My Eugene Realtor ~ Janet Asman .............A Friend To Help You Home
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Real Estate Definitions for you

Acceleration Clause
Allows the lender to speed up the rate at which your loan comes due or even to demand immediate payment of the entire outstanding balance of the loan should you default on your loan.

Adjustable Rate Mortgage (ARM)
A loan that adjusts on a regular schedule based on a national economic index and the lender’s margin.  Also called "variable rate mortgage."

Adjustment Interval
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index.

The process of paying off a loan with regular payments over a fixed time period, including accrued interest on the outstanding balance.

Annual Percentage Rate (APR)
The cost of borrowing money expressed as a yearly rate, which includes the interest, points, and other fees charged by the lender.

An estimate of the value of property, made by a qualified professional called an "appraiser."

Appraisal Fee
A fee paid to the lender to cover the cost of a written report that estimates the monetary value of a property on the open market.

An increase in the value of a house due to changes in the market conditions, home improvement or other factors.

Assessed Value 
The value placed on a house by a public tax assessor for the purpose of determining property taxes.

The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a mortgage is simply taking the loan over from the seller and becoming liable for the repayment. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing costs and new, possibly higher, market-rate interest charge will apply. The lender of record should be contacted. Lender approval is needed, and the seller may continue to have liability for the mortgage.

Balloon Payment Mortgage  
A loan with fixed monthly payments based on a 30-year schedule of payments on which the entire balance of the loan comes due at the end of a set period, usually five, seven, or 10 years.

A legal proceeding declaring that an individual is unable to pay debts, which may release the person from repaying debts owed.

Bi-Weekly Mortgage 

 A loan in which you qualify for a 30-year schedule of monthly payments at current interest rates but make payments every two weeks to pay off the loan sooner and save money on interest charges.

The person who obtains a mortgage loan.  Also called a "mortgagor."

Bridge Loan
A short-term loan secured by the equity in an as-yet-unsold house, with the funds to be used for a down payment and/or closing costs on a new house. There is no payment of
principal until the house is sold or the end of the loan term, whichever comes first.  Interest payments may or may not be deferred until the house is sold.

Points a borrow pays in advance to lower the interest rate.  Also called "discount points."

Buyer’s Agent
A real estate broker who enters into a contract-of-agency relationship with the buyer and typically gets paid by splitting the sales commission with the listing (seller’s) agent.  Also known as a "buyer broker."

The maximum amount an interest rate can increase or decrease in a designated period of time or over the life of the loan on an adjustable rate mortgage.

Clear Title
A title that is free of liens and legal questions about the ownership of the property.

The final steps in transfer of property ownership.  Closing occurs after both buyer and seller have signed final documents at escrow and the buyer has delivered funds to purchase the property to escrow.  The title and escrow company then records the transfer of property with the county and the transaction is referred to as "closed" or "recorded."

Closing Costs 
Usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at settlement. The costs of closing usually are about 3% to 6% of the mortgage amount. 

Closing Date
The date of the final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded.

Closing Statement

The fee a real estate broker/agent is paid for assisting in the purchase or sale of a property.  It is usually a percentage of the purchase price.

An agreement, often in writing, between a lender and a borrower to lend money at a future date subject to the completion of paperwork or compliance with stated conditions.

Comparative Market Analysis (CMA)
A written analysis prepared by a real estate broker to establish the market value of a property.  The CMA analyzes comparable homes currently offered for sale and comparable homes sold in the past six months. 

A home that is usually attached to other homes and shares common areas that everyone in the building or development owns together and maintains through a homeowners’ association fee.

A condition that must be met before a contract is legally binding. Home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. A contingency for financing specifies that if you do not get the mortgage financing you need to purchase the house at the terms you want, the offer is void and you will be refunded your deposit.   

Conventional Loan
A mortgage made by for-profit lenders and not insured by FHA or guaranteed by the VA or Farmers Home Administration (FmHA).

A type of group ownership where all members own the property’s living units and common areas by owning shares in the property.

