness to insure title.

Biweekly payment mortgage. A specialized mortgage loan in which a payment is made every two weeks and is equal to one- half of normal monthly payment. This plan was devised for borrowers who whish to retire their mortgage early. The payment schedule provides the equivalent of 13 months of payments going to retire principal. The result is faster amortizations and a shorter term for the loan.

Blanket mortgage. A single mortgage that includes more than one parcel of real estate as security. When one piece of property is insufficient collateral for a loan, the borrower might be able to satisfy the requirement by putting up more property as security. It is a good idea to negotiate release clauses whereby each parcel can be released from the mortgage without paying off the entire loan.

Blighted area. Portion of city where housing and commercial buildings are substandard, and residents tend t olive in property.

Blueprint. A set plans for construction of a home or other structure. The blueprint shows the floor plan for the building. Blueprints are used by contractors to coordinate the efforts of the various construction crews and to estimate the quantity of materials needed for the job.

Boiler plate. Description of contracts that use Standard terminology. In Texas, residential earnest money contracts promulgated by Texas Real Estate Commission may be described as boiler plate.

Bona fide. In good faith; without fraud. Examples include a purchase that pays for property without knowledge of any title defects. A bona fide sale is one in which the seller accepts consideration without notice of any reason against the sale. An act in good faith is open, sincere and honest.

Bond. A certificate that as evidence of a debt. See mortgage. Many types of bonds are used in real estate. A mortgage bond is one secured by a mortgage on property. A completion bond. (Also called performance bond) usually is issued by a boding company to assure completion construction if a contractor fails.

Borrower. One who is obligated to repay a loan; a mortgagor. Legal documents involved with a mortgage loan refer to the person who applies for a loan or the person who actually gets the loan as the borrower. The borrower is legally obligated under the terms of the mortgage contract.

Broker. One who is licensed by state to act for principals in real estate transactions, within the scope of state law. In most states, including Texas, one must be licensed as a broker to act in real estate transactions for another. A licensed real estate salesperson must be sponsored by a broker who accepts responsibility for the salesperson’s acts. A broker is regulated by the law of agency, which requires the broker to act in the best interest of the principal.

Brokerage. The business of being a broker, Brokerage brings parties together in a real estate transaction, such as a sale, lease, rental or Exchange.

Building codes. Regulations established by local governments describing the minimum structural requirements for buildings. They include foundations, roofing, plumbing, electrical and other specifications for safety and sanitation. Work on real estate must be in compliance with the building codes or it will not pass the required inspections.

Building inspection services. Businesses that inspect building on the behalf of buyers and identify any defects. The buyer has the right to hire an inspector prior to closing. The sales contract may allow the buyer to void the sale and to recover earnest money bases on an unsatisfactory inspection. The seller often is required to make repairs up to a dollar limit in response to professional inspection.

Building line. A line fixed a certain distance from the boundaries of a lot beyond which the building may not project. The building line is frequently set by the municipality in which the property lies, o by deed restrictions. When situating improvements on a lot, it is important to observe the building line. Often, one must ascertain from the city their exact location.

Building loan agreement. See construction loan.

Building permit. Permission granted by a city or other municipal authority to erect or modify a structure.

Bundle of rights theory. The theory that ownership of realty implies rights such as occupancy, use and enjoyment, and the right to sell, bequeath, give or lease all or part of these rights, in a real estate transaction, one must know what one has or is acquiring because come of the bundle of rights may be missing.

Buy down. Payment of discount points at loan origination in order to secure a codger interest rate; the reduced rate may apply to all or a portion of the loan term. When offered low rate financing on property being bought, one should determine whether the buy down applies to just the fist few years or the full term of the loan.

Buyer. In sales contract, the person that arranges to meet the sales price and takes ownership of the property.

Buyer’s agent. A real estate licensee who represents the buyer in a transaction. Often the agent who helps a buyer find a home is working as an agent or subagent of the seller. Come agents contract directly with the buyer to find a suitable property and to negotiate on the buyer’s behalf.

Bylaws. Rules adopted by an organization, the bylaws of a condominium owners association, for example, state how common areas are used, whether pets are allowed, amount of the monthly membership fee and other requirements residents must meet. Owners associations have the legal right to enforce the bylaws and collect fees of residents.

