An employer-sponsored investment plan that allows individuals to set aside
tax-deferred income for retirement or emergency purposes. 401(k) plans
are provided by employers that are private corporations. 403(b) plans
are provided by employers that are not for profit organizations.
Some administrators of 401(k)/403(b) plans allow for loans against the
monies you have accumulated in these plans. Loans against 401K plans are
an acceptable source of down payment for most types of loans.
Abstract of title
The condensed history of a title to a particular parcel of real estate,
consisting of a summary of the original grant and all subsequent conveyances
and encumbrances affecting the property and a certification by the abstractor
that the history is complete and accurate.
The joining, reaching, or touching of adjoining land. Abutting pieces
of land have a common boundary.
The clause in a mortgage or deed of trust that can be enforced to make
the entire debt due immediately if the borrower defaults on an installment
payment or other covenant.
An offeree’s consent to enter into a contract and be bound by the
terms of the offer.
Accessed value is the valuation placed on property by a public tax assessor
for purposes of taxation.
Acquiring title to additions or improvements to real property as a result
of the annexation of fixtures or the accretion of alluvial deposits along
the banks of streams.
The increase or addition of land by the deposit of sand or soil washed
up naturally from a river, lake or sea.
On a closing statement, items of expense that are incurred but not yet
payable, such as interest on a mortgage loan or taxes on real property.
A formal declaration made before a duly authorized officer, usually a
notary public, by a person who has signed a document.
A measure of land equal to 43,560 square feet, 4,840 square yards,
4,047 square meters, 160 square rods or 0.4047 hectares.
The legal process that results in the tenant's being physically
removed from the leased premises.
Express information or fact; that which is known; direct knowledge.
Additional principal payment
A payment by a borrower of more than the scheduled principal amount due
in order to reduce the remaining balance on the loan.
Adjustable-Rate Mortgage (ARM)
A loan characterized by a fluctuating interest rate, usually
one tied to a bank or savings and loan association cost-of-funds index.
The financial interest that the Internal Revenue Service attributes to
an owner of an investment property for the purpose of determining annual
depreciation and gain or loss on the sale of the asset. If a property
was acquired by purchase, the owner's basis is the cost of the property
plus the value of any capital expenditures for improvements to the property,
minus any depreciation allowable or actually taken. This new basis is
called the adjusted basis.
The date on which the interest rate changes for an adjustable-rate mortgage
The period that elapses between the adjustment dates for an adjustable-rate
On an adjustable rate mortgage, the time between changes in the interest
rate and/or monthly payment, usually one, three or five years
Money that the buyer and sellers credit each other at the time of closing.
Often includes taxes and down payment..
A man/woman appointed by a court to settle the estate of a deceased person
when there is no will. Contrast with executor/executrix.
Ad val orem tax
A tax levied according to value, generally used to refer to real
estate tax. Also called the general tax.
The actual, open, notorious, hostile and continuous possession
of another's land under a claim of title. Possession for a statutory period
may be a means of acquiring title.
Affidavit of title
A written statement, made under oath by a seller or grantor of real property
and acknowledged by a notary public, in which the grantor
(I) identifies himself or herself and indicates marital status,
(2) certifies that since the examination of the title on the date of the
contracts no defects have occurred in the title and
(3) certifies that he or she is in possession of the property (if applicable).
An entity related to a Seller that is subject to common operating control
and that is operated as part of the same system or enterprise. The Seller
typically owns less than a majority of the voting stock or the Seller
and the entity are subsidiaries of a third party.
A detailed analysis of your ability to afford the purchase of a home.
An affordability analysis takes into consideration your income, liabilities,
and available funds, along with the type of mortgage you plan to use,
the area where you want to purchase a home, and the closing costs that
you might expect to pay.
Subsidized secondary financing or other financial assistance provided
under an established, documented secondary financing or financial assistance
program that has formal procedures in place to provide applicant qualification,
loan processing, and loan program administration on an ongoing basis.
The relationship between a principal and an agent wherein the
agent is authorized to represent the principal in certain transactions.
Agency coupled with an interest
An agency relationship in which the agent is given an estate
or interest in the subject of the agency (the property).
An authorized person who manages or transacts business for another. Laws
governing real estate--especially relating to agents--vary considerably
from state to state. While some standardization has been achieved, it
is best to check the particulars in each state.
Agreement of sale
Known by various names, such as contract of purchase, purchase agreement,
or sales agreement according to location or jurisdiction. A contract in
which a seller agrees to sell and a buyer agrees to buy, under specific
terms spelled out in writing and signed by both parties.
A designated airspace over a piece of land. An air lot, like
surface property, may be transferred.
The right to use the open space above a property, usually allowing
the surface to be used for another purpose.
The act of transferring property to another. Alienation may be
voluntary, such as by gift or sale, or involuntary, as through eminent
domain or adverse possession.
The clause in a mortgage or deed of trust that states that the
balance of the secured debt becomes immediately due and payable at the
lender's option if the property is sold by the borrower. In effect this
clause prevents the borrower from assigning the debt without the lender's
A system of land ownership in which land is held free and clear
of any rent or service due to the government; commonly contrasted to the
feudal system. Land is held under the allodial system in the United States.
