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Glossary of Real Estate Terms

Whether you are ready to by a home or refinance or to do some remodeling, it is always good to know what certain real estate words mean so that you can better understand your transaction.

Quick Finder: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Absorption The rate, expressed as a percentage, at which available space in the marketplace is leased during a predetermined period of time.

Abstract of Title A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.

Abutting
The joining, reaching or touching of adjoining land. Abutting pieces of property have a common boundary

Acceleration The right of the mortgagee (lender) to demand the immediate repayment of the mortgage loan balance upon the default of the mortgagor (borrower), or by using the right vested in the Due-on-Sale Clause.

Acre
A measure of land equal to 43,560 square feet.

Ad Valorem
According to value.

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 re negotiable 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.

Alienation Clause A clause in a mortgage, which gives the lender the right to call the entire loan balance due if the property is sold, also known as a due-on-sale clause.

Amortization Means loan payment by equal periodic payment calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

Anchor Tenant
The major or prime tenant in a shopping center, building, etc

Annual percentage rate (A.P.R.) Is a 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 point and other credit cost. the APR allows home buyers 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 called an "appraiser".

Appreciation
An increase in value or worth of property.

Asking (List) Price
The price placed on a property for sale.

Assignee
A person to whom a property right is transferred.

Assumable Mortgage
An existing mortgage that can be taken over by the buyer on the same terms given to the original borrower.

Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights.

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 cost and new, probably higher, market-rate interest charges will apply.

Attorn To turn over or transfer to another money or goods. To agree to recognize a new owner of a property and to pay him/her rent. In a lease, when the tenant agrees to attorn to the purchaser, the landlord is given the power to subordinate tenant's interest to any first mortgage or deed of trust lien subsequently placed on the leased premises.

Balloon (payment) mortgage Usually a short-term fixed-rate loan which involves 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.

Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage.

Borrower (Mortgagor) One who applies for and receives a loan in the form of a mortgage with the intention of repaying the loan in full.

Broker An individual in the business of assisting in arranging funding or negotiating contracts for a client buy who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.

Buyer's Broker A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split.

Buy-down When the lender and/or the home builder subsidized 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.

Calendar Year
A year using the actual number of days in each month for a total of 365 days in a year (366 days in a leap year).

CAP The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Cash Flow The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.)

Caps (interest) Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage may change per year and/or the life of the loan.

Caps (payment) Consumer safeguards which limit the amount monthly payments on an adjustable rate mortgage may change.

Ceiling
The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.

Certificate of Eligibility, The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility)

Certificate of Reasonable Value (CRV)
An appraisal issued by the Veterans Administration showing the property's current market value

Certificate of veteran status The document given to veterans or reservists who have served 90 days of continuous active duty (including training time) It may be obtained by sending DD 214 to the local VA office with form 26-8261a (request for certificate of veteran status. This document enables veterans to obtain lower down payments on certain FHA insured loans).

Closing The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. 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 cost of closing usually are about 3 percent to 6 percent of the mortgage amount.

Closing Costs Costs the buyer must pay at the time of closing, in addition to the down payment which may include points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, appraisals, prepayments for property taxes, deed recording fee and property insurance. Closing costs can vary considerably from one financial institution to another.

Comdemnation The process of taking private property, without the consent of the owner, by a governmental agency for public use through the power of eminent domain.

Comission The compensation paid to a licensed real estate broker or by the broker to the salesperson for services rendered. Usually a percentage of the selling price of the property or the total value of the lease.

Commitment A promise by a lender to make a loan on specific terms or conditions to a borrower or builder. A promise by an investor to purchase mortgages from a lender with specific terms or conditions. an agreement, often inwriting, between a lender and a borrower to loan money at a future date subject to the completion of paperwork or compliance with stated conditions.

Comparables
Properties which are similar to a particular property and are use to compare and establish a value for that property.

Condominium A form of real estate, usually a dwelling with individual ownership of separate portions of the building plus shared ownership of the common areas. Also found in industrial parks, where individual units are separately owned, but the common areas (such as guard gates, common landscaping, etc) are shared.

Consessions Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or other monies expended to influence or persuade the tenant to sign a lease.

Construction loan A short term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses.