Cancellation clause. A provision a contract that gives the right to terminate obligations upon the occurrence of certain specified conditions or events. A cancellation clause in a lease upon sale of the building. A lessor may need a cancellation clause if he or she plans to sell the building because the buyer may have another use.

Cap. The limit which the interest rate on an adjustable rate mortgage may be changed; usually there are annual caps and lifetime caps. Without caps, interest rates of adjustable rate mortgages can increase without limit.

Capital gain (loss). Certain assets are defined in the tax code as not being capital assent. Anything not is defined is a capital asset, depending on current tax law, gains from capital assets often are taxed more favorably than ordinary income, whereas losses from the sale of capital assets often do not receive as favorable treatment.

Capitalization. A process whereby anticipated future income is converted to one lump sum capital value. Rental property evaluation is enhanced by the capitalization process. Income is divided by a capitalization rate to estimate value, using this formula:

Rental income less
Operating expenses
Property value= ----------------------------
Capitalization rate

Capitalization rate. A rate of return used to convert anticipated future income into a capital value. The capitalization rate includes interest and principal recovery. See capitalization.

Carrying charges. Expenses necessary for holding property, such as taxes and interest on idle property or property under construction. Investors in nonretail real estate should consider carrying changes.

Cash flow. The amount a property owner has remaining alter all out-of-pocket expenses are subtracted. Depreciation expense generally does not affect cash flow though it is deductible to arrive at net income. Mortgage amortization payments reduce cash flow but do not affect taxable income.

Cashier’s check. A bank check that guarantees the availability of funds in the payer’s account sufficient to cover the amount of the check. A cashier’s check or a certified check usually is required to pay expenses al closing.

Caveat emptor. Latin for “let the buyer beware”. The buyer must examine the goods or property and buy at his or her own risk. This was once an accepted rule. Homebuyers in Texas have much more protections than they once did, as sellers and blockers are required to disclose problems or face possible penalties.

Certificate of defense. See estoppel certificate.

Certified Commercial Investment Member (CCIM). A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.

Certified Property Manager (CPM). A member of the Institute of Real Property Management, an organization affiliated with the National Association of Realtors.

Certified Residential Broker (CRB). A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.

Chain. A unit of land measurement that is 66 feet long, in surveying, land descriptions sometimes uses the chain.

Chain of title. A history of conveyances and encumbrances affecting a title from the time the original patent was granted, or as far back as records are available. See abstract of title.

Chattel. Personal property, including autos and households goods and mixtures. Many laws have different applications, estate or chattel. These laws vary from state to estate.

Chattel mortgage. A pledge of a personal property as security for a debt.

Checking account. A bank account that allows the owner to pay obligations and withdraw funds by writing checks. A checking account is a convenient way of holding cash that is used for routine expenses, when applying for a loan, the lender will want to know amount in any checking accounts the borrower owns.

Clear title. Property ownership that can be transferred readily, a seller must obtain clear title before a sale can be closed. This means that any known claim to an interest in the property, such as an unpaid mortgage loan, a tax liability or unpaid contractor, must be required to uncover any such problems. If found, the seller must obtain releases and quit claim deeds to clear up title defects before the sale can be closed.

Client. One who employs a broker, lawyer, accountant, and appraiser and so on. See agency. The law describes certain relationships that a professional has with a client. In a real estate transaction it is important to know scope of the relationship.

Closing. Formal transfer of ownership from seller to buyer. The sales contract will set a date for the closing, at that time, if the date is not changed, a meeting of buyer and seller, plus agents, attorneys, lenders and other interested person, is held. At the meeting, all fees and commissions are paid, the loan is advanced, legal documents are signed and all transactions expenses, including the buyer’s down payment, are paid out of funds supplied by the buyer and seller. After closing and funding, the buyer is the owner of the property.

Closing agent. One who administers a closing. In most cases, a representative or the title company serves as closing agent. This agent schedules the closing meeting, sends notices to the persons, and prepares settlement statements and conduct the meeting.

Closing cost. In real estate transaction, amounts charged to transfer ownership. Generally includes brokerage commissions, discount points and other loan fees, appraisal and credit check fees, attorney fees, title expenses and recording fees. In residential real estate transaction these easily can exceed 10 percent of the selling price.

Closing date. The date on which the seller delivers the deed and the buyer pays for the property. Also called settlement date, the Texas earnest money contract or agreement of sale will state when closing is to take a place. A buyer or seller may be considered to have defaulted on a contract if unable to close by the agreed upon date.