A person who agrees to share credit responsibilities and repays the debt if the borrower defaults.

A response from a seller or buyer proposing a change to some of the terms of the original offer.

A specific agreement or regulation, which is legally enforceable and is transferred with the deed to the new owner, governing the use of the property.  Also called covenants, conditions, and restrictions (CC&Rs).

Credit Rating/Credit Score
A numerical value that ranks a borrower's credit risk at a given point in time. Your credit score is based on all the information in your credit report. This information is converted into a number which lenders use to determine whether you are likely to repay your loan in a timely manner.

Credit Report
A report of an individual's credit history, including open and fully repaid debt. The credit report is prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

Credit Report Fee
A fee paid for a report of an individual's credit history, including open and fully repaid debt. The credit report is prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

Money owed.  Also called "liability."

Debt-to-income ratio   
The maximum percentage of a borrower’s gross monthly income that can be spent on the house payment and all other creditor debts. 
A legal document conveying title to a property. 

Deed of Trust
An alternative to a mortgage in some states, whereby a third party holds the deed of the property as security until the buyer repays the loan.  Also called "trust deed."  Trust deeds are commonly used in Oregon.

Failure to meet financial obligations, which may result in the lender foreclosing on the loan.

Federal or state requirements to provide information about a property for sale, especially as they represent actual or potential defects or problems with the property.

Down Payment
The amount of cash a    borrower/buyer pays toward the purchase of a home. 

Dual Agent
A real estate broker who represents both the buyer and the seller in a single home purchase transaction.

Due-On-Sale Clause
A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home.

A house divided into two living units.

Earnest Money
Funds that are included with an offer to purchase property to show good faith in following through with the transaction.  In effect, a deposit, refundable under certain conditions.

Earnest Money Agreement

A right of way giving people other than the owner access to or over a property.

Anything that affects or limits the title to a property, such as outstanding mortgages, easement rights or unpaid property taxes.

Equal Credit Opportunity Act (ECOA)
A federal law that requiring 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.

The difference between the fair market value and current indebtedness also referred to as the owner's interest.  If you have a $100,000 mortgage on a property, but you can sell your home for $150,000, then your equity is $50,000.

A neutral third party who carries out the instructions of both the buyer and seller to handle all the paperwork of settlement or "closing."  In Oregon, this neutral third party is typically a title company.  Escrow may also refer to an account held by the lender into which the homebuyer pays money for tax or insurance payments.

Fannie Mae
Federal National Mortgage Association

Farmers Home Administration (FmHA)
Provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

Federal Home Loan Mortgage Corporation (FHLMC)

Also called Freddie Mac. A quasi-governmental agency that purchases conventional mortgages from insured depository institutions and HUD-approved mortgage bankers.

Federal Housing Administration (FHA)
A division of the Department of Housing and Urban Development. Its main activity is the insuring of residential mortgage loans made by private lenders. FHA also sets standards for underwriting mortgages.

Federal National Mortgage Association (FNMA)
Also known as Fannie Mae. A tax-paying corporation created by Congress that purchases and sells conventional residential mortgages as well as those insured by FHA or guaranteed by VA.

FHA Loan
A loan insured by the Federal Housing Administration open to all qualified home purchasers.

FHA Mortgage Insurance
Requires a small fee (up to 3 percent of the loan amount) paid at closing or a portion of this fee added to each monthly payment of an FHA loan to insure the loan with FHA.

First Mortgage
A home loan that has priority over the claims of subsequent lenders for the same property in the event of default.

Fixed-Rate Mortgage
A loan on which the interest rate is set for the term of the loan.

Property, such as a hot water heater or plumbing fixture, that has become permanently attached to piece of real estate and goes with the property when it is sold.

Flood Insurance
A policy required by a lender if a buyer’s house is located in a flood zone.

Freddie Mac
Federal Home Loan Mortgage Corporation

The legal process used to force the payment of debt secured by collateral whereby the property is sold to satisfy the debt.

Good-Faith Estimate (GFE)
A document from the lender that discloses anticipated settlement costs associated with the loan(s) given to buy a home.

