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)
Is a mortgage in which the interest rate is adjusted periodically based on a preselected index. Also sometimes known as the renegotiable rate mortgage, the variable rate mortgage or the Canadian rollover 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.

Agent
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.

Buyer Agent
An agent who represents the buyer in a real estate transaction. A buyer agent may be paid by the buyer, seller, or listing agent at closing, provided all parties consent.

Dual Agent
An agent representing both parties in a transaction. In almost every state, dual agency is illegal and unethical without the written consent of both the buyer and the seller.

Listing Agent
The agent who represents the seller.

Selling Agent
The agent who obtains a buyer. A selling agent may represent the buyer, or may be a subagent of the seller.

Subagent
A salesperson who works for an agent.

Amenities
Features that enhance the value or desirability of a property.

Amortization
Means loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance. To Amortize is to pay a debt in periodic amounts until the total amount, including any interest, is paid.

Annual Percentage Rate (APR)
An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows homebuyers to compare different types of mortgages based on the annual cost for each loan.

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

Appreciation
An increase in value

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.

Assessment
An official valuation of property for tax purposes. Payments made by condominium or cooperative owners for their share of building maintenance expenses.

Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. 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 charges will apply.

Balloon (payment) Mortgage
Usually a short-term fixed rate loan which involved small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.

Broker
An independent business person who sets real estate office policies, hires employees, determines their compensation, and supervises their activities.

Buy-down
When the lender and/or the homebuilder subsidizes the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires.

CRS (Certified Residential Specialist)
A professional designation awarded to experienced agents who complete an advanced course of study in residential real estate and demonstrate proficiency in sales and production. CRS Designees are members of the Residential Sales Council, a not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®.

CLO (Computerized Loan Origination)
A computer network of major lenders that allows agents to initiate mortgage applications in their office. HUD has approved the procedure as long as 1) full disclosure is made of the fee; 2) multiple lenders are displayed on the computer screen to give borrowers a basis for comparison; 3) the fee charged is a dollar amount rather than a percentage of the loan.

Closing
The point at which real estate formally changes ownership. Closing costs are fees paid for services associated with a home's closing such as title insurance, surveying fees, recording fees, deeds, and affidavits.

CMA (Competitive Market Analysis):
A method of determining the value of a property by comparing the prices paid for similar properties.Code of Ethics A written standard of ethical conduct embraced by the NATIONAL ASSOCIATION OF REALTORS®, a trade organization of more than 700,000 members representing all branches of the real estate industry.

Commission
Compensation paid to a real estate agent (usually by the seller) for services rendered in connection with the sale, exchange, or lease of property.

Condominium (Condo)
Individual ownership of a portion of a building, with common areas shared by all owners. Maintenance fees called "assessments" are paid to the condominium association to maintain, repair, or improve the property.

Conventional Loan
A fixed-rate, fixed term loan that is not insured by the government.

Co-operative (Co-op)
An arrangement in which a corporation made up of residents owns a building. The buyer owns a proprietary lease, rather than real property, and a corresponding number of shares in the corporation.

Counter Offer
A new offer as to price, terms, and conditions, made in response to a prior, unacceptable offer. A counter offer terminates an original offer.

Deed
A legal document transferring ownership of a property from one party to another.

Disclosure
Revealing what previously was private knowledge. Any statement of fact that is required by law.

Down Payment
A percentage of the purchase price the buyer pays in cash.

Earnest Money
A buyer's partial payment to the seller as a show of good faith in completing the transaction.

Equity
The difference between the current market value of a property and the claims--such as the unpaid portion of a mortgage--that exist against it.

Escrow
The closing of a real estate transaction through a neutral third party who holds funds and/or documents for delivery after specific conditions have been met.

Exclusive Listing
A written agreement in which the seller appoints only one agent to market the property for a specific period of time. If the owner sells the property himself, he is not required to pay a commission.

Exclusive Right of Sale Listing
A written agreement between an agent and a property owner stating that the owner will pay a commission to the agent if the property is sold during a specific time period--whether or not the agent is responsible for the sale.