Closing statement. An accounting of funds from a real estate sale, made to both the seller and the buyer separately. Most states require the broker to finish accurate closing statements to all parties to the transaction in which he or she is an agent. Shows the accounting, which should be considered with the Texas earnest money contract. The transaction should not be closed if an error is suspected in the closing statement.

Cloud on the title. An outstanding claim or encumbrance that, if valid, World affect or impair the owner’s title. A cloud on title can restrict use and affect ownership. Theses should de cleared prior to closing. An attorney or title company can give assurance of title.

Cluster housing. In a residential subdivision, detached housing with each allow for a large tract of open land to be shared by the units.

Co-applicant, co-borrower, co-debtor, co-mortgagor. One who signs with an applicant or borrower on a mortgage loan, thereby assuming an obligation to repay the loan. A co- applicant or co- borrower may be related or unrelated to the applicant or borrower may supply cash, agree to pay part of the debt service or merely guarantee repayment by the borrower. The lender then may consider the income, wealth and creditworthiness of the co-borrower in underwriting the loan.

Collateral. Item of value pledged to secure a loan. A loan backed by collateral is of lower risk to the lender that an unsecured loan. In case of default, the lender can sell the collateral to satisfy the debt. For mortgage loans, the collateral usually is the property being purchased.

Color of title. That which appears to be good title but is not. A title that appears good actually can be clouded. An attorney or Title Company’s input is essential in determining if a title is clear.

Commercial property. Property designed for use by retail, wholesale, office, hotel and service users. Nearly all cities and towns have zoning, which restricts the location of commercial property.

Commingle. To mingle or mix, such as the deposits of another’s Money in a broker’s personal account, brokers generally must maintain amounts of earnest money in an account that is separate from their personal funds.

Commission. 1. Amount earned by real estate broker for services rendered. 2. The official body that enforces real estate license laws. 1. Commissions are the way real estate brokers earn money. 2. The Texas Real Estate Commission licenses brokers and salesperson and may suspend a license for certain behavior.

Commitment. A pledge or promise; a firm agreement. When a financing is needed to buy a property, a commitment that specifies the loan terms must be obtained from a lender. The loan terms are noted in the commitment, which may include interest rate lock-in.

Commitment fee. A charge by lender for making Money available. A lender may agree to lock in an interest rate for 60 to 90 days while the necessary title works is performed, upon the receipt of 1 percent of the proposed loan.

Commitment letter. An agreement by a lender to fund a loan with specified terms including a specified period, when a buyer applies for a mortgage loan, the applicant’s credit rating, income and wealth and on a appraisal of the property. If everything is satisfactory, the lender issues a commitment letter for a loan amount at a stated rate of interest. The buyer may then proceed with the closing within the time covered by the commitment.

Common elements. Generally, in a condominium development that all owners can use and enjoy. Owners of a condominium share in the use of and payment for the common area, such as walkways, recreational facilities and ponds. A homeowner’s association typically manages the common area.

Common law. The body of law that has grown out legal customs and practices that Developer in England. Common law prevails unless superseded by other law.

Community association. An organization of property owners in a certain subdivision, condominium or cooperative development.

Community property. Property accumulated through joint effects of husband and wife and owned by them in equal shares. The doctrine now exists in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington. See separate property. Husband and wife must agree to all real estate transactions involving community property.

Comparative market analysis. An informal estimate of market value performed by a real estate agent, as a service to the seller or buyer, an agent Hill give an analysis of market data on price. The analysis is not as rigorous as an appraisal but allows the property to be priced in line with similar properties on the market. The analysis usually is provided free or charge.

Compound interest. Interest paid on the original principal and also on the unpaid interest that has accumulated. For example, $100 deposited in a 5 percent savings account earns $5 interest the first year. Its second- year earnings are 5 percent. Of $105, or $5.25. Compound interest is the cornerstone of all financial computations, including monthly mortgage payments and remaining balances.

Condemnation. Taking private property for public use, with just compensation to the owner, under eminent domain. Used by governments to acquire land for streets, parks, schools and so on, and by utilities to acquire necessary property. Also, declaring structure unfit for use. All property is subject to condemnation, though the government must show need. The amount of compensation can be disputed.

Condition(s). Provision(s) in a contract that some or all terms of the contract must be met or the contract need not be consummated. Examples include that the buyer must obtain certain amount; the city must pay for certain repairs.