Graduated Payment Mortgage
A fixed rate loan with monthly payments that start low, increasing by a fixed amount for a specific number of years. After that period, the payments typically remain constant for the duration of the loan.

Gross Income  
Money earned before taxes and other deductions.

Gross Monthly Income
The total amount the borrower earns per month, before any expenses are deducted.

Hazard Insurance
Insurance to protect the homeowner against physical damage to a property from fire, wind, vandalism and other hazards.  Also known as "Homeowner’s Insurance."

Home Equity Loan 
A loan secured by a mortgage lien that allows homeowners to borrow against equity in their house to pay for repairs or other home improvements, refinance other debt or use for other purposes. 

Home Inspection
An objective examination of the physical structure and systems of a home.  A common expense for a homebuyer in a real estate transaction.

Housing Expenses-to-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her net effective income (FHA/VA loans) or gross monthly income (conventional loans).

A final statement listing all the costs of the sale of a property and who pays for them.  The form for the statement is published by the Department of Housing and Urban Development (HUD). The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

That portion of a borrower's monthly payments held by the lender or servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due. Also known as "reserves" or "escrow."

A published market index rate tied to an economic indicator that is used to calculate the interest rate of an adjustable rate mortgage at origination and at each adjustment period.

The cost of borrowing money.

Interest Rate
The percentage rate at which interest accrues on the mortgage. Also the rate used to calculate the monthly payments.

Interest Rate Lock-In
A written guarantee that a buyer will receive a specified interest rate from a lender provided that the loan closes within a set period of time.

Joint Tenancy
A form of ownership in which two or more people have an equal and undivided interest in the property.

Land Lease
An arrangement in which a person owns a house and rents the land underneath it.

A legal hold or claim of one person on the property of another as security for a debt, or a charge that may be listed on a credit report as a public record.

Life Estate


Listing Agent
A real estate broker who has a contract with the seller of a house to advertise the property for sale and represent the seller when offers are made.  Also called the "seller’s agent."

Loan Closing
The final transfer of the ownership of a property from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded.

Loan Discount Points
A fee paid by the borrower at closing to reduce the interest rate on a mortgage. A point equals 1 percent of the loan amount.

Loan Origination Fee
The loan origination fee covers the administrative costs of processing the loan. It is often referred to as "points." One point is 1 percent of the mortgage amount. An example: a 100,000 mortgage with a loan origination fee of 1 point would be a fee of $1,000.

Loan-To-Value Ratio (LTV
The ratio of the loan balance to the appraised value of the home.
Manufactured Home
A factory-built home that meets certain federal standards put into effect in 1976 and which has a structural frame, or chassis, that supports the complete unit of walls, floor and roof. If built before regulations went into effect, called a "mobile home."

Market Value
The highest price that a buyer would pay and the lowest price a seller would accept on a property. Market value may be different from the price a property could actually be sold for.

In its strictest sense, a legal document that pledges a property to the lender as security for payment of a debt. The mortgage gives the lender the right to collect payment on the loan and foreclose (take back the property) if loan obligations are not met. Term commonly used to refer to any loan obtained for the purchase of a house or other real property.

Mortgage Broker
A company or individual that, for a fee, matches borrowers with lenders.

Mortgage Insurance
Money paid to insure the mortgage when the down payment is less than 20 percent.

Mortgage Loan Application
Lenders use the information you provide on the loan application to evaluate whether or not they can give you a loan, and if so, the amount of money they can lend you.

Mortgage Payment
The monthly payment to your lender that in most circumstances reduces the debt once a month. It may include four components.  Principal (P) refers to the portion that reduces the remaining balance of the mortgage. Interest (I) is the fee charged for borrowing money. Taxes and insurance (T & I) refer to the amounts that are paid into an escrow account each month for property taxes, and also for mortgage and hazard (property) insurance. Not all loans are set up to include T & I.

The lender.


The borrower or homeowner.

Multiple Listing Service (MLS)
A service within a certain area that allows real estate professionals to submit listings, attempt to sell such listed properties, and agree to pay commissions on a cooperative basis.