Contingency A provision in a contract stating that some of all of the terms of the contract will be altered or voided by the occurrence of a specific event.

Contract Sale or Deed: A contract between purchaser and a seller of real estate to convey title after certain conditions have been met. It is a form of installment sale.

Conventional Loan
A mortgage not insured by FHA or guaranteed by the VA.

Conveyance Most commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments by which an interest in real estate is created, mortgaged or assigned.

Counter Offer The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way.

Credit Report
A report documenting the credit history and current status of a borrower's credit standing.

Debt-to-Income Ratio The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio.

Deed
A written instrument by which title to land is conveyed.

Closing Statement A detailed written summary of the financial settlement of a real estate transaction showing all charges and credits made, and all cash received and paid out.

Deed of trust
In many states, this document is used in place of a mortgage to secure the payment of a note.

Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage.

Deferred interest When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance.Seenegative amortization

Delinquency
Failure to make payments on time. this can lead to foreclosure.

Department of Veterans Affairs (VA) An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.

Depreciation
A loss in value.

Discount Point
see points

Disclosure
The making known of a fact that had previously been hidden.

Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount.

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.

Earnest Money
Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Easement A right to use another person's real estate for a specific purpose. The most common type of easement is the right to travel over another person's land, knows as a right of way. In addition, property owners commonly grant easements for the placement of utility poles, utility trenches, water lines or sewer lines. The owner of property that is subject to easement is said to be "burdened" with the easement because he or she is not allowed to interfere with its use.

Encroachment The intrusion of a structure which extends, without permission, over a property line, easement boundary or building setback line.

Encumberance A cloud against clear free title to the property which does not prevent conveyance such as unpaid taxes, easements, deed restrictions, mortgage loans etc.

Entitlement The VA home loan benefit is called entitlement. Entitlement for a VA guaranteed home loan. This is also known as eligibility.

Equal Credit Opportunity Act (ECOA Is a federal law that requires 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.

Equity The difference between the fair market value and current indebtedness, also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property.

Escalation Clause A clause in a lease which provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes, operating costs, etc.

Escrow An account held by the lender into which the home buyer pays money for tax or insurance payments. Also earnest deposits held pending loan closing.

Escrow Account
1. A third party account which holds money safely while a sale is in progress.
2. An account used to save monies required for payment of an eventual debt.

Estoppel Certificate A signed statement certifying that certain statements of fact are correct as of the date of the statement and can be relied upon by athird party, including a prospective lender or purchaser.

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Fair Market Value The price a willing buyer will pay a willing seller for a leased property on an "as is, where is" basis with both under no compulsion to either buy or sell.

Fannie Mae
seeFederal 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 Bank Board (FHLBB) The former name for the regulatory and supervisory agency for federally chartered savings institutions. Agency is now called the Office of Thrift Supervision>

Federal Home Loan Mortgage Corporation (FHLMC) also called "Freddie Mac", is a quasi-governmental agency that purchases conventional mortgage 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 know 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. This institution, which provides funds for one in seven mortgages, makes mortgage money more available and more affordable.

FHA loan a loan insured by the Federal Housing Administration open to all qualified home purchasers. While there are limits to the size of FHA loans ($312,895 as of 1/1/2005), for California. FHA Loan limits vary by state and county and you should check with HUD.

FHA Mortgage Insurance Requires a fee (up to 2.25 percent of the loan amount) paid at closing to insure the loan with FHA. In addition, FHA mortgage insurance requires an annual fee of up to 0.5 percent of the current loan amount, paid in monthly installments. The lower the down payment, the more years the fee must be paid.

FHLMC The Federal Home Loan Mortgage Corporation provides a secondary market for savings and loans by purchasing their conventional loans. Also known as "Freddie Mac."

FICO Score FICO stands for Fair Isaac Company, the company that created the original scoring system. Each credit bureau has its own unique system that allows them to offer a score based solely on the contents of the credit bureau’s data about an individual. However, a numerical score at one bureau is the equivalent of the same numerical score at another. Thus, a score of 700 from Experian indicates the same creditworthiness as a score of 700 from Trans Union or Equifax, even though the calculations used to determine those scores are different at each bureau. The scores range from 375 to 900 points, and in general, a score of 650 or above indicates a very good credit history. Average FICO scores fall into the range between 620 and 650. It must however be noted that not all lenders give same value to a particular credit score. Besides, not all lenders use credit scoring system and even when they do they may not use credit scoring system for all their loan programs.