Conditional sales contract. A contract for sale of property skating that the seller retains title until the conditions of the contract have been fulfilled. See contract for deed. Generally, buyers have less of an interest under this type of contract as contrasted with receipt of a deed.

Condominium. A system of ownership of individual units in a multi- unit structure, combined with join to ownership of commonly used property such as sidewalks, hallways and stairs. See common elements. The condominium can be mortgage by its individual owner, who must pay assessments for common- area expenses.

Condominium fee. Periodic, usually monthly, charge levied by a condominium homeowner’s associations on members. One difference in owning a condominium unit, as apposed to a fee simple property, is the requirement to support and follow the bylaws established by the homeowners’ association. Buyers need information about the fee and the rules before buying a condominium unit.

Conformity principle. An appraisal principle that holds that property values tend to be maximized when the neighborhood is reasonably homogeneous in social and economic activity.

Consideration. Anything of value given to induce entering into a contract, including money, personal services, love and affection. A contract must have some consideration to be legally binding.

Constant payment loan. A loan which equal payments are made periodically to pay off the debt when the last payment is made. Although each periodic payment is the same, the portion that is interest declines over time, while the principal portion increases.

Construction loan. A loan used to build on real estate. Many construction lenders require, among there things, that the builder obtain a commitment for a permanent loan before they will issue a construction loan. Commercial banks are the most common source of construction loan. The rate is often the prime rate plus 2 percent plus one or more discount points. The loan is advanced in stages as the project is completed.

Constructive eviction. Exists when physical conditions render property unfit for the purpose for which it was leased, through the fault of the landlord.

Constructive notice. The law presumes that everyone has knowledge of a Fac. When that fact is matter of public record. For example, A buys land from B, believing that B is the owner, however, C owned the property. Because C’s deed had been properly recorder, A had constitutive notice of C’s ownership and cannot claim ownership against C.

Consumer credit reporting agency. A business that maintains historical records on individual debt repayment. Information is volunteered by creditors, and the reports are reviewed when an individual applies for a loan or line of credit. When someone applies for a mortgage loan, part of the loan underwriting process involves checking the borrower’s credit report. A history of slow payment or nonpayment may cause the loan to be denied.

Contiguous. Actually touching; having a common boundary. See adjacent and adjoining.

Contingency. A provision written into a sales contract that allows a person, usually the buyer, to void the contract if a specified condition is not met. Contingencies protect a buyer from being forced to complete a transaction even though something occurs that makes the purchase impractical. Common contingencies include a requirement for approval of financing and sale of an existing residence. The provision lest the buyer recover deposited earnest money if the contingency arises.

Contract. An agreement between competent parties to do or not to do certain things for a consideration. A valid contract is enforceable in a court or law. All contracts for real estate must be in writing to be enforceable, except leases for less than year.

Contract for deed. A type of installment sale whereby the buyer makes monthly payments of property and receives the deed upon the final payment. See land contract.

Contract of sale. See agreement of sale and earnest money contract.

Contractor. Someone who performs services Ander contract. This term is involved in real estate in two ways, first, contraction contractors supervise the building, remodeling or repair of buildings under contract with a developer or owner, second, real estate salespeople may be considered independent contractors, rather than employees, depending on their relationship with the firm.

Conventional loan. A mortgage loan other than one guaranteed by the Veterans Administration or insured by the Federal housing Administration. Conventional loans generally require a larger down payment than others; conventional loans can be decreased with private mortgage insurance.

Convey. To deed or transferor title to another, jeans a sale or transfer of ownership.

Conveyance. the transfer of the title of real estate from one to another; the jeans or medium by which title of real estate is transferred. Usually refers to use of a deed, but can also be used for a lease, mortgage, assignment or encumbrance.

Cooperating broker. An agent who helps completes the transaction and who is eligible to receive a sales commission. In a Multiple Listing Service, the broker supplying the buyer often is a cooperating blocker who earns a share of the commission paid by the seller. An agent does not have to directly enter a listing contract to earn a sales commission. Sales commonly involve a cooperating broker in addition to the listing broker.

Cooperative. A type of corporate ownership of real property whereby stockholders of the corporation are entitled to use a certain dwelling unit or other units of space. Special income tax laws allow the tenant stockholders to deduct from their tax return housing interest and property taxes paid by the corporation.