Negative Amortization
Occurs when a borrower’s monthly payments are not large enough to pay all the interest due on the loan. This unpaid interest is added to the unpaid balance of the loan. The risk of negative amortization is that the homebuyer ends up owing more than the original amount of the loan.

Non-Assumption Clause
A statement in a mortgage contract forbidding the assumption of the mortgage (that is, allowing a new owner to take on the current loan payments) without the prior approval of the lender.

Non-Traditional Credit History
A record of credit performance shown with receipts and check stubs from payments to landlords, utility companies, etc., for loan applicants without a credit history from loans and other forms of credit.

A document signed by the borrower of a loan that states the loan amount, the interest rate, the time and method of repayment and the obligation to repay. The note serves as the evidence of debt.

Occupancy Date

The process of making a formal bid to buy a home, in which the would-be buyer offers a stated amount for the house, provided certain conditions are met.

The process carried out by a lender of providing a borrower with a loan.  Contrast with Servicing.

Origination Fee
The fee charged by a lender to prepare loan documents, make credit checks, and carry out related tasks, usually computed as a percentage of face value of the loan.

Personal Property
Any property that is not real property; for example, furniture.  In general, personal property is not fixed or attached to the property.

Principal, interest, taxes, and insurance. Also called monthly housing expense.  See Mortgage Payment.

Planned Unit Development (PUD)
Property that is part of a subdivision and has common areas that are shared and maintained through a homeowner’s association fee, while each homeowner owns his/her own home and the land upon which it sits.

A map of a piece of land showing boundary lines, streets, actual measurements and easements


Possession Date
The date in a residential real estate contract defining when the buyer will take possession and/or move in to the property; also referred to as "occupancy date." In most cases, the dates of possession and closing will be the same, with the specific time of transfer no later than 5 p.m.

Power of Attorney
A legal document authorizing one person to act on behalf of another.

A guarantee that a lender will lend potential buyers up to a fixed amount as long as they buy a home by a certain time and the house appraises for no less than the value agreed upon by the buyers and the seller(s).

Predatory Lending
Deceptive and sometimes-fraudulent sales tactics used when a party is taking out a mortgage or home equity loan.

Prepaids (Prepaid Items)
Expenses necessary to create an escrow account or to adjust the seller's existing escrow account. May include taxes, hazard insurance, private mortgage insurance and special assessments. Usually paid by buyer at signing, prior to closing.

Prepaid Interest
Paying of interest before it is due. Mortgage interest is paid for the previous month. Buyers may have to pay interest at closing for that month, and not be required to make a mortgage payment until the beginning of the second month following the closing.

1) Paying more each month than the amount of the regular mortgage payment to pay off the loan sooner and save money on interest charges.  2) Paying off the entire loan balance ahead of the original payment schedule.

Prepayment Penalty
Money charged by the lender for an early repayment of debt.  Buyers should find out before signing whether their loan carries this kind of penalty.

The amount of debt, not counting interest, left on a loan.

Principal Broker
In Oregon, a real estate broker qualified to manage other brokers, or work as a sole practitioner.  
Private Mortgage Insurance (PMI)
A type of insurance paid by borrowers who put down less than a specific down payment, usually 20%.  Paid either as an additional cost at closing, or via a monthly fee added to the mortgage payment, or both.  Other low-down-payment alternatives do not involve PMI.  In many cases borrowers can petition their lenders to cancel the PMI once their equity in the property reaches the 20% threshold.

Promissory Note

Property Tax
A tax charged by a local government based on the assessed value of the property and used to fund a variety of services such as schools, police and government operations.

Purchase and Sale Agreement
A contract used to purchase real estate. 

Real Estate Broker
A person licensed to negotiate and transact the sale of real estate on behalf of either the buyer or the property owner, or under certain conditions, more than one party to a transaction.

A licensed real estate professional holding active membership in a local real estate board affiliated with the National Association of REALTORS®. REALTORS® adhere to a Code of Ethics, which is based on professionalism and protection of client interests.