Firm Commitment A promise by FHA to insure a mortgage loam for a specified property and borrower. A promise from a lender to make a mortgage loan.

Fixed Rate Mortgage The mortgage interest rate will remain the same on these mortgages throughout the term of the mortgage for the original borrower.

FNMA The Federal National Mortgage Association is a secondary mortgage institution which is the largest single holder of home mortgages in the United States. FNMA buys VA, FHA, and conventional mortgages from primary lenders. Also known as "Fannie Mae."

Foreclosure A legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage. Also known as a repossession of property.

Freddie Mac
see Federal Home Loan Mortgage Corporation

Ginnie Mae see Government National Mortgage Association.

Governmen A survey method A system of land description which uses meridians (north and south lines) and base lines (east and west lines). Areas include quadrangles (24 miles on each side), townships (6 miles on each side) and sections (1 mile on each side).

Government National Mortgage Association (GNMA) also known as "Ginnie Mae",provides sources of funds for residential mortgages, insured or guaranteed by FHA or VA

Graduated Payment Mortgage (GPM) A type of flexible-payment mortgage where the payments increase for a specified period of time and then level off. This type of mortgage has negative amortization built into it.

Guaranty Apromise by one party to pay a debt or perform an obligation contracted by another if the original party fails to pay or perform according to a contract.

Hazard Insurance A form of insurance in which the insurance company protects the insured from specified losses, such as fire, windstorm and the like.

Hold Harmless In a contract, a promise by one party not to hold the other party responsible if the other party carries out the contract in a way that causes damage to the first party.

Housing Expenses-to-Income Ratio The ratio, expressed as a percentage, which results when a borrower's housing expenses are divided by his/her gross monthly income. See debt-to-income ratio.

Impound 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.

Index A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other investments (such as one- three-, and five-year U.S. Treasury security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average costs-of-funds incurred by savings and loans), which is then used to adjust the interest rate on an adjustable mortgage up or down.

Interim Financing A construction loam made during completion of a building or a project. A permanent loan usually replaces this loan after completion.

Investor A money source for a lender.

Jumbo Loan a loan which is larger than the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. One-family $417,000, Two-family $533,850, Three-family $645,300 and Four-family for the year 2006 Because jumbo loans cannot be funded by these two agencies, they usually carry a higher interest rate.

Legal Description A description of a specific parcel of real estate which is acceptable to the courts in that state, and which allows an independent surveyor to locate and identify it. Usually it uses one of the following methods: government survey, metes and bounds or recorded plat (lot and block number).

Lien
A claim upon a piece of property for the payment or satisfaction of a debt or obligation.

Listing Agreement The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment.

Loan-to-Value Ratio The relationship between the amount of the mortgage loan and the appraised value of the property expressed as a percentage.

Margin The amount a lender adds to the index on an adjustable rate mortgage To establish the adjusted interest rate.

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 at a given time.

Mechanic's Lien A legal claim placed on real estate by someone who is owed money for labor, services or supplies contributed to the property for the purpose of improving it.

Metes and Bounds A system of land description using distance (metes) and angles/compass directions (bounds) beginning and ending at the same point.

MIP (Mortgage Insurance Premium) It is insurance from FHA to the lender against incurring a loss on account of the borrower's default.

Month to Month Tenancy A rental agreement that provides for a one month tenancy that is automatically renewed each month unless either tenant or landlord gives the other the proper amount of notice (usually 30 days) to terminate the agreement.

Mortgage A contract providing security for repayment of a loan, registered against property with stated rights and remedies in the event of default.

Mortgagee
The lender

Mortgagor
The borrower or homeowner

Mortgage Insurance Money paid to insure the mortgage when the down payment is less than 20 percent. See private mortgage insurance, FHA mortgage insurance.

Negative Amortization Occurs when your 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 danger of negative amortization is that the home buyer ends up owing more than the original amount of the loan.

