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Real Estate Terms / Real Estate Dictionary

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Accelerated depreciation
A method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the ownership of a property.

Acceleration Clause
A provision in a legal agreement / contract stating that the entire outstanding balance of a loan becomes payable immediately if a certain event transpires (e.g., missing a payment.)

An offeree's agrees to enter into a contract and be bound by the terms of the offer.

A unit of land measure equaling 43,560 square feet or a tract about 4,840 square yards. For visuality purposes, an acre can be compared to the size of a football field - not counting the two end zones. One square mile is equal to 640 acres.

Something added or attached to a contract. It is sometimes called a rider. More than one are called addenda.

Additional Principal Payment
A borrower's payment of more than the scheduled principal amount due in order to reduce the remaining balance on a loan.

Adjustable-Rate Mortgage (ARM)
A mortgage loan that bears interest at a rate that is subject to change and therefore adjustable during the term of the loan. Interest rates may move up or down as conditions in the market changes. Most ARMs have caps on how much the interest rate may increase.

Adjusted Basis
The original cost of a property that reflects any deductions taken on or improvements to the asset or security, used to compute the gain or loss when sold.

Adjustment Date
After an initial period where an ARM’s interest rate remains the same, the rate changes on the adjustment date to reflect the current market rate. It will continue to adjust either monthly, semi-annually or annually over the life of the loan. For example, the first adjustment date for a 10/1 ARM is after 10 years.

Adjustment Interval
How often the loan's rate can be changed.

Adjustment Period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

A person appointed by a probate court to administer the estate of a person who has died.

Affordability Analysis

A thorough examination of an individual's ability to afford a house, taking into consideration income, assets, liabilities, available funds, mortgage type, home price, the area where you want to purchase a home, and the expected closing costs.

Affordable housing
A term applied to the efforts of the public and private sector to help low and moderate income people purchase homes through programs that offer lower down payments, loan with more lenient qualifying rules, and interest below market interest rates.

A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. (e.g., swimming pools, tennis courts, boat docks, club houses, community buildings, and other recreational facilities).

The gradual repayment of a mortgage loan by installments over a specified period of time which must be sufficient to cover both the principal and the interest.

Amortization Schedule
A table showing the periodic principal and interest payments and the remaining balance after each payment is made for the life of a loan.

Amortization Term
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 reduce debt by by making payments against the principal balance in installments or regular payments.

Amortized Loan
A mortgage where the principal and interest amounts are repaid according to a plan through a series of equal payments in monthly or other periodic installments without any special balloon payment prior to maturity. Also known as a Level payment loan.

Annual Mortgage Statement
A report sent to the the borrower of a mortgage loan 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 cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points). The APR interest rate is different from the note rate. It is commonly used to compare loan programs from different lenders. The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. Typically the APR is found next to the rate.

An amount paid yearly or at other regular intervals, at equal or nearly equal payments such as the installment rent payments due to a landlord under a lease or the installment payments due to a lender over a period of time or paid at times in a lump sum future payment.

The lender's form filled out by the potential borrower of funds. Lenders use the information to evaluate if they can grant the loan and if so, how much they can lend.

A written report prepared by a qualified appraiser estimating the value of a property. Appraisals are performed for lenders more so than buyers. The purpose is to justify the sales price so that the lender feels they are making a solid investment since the property is collateral for the loan. In an appraisal, importance is given to recent home sales in proximity to the appraised home such as properties on that street and in the neighborhood.

Appraised Value
An educated opinion of a property's fair market value, which is based on the appraiser's analysis of the property, knowledge and experience.


A person qualified by education, training, and experience to estimate the value of real property and personal property.

An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

See Adjustable Rate Mortgage.

Assessed Value
The valuation placed on property by a public tax assessor for purposes of taxation.

The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.

Assessment Rolls
The public record of taxable property. Also called Tax Roll.

A public official who establishes the value of a property for taxation purposes.

Anything of monetary value that is owned by a person and has a value. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, etc...).

The transfer of a mortgage from one person to another.

Assumable Mortgage
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.

The transfer of the seller's existing mortgage to the buyer. See assumable mortgage.

Assumption Clause
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.

Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

An atrium refers to a entranceway with an enclosed multi-storied space that is open vertically to multiple levels. Buildings with an atrium appeal to people because it brings the outside views inside by bringing natural light into the interior of a building.

Building with Atrium,
Atrium Building

The official act of establishing authenticity or to affirm that a statement or document is true, genuine or accurate.

One who has been authorized by a principal under a power of attorney (a written instrument) to perform a acts or to execute documents on behalf of the grantor of the power.

A public sale of property to the highest bidder.

Auction with reserve
An offer by a seller to sell property but holds the right to establish a minimum opening bid or to accept or reject bids.

An inspection of the books, records and procedures used by a business or individual. Inspection is done by a CPA or other qualified person.

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