Co- purchaser. A related or unrelated person who joins with another to buy a property. A sales contract may be someone who will share the home with the purchaser or someone who will help the purchaser finance and pay for the home.

Corporeal. Visible. Corporeal rights in real estate include such things as the right in real estate includes such things as the right of occupancy under a lease.

Cosign. To become liable in a contract, such as mortgage loan. Often the lender will not extend the loan. Often the lender will not extend the loan to the party seeking it without a substantial partner who accepts liability.

Cost approach. One of the three appraisal methods of estimating value. The estimated current cost of reproducing or replacing the existing improvements, less the estimated depreciation, added to the value. Same as appraisal by summation. Most properties sell for market value. The cost approach is useful for proposed construction or for estimating the amount of insurance, two other common appraisal methods arte the market approach and the income approach.

Co tenancy. Ownership of property by two or more persons, as in tenancy in common or join tenancy.

Counteroffer. In real estate negotiations, the rejection o fan offer and substitution of a new offer to the other party. A counteroffer may bring the transaction closer to agreement but legally is a rejection of the offer.

Covenant. A promise written into deeds and other instruments agreeing to do or preventing certain acts, or requiring or preventing certain uses of the property. When buying real estate, it is prudent to determine whether any of the covenants would inhibit or prevent a proposed use of the property.

Credit history. A person’s past record in repaying deb. A person’s credit history is reviewed by a lender prior to approving a loan.

Credit rating. An evaluation of credit worthiness of an n individual base don their credit history, mortgage loan approval may be difficult to obtain with no credit rating. Someone who has never corroded money may have as much difficulty obtaining credit as a person who has a poor credit history.

Credit report. A document maintained by a credit reporting agency that describes an individual’s credit history, loan underwriters commonly order credit reports in loan applicants. Individuals have the right to inspect their credit report and make corrections as needed.

Credit score. A rating that estimates the loan applicant’s risk of defaulting on the loan. Scores depend heavily on the individual’s prior use of credit and other indications of trustworthiness. The score is based in objective information from the applicant’s credit records. A person’s credit score helps determine whether they get a mortgage loan terms that will be offered, the worse (lower) the score, the higher the interest rate on the loan will be.

Creditor. Someone who is owned a debt. Mortgage loan applications require the borrower to identify current creditors. The lender wants to know how much debt the borrower already has and whether income is sufficient to carry the additional debt loan of the proposed loan.

Cul-de-sac. A turn space at the end of a street that allows vehicles to turn around in the street without backing up but provides no outlet to other streets. Cul-de-sacs are popular with homeowners because they have no through traffic, making them quieter and safer than through streets.

Curable depreciation. Depreciation or deterioration that can be corrected at a cost less than value that Hill be added. It is economically profitable to correct curable depreciation.

Curtsey. The right of a husband to all or part of his deceased wife’s realty regardless of the provisions of her Hill exists; this is the husband’s counterpart to dower.

Damages. The amount recoverable by a person who has been injured in any manner, including physical harm, property damage or violated rights, through the act or default of another. Damages may be awarded for compensation and as punitive measures, in the case of outrageous behavior.

Deal. To negotiate a contract. An agreement on a contract. See negotiation. A buyer and seller deal for the right price and conditions of sale. Once the sales contract is signed, they have made a deal.

Debt. Money acquired by borrowing. Secured debt is Money borrowed through loans using property as collateral. Mortgage debt is money borrowed through a loan secured by real property. Investments can be financed through the use of debt or equity or a mixture of the two. The cost of debt is interest paid to creditors, while equity requires sharing profits with investors through dividends.

Decree. An order issued by one in authority; a court order or decision. A decree may be final or interlocutory (preliminary).

Dedication. The gift of land by its owner for a public use and the acceptance of it by a unit of government. An example includes streets in a subdivision, land for a park or a site for a school.

Deed. A written document, properly signed and delivered, that combers title to real property. See bargain and sale deed, general warranty deed, quitclaim deed, special warranty deed.

Deed in lieu of foreclosure. A borrower who is in default may surrender property ownership to the creditor instead of requiring the creditor to foreclose through court action.

Deed of trust. A security instrument used for mortgage loans. When a mortgage loan is secured by a deed of trust, a trustee is designated. If the borrower defaults, the trustee may sell the property to satisfy the debt, unpaid interest and lender’s expenses.