Net Effective Income The borrower's gross income minus federal income tax.

Non Assumption Clause A statement in a mortgage contract forbidding the assumption of the mortgage without the prior approval of the lender. Note: The signed obligation to pay a debt, as a mortgage note.

Office of Thrift Supervision (OTS) The regulatory and supervisory agency for federally chartered savings institutions. Formally known as Federal Home Loan Bank Board

Origination Fee The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the face value of the loan.

Permanent Loan
A long term mortgage, usually ten years or more. Also called an "end loan."

PITI
Principal, Interest, Taxes and Insurance. Also called monthly housing expense.

Plat Book
A record or recorded subdivisions of land

Plat: Map
Map of a specific area, such as a subdivision, that shows the boundaries of individual lots together with streets and easements

Pledged account Mortgage (PAM): Money is placed in a pledged savings account and this fund plus earned interest is gradually used to reduce mortgage payments.

Points (loan discount points) Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).

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

Power Of Sale: Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, upon default in the payment of the debt secured, to advertise and sell the property at public auction

Prepaid Expenses Necessary to create an escrow account or to adjust the seller's existing escrow account. Can include taxes, hazard insurance, private mortgage insurance and special assessments.

Prepayment
A privilege in a mortgage permitting the borrower to make payments in advance of their due date.

Prepayment Penalty Money charged for an early repayment of debt. Prepayment penalties are allowed in some form (but not necessarily imposed) in many states.

Primary Mortgage Market Lenders making mortgage loans directly to borrower's such as savings and loan associations, commercial banks, and mortgage companies. These lenders sometimes sell their mortgages into the secondary mortgage markets such as to FNMA or GNMA, etc.

Prime Rate
The interest or discount rate charged by a commercial bank to its largest and strongest customers.

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

Private Mortgage Insurance (PMI) In the event that you do not have a 20 percent down payment, lenders will allow a smaller down payment - as low as 5 percent in some cases. With the smaller down payment loans, however, borrowers are usually required to carry private mortgage insurance. Private mortgage insurance will usually require an initial premium payment and may require an additional monthly fee depending on you loan's structure.

Property Taxes Taxes that are paid yearly on real property. Property taxes are ad valorem, based on the assessed value of the real property.

Pro-Rata
Proportionately; according to measure, interest or liability.

Pro-Rate To divide or distribute proportionally. At closing, various expenses such as taxes insurance, interest, rents etc are prorated between the seller and the buyer.

Purchase Option Option to purchase leased property either at the end of the lease term or if some other specific criteria are met by the lessee.

Quitclaim Deed: A deed operating as a release that is intended to pass any title, interest or claim that the grantor may have in the property, but not guaranteeing such title is valid

Quiet Enjoyment
The right of a property owner or tenant to enjoy his or her property without interference.

Real Property Land, and generally whatever is erected or affixed to the land, such as buildings, fences and including light fixtures, plumbing and heating fixtures or other items which would be personal property if not attached.

REALTOR® A real estate broker or associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors®.

Receiver Court-appointed custodian who holds property for the court, pending final disposition of the matter before the court.

Recision The cancellation of a contract. With respect to mortgage refinancing, the law that 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.

Recorded Plat A subdivision map filed with the county recorder's office that shows the location and boundaries (lot and block number) of individual parcels of land.

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

Refinance Obtaining a new mortgage loan on a property already owned. Often to replace existing loans on the property.

Renegotiable Rate Mortgage a loan in which the interest rate is adjusted periodically. See adjustable rate mortgage.

RESPA short for the Real Estate Settlement Procedures Act. RESPA is a federal law that allows consumers to review information on known or estimated settlement cost once after application and once prior to or at a settlement. The law requires lenders to furnish the information after application only.

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 asSatisfaction of Mortgage: The document issued by the mortgagee when the mortgage loam is paid in full. Also called a "release of mortgage."

Second Mortgage
A mortgage made subsequent to another mortgage and subordinate to the first one.

Secondary Mortgage Market The place where primary mortgage lenders sell the mortgages they make to obtain more funds to originate more new loans. It provides liquidity for the lenders. security.