The cancellation of a contract. With respect to mortgage refinancing, the law gives the homeowner three days to cancel a contract in some cases once it is signed, if the transaction uses equity in the home as security.

Recording Fees
Money paid to the lender for recording a home sale with the local authorities, thereby making it part of the public records.

Paying off an existing loan with the proceeds from a new loan using the same property as security. Usually done to lower the interest payment or to take cash from the equity in the property. Often referred to as a "refi."

Real Estate Settlement Procedures Act (RESPA)
A federal law that allows consumers to review information on known or estimated settlement costs once after application and once again prior to closing. The law requires lenders to furnish information only after the receipt of a loan application.

Money set aside for emergencies or repairs, or for specific expenses such as taxes or insurance.

Reverse Annuity Mortgage (RAM)
A form of mortgage in which the lender makes periodic payments to the borrower using the borrower's equity in the home as security. Usually called a "reverse mortgage."

Sales Contract
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. In Oregon, commonly referred to as an "earnest money agreement," or EMA.

Schedule of Payments
The day of the month, timing, number and dollar amount of payment due over the entire course of the loan.

Second Mortgage
A home loan with rights subordinate to the rights of the first mortgage; that is, will be repaid only after the first mortgage in case of foreclosure.

All operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes and insurance, etc.  Contrast with Origination.

Settlement/Settlement Costs
See Closing/Closing Costs.

Settlement Statement

Shared Appreciation Mortgage (SAM)
A mortgage in which a borrower receives a below-market interest rate, or some other beneficial term and/or condition, in return for which a lender (or another investor, a co-borrower, or non-profit organization) receives a portion of the future appreciation in the value of the property.

Single-Family Home
A type of house, usually detached, owned by one person or family, including the land upon which it sits.

A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to known points, its dimensions, and in some cases the location and dimensions of any building.

Term Mortgage
Baloon Payment Mortgage

A document that gives evidence of an individual's ownership of property.

Title Insurance
Insurance to protect the lender (lender’s policy) or the buyer (owner’s policy) against loss arising from disputes over the ownership of a property. In Oregon, it is common for the seller of a property to purchase a policy to protect the buyer, and the buyer, in turn, to purchase a second policy to protect the lender.

Title Search
An examination of public records, usually performed by a title company, to determine the legal ownership of property.

Total of Payments
The total dollar cost of the loan to you, assuming all payments are made on time.

Truth in Lending Act (TILA)
A federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs so the borrower can make informed choices about credit. Five terms must be disclosed: Finance Charge, Annual Percentage Rate (APR), Amount Financed, Schedule of Payments and Total of Payments.

The decision-making process by a lender regarding whether to make a loan to a potential homebuyer based on credit, employment, assets and other factors, and the matching of this risk to an appropriate rate, term and/or loan amount.

Up-front Costs
Expenses paid at time of property closing.

VA Loan
A long-term, low-or no-down payment loan guaranteed by the Department of Veterans Affairs. Restricted to individuals qualified by military service or other entitlements.

VA Mortgage Funding Fee
A premium of up to 2% (depending on the size of the down payment) paid on a VA-backed loan.

Variable Expense
An expense that changes from period to period, such as utilities, food, clothing or entertainment.

Variable Rate Mortgage (VRM)
Adjustable Rate Mortgage

Verification of Deposit (VOD)
A document signed by the borrower's financial institution verifying the status and balance of his/her financial accounts.

Verification of Employment (VOE)
A document signed by the borrower's employer verifying his/her position, salary and length of employment.

A buyer’s final inspection of the property, usually conducted right before closing, to determine that the property is as described in the purchase agreement.

Wraparound (Mortgage)
A loan with which a seller finances a new mortgage, which "wraps around" his or her previous mortgage, and the buyer repays to the seller.

Yield Spread Premium
The commission a mortgage broker receives from a lender for matching a borrower with one of its loans.

Government laws and/or regulations describing how properties can be used in specific areas (such as residential neighborhoods, commercial development, etc.).