Deed restriction. A clause in a deed that limits the use of land. For example, a deed might stipulate that alcoholic beverages are not to be sold on the land for 20 years. A prospective buyer should check that deed restrictions would not inhibit an intended use of property; a prospective seller should consider whether he or she wants to restrict the use of land.

Default. Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any acts. Upon default, the defaulting party may be liable to the other pasty (ies).

Defeasance. A clause in mortgage that gives the borrower the right to redeem the property after default, usually by paying the full indebtedness and fees incurred. For example late payments on a mortgage or other default neither do nor necessarily cause the borrower to lose the property. Defiance may loan and fees may have to be paid.

Defendant. The party sued in an action at law. See plaintiff.

Deferred payments. Money payments to de made at some future date.

Deficiency judgment. A court order skating that the borrower still owes Money when the security for a loan does not entirely satisfy a defaulted debt. When property is foreclosed, the amount or value of the collateral might not satisfy the debt. The lender may be able to get a deficiency judgment to recover the balance owned.

Delinquency. Failure to make a payment when it is due. Technically, payment is delinquent as soon as its due date passes. Most lenders do not consider late payment a cause door alarm until the delinquency is at least 30 days old.

Delinquent payment. A payment that is past due. A late payment, beyond any grade period offered by the lender, is a default of the loan contract and could lead to foreclosure. A borrower who is having trouble making loan payments on time should talk to the lender about possible courses of action.

Delivery. Transfer of the possession of a thing from one person to another. In a real estate transaction there should be delivery of a deed. If an owner dies without giving a deed to a relative while alive, a verbal promise to give the property is inadequate.

Deposit. See Earnest Money.

Depreciation. In appraisal, a loss of value in real property resulting from age. Physical deterioration or functional or economic obsolescence. Also, in accounting, the allocation of the cost of an asset over its economic useful life. The value or real estate may decline; one can reduce income taxes by claiming depreciation as a tax expense.

Developer. One who converts raw land into improver real estate. Developers create subdivisions by platting land and putting in utilities, roads and landscaping. Some construct and market homes on the sites; others sell lost to builders.

Devise. A gift of real estate by will or last testament.

Devisee. One who inherits real estate through a will.

Directional growth. The locations or area in which a city is growing. An investor often can make a profit by purchasing land in the path of a city’s growth.

Discharge in bankruptcy. The release of a bankrupt party from the obligation to repay debts that were, or might have been, proved in bankruptcy proceedings.

Disclosure. Providing adequate factual information, such as about a property, to a potential buyer.

Discount points. Amounts paid to the lender at the time of loan origination, to account for the difference between the market interest rate and the lower facer ate or the note. They are often required when Federal Housing Administration of Veterans Administration financing is used. Each point is 1 percent of the loan principal. Discount point must be paid in cash at the tine they prepare an earnest money contract, which is to pay them.

Dispossess proceedings. The legal process by a landlord to remove a tenant and regain possession of property. If a lease is breached, the landlord may want to regain possession of the property.

Distressed property. Property undergoing foreclosure, bankruptcy or on the verge of doing so. Generally caused by insufficient income or loss in value.

Distribute. A person receiving or entitled to receive land as the representative of the former owner; an heir.

Documentary evidence. Evidence that is in written or printed from. Documentary evidence often carries more weight that oral evidence.

Domicilie. A person’s legal residence.

Dower. Under common law, the legal right of a wife or child to part of a deceased husband’s of father’s property. Generally abolished or severely altered in most states. Community property applies in Texas.

Down payment. Cash payment needed to make up the difference between the amount borrowed and the price of a property; few mortgage loans cover the complete cost of a property, even when supplemented with junior mortgages. The borrowed most likely will have to contribute cash, partly to pay for transactions cost and partly to make the down payment, down payments often are substantial, equaling thousands or tens of thousands of dollars.

Due date. The last day on which a payment must be made before it is delinquent. Mortgage loans often are due on the first of the month, but often they are not considered late until after the fifteenth (a grace period). Some lenders then add on late charge for payments made after the grace period.

Due on sale clause. Found in mortgage contract, this provision causes the entire principal owned to be due upon a sale of the property.

Duplex. A structure with two dwelling units. Each unit has a separate entrance and full kitchen and bath facilities. Duplexes are popular with small investors who live in one unit and rent out the other, often receiving enough rent to pay the entire mortgage payment.

Duress. Unlawful constraint exercised upon a person whereby he or she forced to do some act against his or her will. A person who signs a contract or performs another act under duress is not legally bound to go through with the agreement.