Security Deposit A payment required by a landlord to ensure that a tenant pays rent on time and keeps the rental unit in good condition. If the tenant damages the property or leaves owing rent, the landlord can use the security deposit to cover what the tenant owes. Servicing all the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.

Setback The distance a building must be set back from the property lines in accordance with local zoning ordinances or deed restrictions.

Settlement/Settlement Costs
see closing/closing costs

Shared Appreciation Mortgage (SAM) a mortgage in which a borrower receives a below-market interest rate in return for which the lender (or another investor such as a family member or other partner) receives a portion of the future appreciation in the value of the property. May also apply to mortgage where the borrowers shares the monthly principal and interest payments with another party in exchange for part of the appreciation.

Simple Interest
Interest which is computed only on the principle balance.

Site Development The installation of all necessary improvements (installment of utilities, grading etc) made to a site before a building or project can be constructed on such a site.

Site Plan A detailed plan which depicts the location of improvements on a parcel of land which also contains all the information required by zoning ordinances.

Slab The exposed wearing surface laid over the structural support beams of a building to form one of the floor(s) of the building or laid slab on grade in the case of non-structural ground level concrete slab.

Space Plan A graphic representation of a tenant's space requirements, showing all wall and door locations, room sizes, and sometimes furniture layout.

Special Asessment
Any special charge levied against real property for public improvements that benefit the assessed property.

Specifiv Performance
Carrying out the precise terms agreed upon in a contract.

Survey A measurement of land, prepared by a registered land surveyor, showing the location of the land with reference to know points, its dimensions, and the location and dimensions of any buildings.

Sweat Equity Equity created by a purchaser performing work on a property being purchased.

Tax Roll A list or record containing the descriptions of all land parcels located within the county, the names of the owners, the assessed values and the tax amounts.

Time is Of the Essence A clause, which if included in a contract, makes failure to perform by a specific date a material breach or violation of the contract.

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

Title Insurance a policy, usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller. Policies are also available to protect the lender's interests.

Title Search an examination of municipal records to determine the legal ownership of property. Usually is performed by a title company.

Trustee
One who as agent for others handles money or holds title to their land.

Truth-In-Lending a federal law requiring disclosure of the Annual Percentage Rate to home buyers shortly after they apply for the loan. Also known as Regulation Z.

Two-Step Mortgage a mortgage in which the borrower receives a below-market interest rate for a specified number of years (most often seven or 10), and then receives a new interest rate adjusted (within certain limits) to market conditions at that time. the lender sometimes has the option to call the loan due with 30 days notice at the end of seven or 10 years. also called "Super Seven" or "Premier" mortgage.

Underwriting the decision whether to make a loan to a potential home buyer based on credit, employment, assets, and other factors and the matching of this risk to an appropriate rate and term or loan amount.

Usury
Interest charged in excess of the legal rate established by law.

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 1-7/8 percent (depending on the size of the down payment) paid on a VA-backed loan. On a $75,000 fixed-rate mortgage with no down payment, this would amount to $1,406 either paid at closing or added to the amount financed.

Variable Rate Mortgage (VRM)
see adjustable rate mortgage

Variance
An exception to a zoning ordinance, usually granted by a local government.

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 and salary.

Vitual Tour
Any method used to provide internet users with a graphical presentation of a property or properties.

Void
Having no legal force or effect.

Waiver
The intentional or voluntary relinquishment of a known claim or right.

Walk Thru 1. Buyer's on-site inspection of the property being purchased just prior to closing 2. A detailed inspection of a new construction, in which a punch list and cosmetic items are addressed prior to final acceptance.

Warehouse Fee Many mortgage firms must borrow funds on a short term basis in order to originate loans

which are to be sold later in the secondary mortgage market (or to investors). When the prime rate of interest is higher on short term loans than on mortgage loans, the mortgage firm has an economic loss which is offset by charging a warehouse fee.

Work Letter A list of the building standard items that the landlord will contribute as a part of the tenant improvements.

Wraparound Mortgage results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top.

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Zoning Exercise of police powers of city in regulating and controlling the character or use of property. Zoning laws divide cities into different areas according to use, from single-family residences to industrial plants.

Zoning Ordinances
A set of laws which control the size, location and use of buildings

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