Glossary of Real Estate Terms A-D

AKA – Also Known As

Alcalde – Spanish for mayor or chief magistrate.

Alienate – To transfer title to property.

Alienation – The transfer of title to property.

Alienation Clause – Provision in a note or in a security instrument calling for automatic maturity in the event of sale or transfer of title by borrower.

Aliter – Otherwise.

Allegation – A statement of fact in a pleading yet to be proved.

Alluvion – Soil deposited by the process of accretion.

Amenities – Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

Amortization – Payment of principal and interest at stated periods for a stated time until debt is extinguished.

Ancillary – An addition to.

Ancillary Administration – Probate estate administration in a state other than the state of decedent’s domicile.

Annexation – Addition to property or to territory.

Annual Percentage Rate (APR) – The cost of a loan or other financing as an annual rate. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

Annuity – A yearly payment of money for life or for a term of years.

Annum – Year.

Ante – Before.

Antenuptial – Before marriage.

Appearance – Presence of a party litigant before the court.

Application – A form used to apply for a mortgage loan that details a potential borrower’s income, debt, savings and other information used to determine credit worthiness.

Application Fee – The fee that a mortgage lender or broker charges to apply for a mortgage to cover processing costs.

Appraisal – A ”defensible” and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

Appraised value – An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

Appraiser – An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

Appreciation – An increase in the market value of a home due to changing market conditions and/or home improvements.

Appurtenance – Anything incidental to or belonging to land considered a part of the real property.

Appurtenant – Belonging to.

Arbitrary (ARB) Map – A map made by a title company for its own convenience in identifying parcels of real property.

Arbitration – A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.

Arms length transaction – Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

Asbestos – A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

Assessed value – The value of a property according to jurisdictional tax assessment.

Assessment – The function of assigning a value to a property for the purpose of levying taxes.

Assessments – Special taxes imposed to pay for public improvements beneficial to a limited area.

Assessor – County official who determines value of property for taxation purposes.

Assets – Property of value, property having an economic benefit.

Assign – To transfer all of an interest in personal property.

Assignee  – One to whom property is assigned.

Assignment – Transfer of ownership of a mortgage usually when the loan is sold to another company.

Assignment of Mortgage – A document evidencing the transfer of ownership of a mortgage from one person to another.

Assignor  – One who transfers property by assignment.

Assumable Mortgage – A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the seller’s existing mortgage; the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due on sale clause, the loan may not be assumed without the lender’s consent.

Assumpsit – An undertaking to do an act or to make payment.

Assumption – A homebuyer’s agreement to take on the primary responsibility for paying an existing mortgage from a home seller. When a buyer takes over, or “assumes” the seller’s mortgage.

Assumption Agreement – An agreement to undertake a debt or obligation contracted by another.

Assumption Fee – The charge made by a lender when a buyer assumes seller’s existing loan.

Assumption of Mortgage – An agreement in which buyer agrees to be liable for payment of an existing note secured by a mortgage.

Attachment – A judicial process by which a creditor obtains a lien upon property of a debtor prior to adjudication of the debt.

Attestation Clause – The clause in a deed denoting the subscribing persons are witnesses.

Attorn – To accept and acknowledge a new landlord.

Attorney In Fact – An agent authorized to act for another.

Automated Underwriting – An automated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.


Balance Sheet – A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon Mortgage – A mortgage with monthly payments often based on a 30 year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.

Balloon Payment – A final lump sum payment that is due, often at the maturity date of a balloon mortgage.

Before tax Income – Income before taxes are deducted. Also known as “gross income.”

Bi-Monthly Mortgage – A mortgage with payments due every two weeks (instead of monthly).

Bridge Loan –

Balance Sheet – A short term loan secured by the borrower’s current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold. Also known as a “swing loan.”

Broker – An individual who facilitates the purchase of property by bringing together a buyer and a seller.

Broker, Mortgage – An individual or firm that acts as an agent between providers and users of products or services, such as a mortgage broker or real estate broker. See also, “Mortgage Broker.”

Broker, Real Estate – One who is licensed by the state to carry on the business of dealing in real estate. A broker may receive a commission for his or her part in bringing together a buyer and seller, landlord and tenant, or parties to an exchange.

Building Code-

Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public.

Buydown – An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower’s monthly payments typically in the early years of the loan.

Buydown Account- An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.


Cap- For an adjustable rate mortgage (ARM), a limitation on the amount the interest rate or mortgage payments may increase or decrease. See also, “Lifetime Payment Cap,” “Lifetime Rate Cap,” “Periodic Payment Cap,” and “Periodic Rate Cap.”

Capacity – Your ability to make your mortgage payments on time. This depends on your income and income stability (job history and security), your assets and savings, and the amount of your income each month that is left over after you’ve paid for your housing costs, debts and other obligations.

Capital Gains – Gains realized from the sale of capital assets. Generally, the difference between cost and selling price, less certain deductible expenses. Used mainly for income tax purposes.

Cash out Refinance – A refinance transaction in which the borrower receives additional funds over and above the amount needed to repay the existing mortgage, closing costs, points, and any subordinate liens.

Certificate of Eligibility – A document issued by the U.S. Department of Veterans Affairs (VA) certifying a veteran’s eligibility for a VA guaranteed mortgage loan.

Certificate of occupancy – Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

Certificate of title – A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

Chain of Title – The history of all of the documents (chronological list of documents) that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Orders – A change in the original construction plans ordered by the property owner or general contractor.