Earnest Money. A deposit made by a purchaser of real estate to evidence good faith, Earnest Money should accompany an offer to buy property, generally a broker, attorney or title company deposit the money in a separate account beyond the control of the principals until the contract is completed.

Earnest Money contract. The term used in Texas for an agreement of sale contract. The Texas Real Estate Commission makes preprinted forms available for several types of transactions.

Basement. The right, privilege or interest that one party has in the land of another, such as the right of public utility companies to lay their lines across another’s service without requiring the public utility to buy the land. However, a potential real estate purchaser should determine exact locations of all easements to be sure they will not interfere with planned land uses.

Economic depreciation. Loss of value from all causes outsides the property itself. For example, a private home’s value may drop when a sanitary landfill is placed nearby.

Economic life. That remaining period for which real estate improvements are expected to generate income grater than operation expenses cost. As land improvements age, they tend to command less rent (in real terms) while maintenance costs rise. The economic life is the expected life of positive contributions to value by buildings or other land improvements.

Economic obsolescence. See economic depreciation.

Obsolescencia económica. Véase depreciación económica.

Effective rate. The rate interests on a loan, considering its face rate and discount points. See annual percentage rate.

Egress. The ability reaches a roan from a parcel of land.

Ejectment. Action to regain possession of real property and for damages for unlawful possession. Allows a rightful owner to remove a squatter or trespasser.

Encroachment. A building, a part of a building or any improvement that physically intrudes upon, overlaps or trespasses upon the property of another. A survey often is required as part of a real estate contract to determine whether there are any encroachments on the property.

Encumbrance. Any right to or interest in land that diminishes its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions, mechanics’ liens and leases.

Endorsement. The act of signing one’s name on the back of a check or note, with or without further qualification; also, the signature itself.

Equity. The difference between the value of a property and outstanding mortgage debt. When a property is purchased, equity is equal to the down payment, assuming the buyer paid market value. Over time, equity increases as the property’s value increases and mortgage debt is repair. If value falls, however, equity can diminish and even become negative.

Equity redemption. The right of a real estate owner to reclaim property alters default, before foreclosure proceedings, by the payment of the debt, interest and costs. See redemptive rights.

Erosion. The gradual wearing away of land through processes of nature, as by water (oceans, lakes and streams) and winds.

Escheat. The reversion of property to the state in the event that the owner dies without leaving a will or legal Harris. The assets of a person who has no legal heirs will escheat to the state unless a will is prepared that leaves property to another party.

Escrow. An agreement between two or more parties providing that certain instruments or property de placed with a third party for safekeeping, pending the fulfillment or performance of some act or condition. It is prudent to place money or property in escrow, rather that giving it to the other principal in a pending transaction.

Escrow account. See trust account.

Escrow agent. Any person or organization engaged in the Business of receiving escrows for deposit or delivery, such as a Sawyer, title company or broker.

Escrow funds. Money deposited with and held by a third person to be dispersed for a specific purpose in the future. Usually, earnest money is held in escrow until closing when it is credited to the buyer’s account. Lenders collect funds monthly for an escrow account that pays insurance premiums and property tax assessments as they become due.

Estate. The degree, quantity, nature and extent of interest a person has in real or personal property.

Estate at sufferance. The wrongful occupancy of property by a tenant alter the lease has expired.

Estate at will. The occupation of real estate by a tenant for an indefinite period, terminable by one or both parties at will.

Estate for life. An interest in property that terminates upon the death of a specified person. See life estate.

Estate for years. An interest in land allowing possession for a definite and limited time.

Estate in reversion. An estate left by the grantor for himself or herself, to being alter the termination of some particular estate that he or she grants. For example, a landlord’s estate in reversion becomes his or hers to possess when the lease expires.

Estoppels certificate. A document by which the mortgagor (borrower) certifies that the mortgage debt is a lien for the amount stated. The mortgagor is thereafter prevented from claiming that the balance due differed fro the amount stated. Also applies to leases. The buyer of property on which there is a mortgage or lease should get estoppels to be sure the terms of those agreements are as expected. The right to get estoppel certificates is in the lease or mortgage.

Et al. Latin; abbreviation of et alii, “and others”

Et ux. Latin; abbreviation of et uxor, “and wife”.