Non monetary benefits and satisfactions derived from property ownership,
such as a pleasant view, pride in home ownership, etc.
American Land Title Association (ALTA) policy
A title insurance policy that protects the interest in a collateral
property of a mortgage lender who originates a new real estate loan.
A modification to an existing contract, mutually agreed to by all parties.
Examples might include a change in the pruchase price due to a low appraisal,
or a change in the closing date.
The operation of paying off indebtedness, such as a mortgage, by installments.
The conventional amortization periods are15 or 30 years.
A timetable for payment of a mortgage loan. An amortization schedule shows
the amount of each payment applied to interest and principal and shows
the remaining balance after each payment is made.
The amount of time required to amortize the mortgage loan. The amortization
term is expressed as a number of months. For example, for a 30-year fixed-rate
mortgage, the amortization term is 360 months.
To repay a mortgage with regular payments that cover both principal and
A loan in which the principal as well as the interest is payable
in monthly or other periodic installments over the term of the loan.
A mortgage requiring periodic payments that include both interest and
The amount that is charged annually for having a line of credit available.
Often charged regardless of whether or not you use the line.
Annual mortgagor statement
A report sent to the mortgagor each year. The report shows how much was
paid in taxes and interest during the year, as well as the remaining mortgage
loan balance at the end of the year.
Annual Percentage Rate (APR)
The relationship of the total finance charges associated with
a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending
An amount paid yearly or at other regular intervals, often on a guaranteed
The appraisal principle that holds that value can increase or
decrease based on the expectation of some future benefit or detriment
produced by the property.
Laws designed to preserve the free enterprise of the open marketplace
by making illegal certain private conspiracies and combinations formed
to minimize competition. Most violations of antitrust laws in the real
estate business involve either price-fixing (brokers conspiring to set
fixed compensation rates) or allocation of customers or markets (brokers
agreeing to limit their areas of trade or dealing to certain areas or
An initial statement of personal and financial information, which is required
to approve your loan.
Fees that are paid upon application. Charges for property appraisal and
a credit report are usually included in the application fee.
An estimate of the quantity, quality or value of something. The process
through which conclusions of property value are obtained; also refers
to the report that sets forth the process of estimation and conclusion
An estimate of the present worth.
A person qualified by education, training, and experience to estimate
the value of real property and personal property.
An increase in the worth or value of a property due to economic or related
causes, which may prove to be either temporary or permanent; opposite
A right, privilege or improvement belonging to, and passing with, the
An easement that is annexed to the ownership of one parcel and
allows the owner the use of the neighbor's land.
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise or lower the mortgage
interest rate according to a set index, such as six-month Treasury bills.
Asking (List) price
The price placed on property for sale.
The combining of two or more adjoining lots into one larger tract to increase
their total value.
The valuation placed on property by a public tax assessor for purposes
The imposition of a tax, charge or levy, usually according to
Report that appraisers use to record property values, marketability analyses
and any pertinent comments regarding the subject property. Assessment
reports are classified as appraisal reports or inspection reports.
A local government official who determines the value of the property for
Anything of monetary value that is owned by a person. Assets include real
property, personal property, and enforceable claims against others (including
bank accounts, stocks, mutual funds, and so on).
A person to whom a property right is transferred. For example, an assignee
may take over a lease from a tenant who wants to permanently move out
before the lease expires. The assignee takes control of the property and
assumes all the legal rights and responsibilities of the tenant, including
payment of rent. However, the original tenant remains legally responsible
if the assignee fails to pay the rent.
The transfer in writing of interest in a bond, mortgage, lease
or other instrument.
An existing mortgage that can be taken over by the buyer on the same terms
given to the original borrower.
The transfer of the seller’s existing mortgage to the buyer. See
A provision in an assumable mortgage that allows a buyer to assume responsibility
for the mortgage from the seller. The loan does not need to be paid in
full by the original borrower upon sale or transfer of the property.
The fee paid to a lender (usually by the purchaser of real property) resulting
from the assumption of an existing mortgage.
Assumption of mortgage
Acquiring title to property on which there is an existing mortgage
and agreeing to be personally liable for the terms and conditions of the
mortgage, including payments.
The act of taking a person's property into legal custody by writ
or other judicial order to hold it available for application to that person's
debt to a creditor.
One who holds a power of attorney from another to execute documents on
behalf of the grantor of the power.
Attorney's opinion of title
An abstract of title that an attorney has examined and has certified
to be, in his or her opinion, an accurate statement of the facts concerning
the property ownership.
Something on a piece of property that attracts children but also endangers
their safety. For example, unfenced swimming pools, open pits, farm equipment
and abandoned refrigerators have all qualified as attractive nuisances.
A public sale of property to the highest bidder.
A clause in a listing agreement that states that the agreement
will continue automatically for a certain period of time after its expiration
date. In many states, use of this clause is discouraged or prohibited.
The sudden tearing away of land, as by earthquake, flood, volcanic
action or the sudden change in the course of a stream.