Fannie Mae (Federal National Mortgage Association)
Fannie Mae purchases home mortgages, thus serving as a source of funds for mortgage lenders. It is a privately owned corporation whose shares are traded on the New York Stock Exchange, but it is subject to the strict supervision of the secretary of the U.S. Department of Housing and Urban Development (HUD). Federal Fair Housing Law Refers to Title VIII of the Civil Rights Act, and stipulates that discrimination based on race, color, sex, familial status, handicap, religion, or national origin is illegal in connection with the sale or rental of most dwellings.

FHA (Federal Housing Administration)
A federal agency established to improve housing standards and conditions. The FHA provides mortgage insurance to approved lending institutions.

Freddie Mac (Federal Home Loan Mortgage Corporation)
A federally chartered corporation established to purchase mortgages in the secondary, or resale, market. Freddie Mac's policies are designed to serve the needs of savings and loan associations. It is subject to oversight by the U.S. Department of Housing and Urban Development (HUD).

Guaranty
A pledge made by one person (the guarantor) to ensure that another person (the obligor) will fulfill an obligation to a third party (the obligee).

HUD (U.S. Department of Housing and Urban Development
A federal department active in a variety of national housing programs including urban renewal and public housing.

Improvements
Additions intended to increase the value of a property.

Inspection
An examination of a property by the buyer, agent, title insurance company, or other interested party.

Lien
A charge or claim by one party on the property of another as security for the payment of a debt.

Listing
A written agreement between a property owner and a real estate broker authorizing the broker to find a buyer.

Market Value
The price a property will command on the open market.

MLS (Multiple Listing Service)
A means by which agents are informed of the properties offered for sale by other agents.

Mortgage
A legal document pledging property as security for the payment of a loan.

Mortgage Insurance
An insurance plan that protects the lender if the borrower does not repay a loan. Mortgage insurance is required when a home buyer makes less than a 20% down payment at the time of purchase. Private mortgage insurance (PMI) covers conventional (fixed-year, fixed-rate) loans. The Federal Housing Administration charges a mortgage insurance premium (MIP) on FHA loans.

NATIONAL ASSOCIATION OF REALTORS ®
A trade organization serving over 700,000 members from all branches of the real estate industry. Members subscribe to a strict Code of Ethics which governs their conduct.

Offer
A proposal to purchase property at a specified price and terms.

Open House
The common real estate practice of showing "For Sale" homes to the public during established hours.

Origination Fee
A lender's charge for establishing and processing a new mortgage loan. It is generally computed as a percentage of the loan and may be tax deductible.

Owner of Record
The person named in the public record as the owner of a property or mortgage.

Points
A one-time charge paid to the lender for issuing a loan. Each point equals one percent of the loan amount and is used to obtain revenue in addition to the interest rate.

Principal
The amount of money upon which interest is paid.

Qualified Buyer
A buyer who has demonstrated the financial ability to afford the asking price of a home. Prequalifying with a lender can expedite the home buying transaction.

REALTOR®
A registered trade name that may only be used by members of the NATIONAL ASSOCIATION OF REALTORS®, an organization with over 700,000 members who represent all branches of the real estate industry. REALTORS® subscribe to a strict Code of Ethics which governs their conduct.

Refinance
Obtaining a new loan to pay off an existing loan. Refinancing is a popular practice when interest rates drop.

Residential Sales Council
A not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®. The Council awards the Certified Residential Specialist (CRS) Designation, to experienced members who have completed an advanced course of study in residential real estate.

Title
Lawful ownership of property.

Title Insurance
An insurance policy that protects against losses arising from title defects such as forged or misfiled documents

Title Search
An examination of the public records to determine whether the current title is clear or defective.

Town House
Also known as a row house, generally refers to a type of dwelling having two floors, with the living area and kitchen on the first floor, and the bedrooms on the second. Town houses share a common wall between units.

VA (Veterans Administration)
A federal agency designed to
help veterans enter the housing market.

VA Loan
A loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans are made to honorably discharged veterans or their unremarried widows or widowers. Such loans require a minimal or no down payment and offer lower interest rates.

Walk-Through
A final inspection of a property before it changes ownership.