Eviction. A legal proceeding by a lessor (landlord) to recover procession of property. Allows landlord to regain property when tenant does not uphold lease. A legal process must be followed.

Eviction, partial. Exists where the possessor of the property is deprived of a portion thereof.

Exclusive agency listing. Contract giving only broker the right to sell the property for a specified time and also allowing the owner to sell the property him self or herself without paying a commission. This is sometimes arranged when an owner wants to continue personal selling efforts to continue personal selling efforts while employing a broker. Acceptable to some brokers for some properties.

Exclusive right to sell listing. Contract living the broker the right to collect a commission if the property is old by anyone, including the owner, during the term of the agreement, and often beyond the term to someone the broker introduced. See exclusive agency listing and open listing.

Exculpation. Free from blame. An exculpatory clause in a mortgage allows the borrower to default without having personal liability.

Execute. To make out a contract; to perform a contract fully. Unsigned contracts in real estate are generally meaningless.

Executed contract. A contract, all terms and conditions of which have been fulfilled. When executed, a contract is enforceable.

Executor. A man designed in a will to carry out its provisions concerning the disposition of the estate. See executrix. The person making a will should name an executor or co- executor who is trustworthy and capable of carrying out its terms. If there is not mo will and no executor, the court appoints an administrator.

Executrix. A woman designated in a will to carry out its provisions concerning the disposition of the estate. See executor.

Exemptions. Situations not bound by the general rules.

Expenses, fees, cost. Terms used to mean transaction cost. See transfer fees. On a typical settlement statement, several charges are listed for minor services required during the transaction. These charges may include legal fees, survey expenses and document preparation cost.

Fair Housing Act. A federal law that outlaws discrimination by home seller, landlords and their agent on the basis of race, color, national origin, sex, religion, family situation or physical handicap. Real estate professionals must abide by the law when advertising and showing homes. Buyers and renters should be aware of the rights they have under the law.

Federal Deposit Insurance Corporation (FDIC). An agency that provides insurance of up to $100,000 per account in commercial banks and saving and loan associations. Federal insurance, up to $100,000 per account, provides depositors confidence in the banking system and each bank. Banks and savings and loan associations add liquidity to real estate.

Federal Home Loan Bank (FHLB). A federally chartered bank that supplies credit to member banks. Most savings and loan associations are members of the FHLB system. Helps assure a flow of money to savings and loan associations, which provide money for local real estate needs.

Federal Home Loan Mortgage Corporation. Nicknamed Freddie Mac; buys mortgage loans primarily from savings and loan associations.

Federal Housing Administration (FHA). U.S. government agency that insures the repayment of real estate loans to lenders. The FHA is instrumental in assuring that financing is available for those of low and moderate income levels. Programs include single-family homes, condominiums, apartments, nursing homes and new towns.

Federal National Mortgage Association (FNMA). Agency that buys and sells existing residential mortgages; known as “Fanny Mae”. FNMA significantly increases liquidity in the mortgage market. Without FNMA, it might be difficult for lenders who originate loans. FNMA has standardized the loan submission and approval process and brought the mortgage finance business on par with other national credit markets.

Federal Savings and Loan Insurance Corporation (FSLIC). A defunct agency that once insured deposits in federal savings and loan institutions.

Fee simple. Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition Turing his or her life, and the property descends to heirs ad legal representatives upon his or her death intestate. Also called fee absolute. When buying real estate, the seller can give only the rights she or she has. A buyer should determinate whether complete ownership will be deeded.

FHA Loan. A mortgage loan insured by the Federal Housing Administration (FHA)> FHA loans generally reduce the required down payment to 3 percent or less but require FHA mortgage insurance. In addition to interest, at ½ percent annually.

Fiduciary. A person who, on behalf of or for the benefit of another, transacts Business or handles Money or property belonging to another. Founded on trust; the nature of trust. A fiduciary or one in such capacity must act in the best interest of the party who has placed trust.

Financial institutions. Banks, credit unions and savings associations. These institutions, along with mortgage bankers, are potential sources of mortgage loans.

Financing options. Alternative ways to borrow Money to purchase real estate. These include various types of fist mortgage loans, combinations of loans, loan assumptions and seller financing. Not every borrower has the same financial situation. Financing options allow more ways to borrow money.

Financing terms. The important characteristics of loan, such as interest rate, amount (or loan- to – value ratio), points, fees and maturity. If the interest rate is adjustable, additional terms are important.


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