Clear Title – Ownership of a property that is free of liens, defects, or other legal encumbrances.

Closing – The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions.

Closing Agent – The person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds. (May be referred to as an escrow agent or settlement agent in some jurisdictions.) Typically, the closing is conducted by title companies, escrow companies or attorneys.

Closing Costs – The upfront fees charged in connection with a mortgage loan transaction. Money paid by a buyer (and/or seller or other third party, if applicable) to affect the closing of a mortgage loan, generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance.

Closing Date – The date on which the sale of a property is to be finalized and a loan transaction completed. Often, a real estate sales professional coordinates the setting of this date with the buyer, the seller, the closing agent, and the lender.

Closing Disclosure – A five (5) page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs). The lender is required to give you the Closing Disclosure at least three business days before you close on the mortgage loan. This three-day window allows you time to compare your final terms and costs to those estimated in the Loan Estimate that you previously received from the lender. The three days also gives you time to ask your lender any questions before you go to the closing table.

Closing statement – The document detailing the final financial arrangement between a buyer and seller and the costs paid by each.

Co-borrower – Any borrower other than the first borrower whose name appears on the application and mortgage note, even when that person owns the property jointly with the first borrower and shares liability for the note.

Comparable- An abbreviation for “comparable properties,” which are used as a comparison in determining the current value of a property that is being appraised.

Commission – The fee charged for services performed, usually based on a percentage of the price of the items sold (such as the fee a real estate agent earns on the sale of a house).

Commitment Letter – A binding offer from your lender that includes the amount of the mortgage, the interest rate, and repayment terms.

Common Areas – Those portions of a building, land, or improvements and amenities owned by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Comparables – An abbreviated term used by appraisers to describe properties which are similar in size, condition, location and amenities to a subject property whose value is being determined. The Uniform Standards of Professional Appraisal Practice (USPAP) establish clear guidelines for determining a comparable property.

Concession – Something given up or agreed to in negotiating the sale of a house. For example, the sellers may agree to help pay for closing costs.

Condominium – A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

Construction Loan – A loan for financing the cost of construction or improvements to a property; the lender disburses payments to the builder at periodic intervals during construction.

Construction-perm loan – A loan made to a builder or home owner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

Contingency – A condition that must be met before a contract is legally binding. For example, home purchasers often include a home inspection contingency; the sales contract is not binding unless and until the purchaser has the home inspected. It is also used often used in real estate sales when a buyer must sell a current home before purchasing a new one.

Conventional Mortgage – A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS). Contrast with “Government Mortgage.”

Conversion Option – A provision of some adjustable rate mortgage (ARM) loans that allows the borrower to change the ARM to a fixed rate mortgage at specified times after loan origination.

Convertible ARM – An adjustable rate mortgage (ARM) that allows the borrower to convert the loan to a fixed rate mortgage under specified conditions.

Cooperative (Co-op) Project – A project in which a corporation holds title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title.

Cost of Funds Index (COFI)- An index that is used to determine interest rate changes for certain adjustable rate mortgage (ARM) loans. It is based on the weighted monthly average cost of deposits, advances, and other borrowings of members of the Federal Home Loan Bank of San Francisco.

Counteroffer – An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counteroffer with a slightly higher sale price.

Covenants, Conditions and Restrictions (CC and Rs)- Limitations placed on the use and enjoyment of real property. These are found most often in condominiums and planned unit developments.

Credit – The ability of a person to borrow money, or buy goods by paying over time.

Credit Bureau – A company that gathers information on consumers who use credit. These companies sell that information to lenders and other businesses in the form of a credit report.

Credit History – Information in the files of a credit bureau, primarily comprised of a list of individual consumer debts and a record of whether or not these debts were paid back on time or “as agreed.” Your credit history is called a credit report when provided by a credit bureau to a lender or other business.

Credit Life Insurance – A type of insurance that pays off a specific amount of debt or a specified credit account if the borrower dies while the policy is in force.

Credit Report – Information provided by a credit bureau that allows a lender or other business to examine your use of credit. It provides information on money that you’ve borrowed from credit institutions and your payment history.

Credit Score – A numerical value that ranks a borrower’s credit risk at a given point in time based on a statistical evaluation of information in the individual’s credit history that has been proven to be predictive of loan performance.

Creditor – A person who extends credit to whom you owe money.

Creditworthy – Your ability to qualify for credit and repay debts.


Debt – An obligation to repay some amount owed. This may or may not be monetary.

Debt-to-Income Ratio – The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts, such as credit cards.

Deed – The legal document transferring ownership or title to a property.

Deed of Trust – A legal document in which the borrower transfers the title to a third party (trustee) to hold as security for the lender. When the loan is paid in full, the trustee transfers title back to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.

Deed-in-Lieu of Foreclosure – The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure. Also called a “voluntary conveyance.”

Default Failure to fulfill a legal obligation. – A default includes failure to pay on a financial obligation, but also may be a failure to perform some action or service that is nonmonetary. For example, when leasing a car, the lessee is usually required to properly maintain the car.

Deferred Interest Loan – A deferred interest loan, also known as a negative amortization loan, is a loan that lets you pay less than the entire interest owed for that month. The unpaid interest is then added to your loan amount to be paid off later, increasing the overall loan amount.

Delinquency – Failure to make a payment when it is due. The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.

Deposit verification – Cash given along with an offer to purchase property, Also called EARNEST MONEY.

Depreciation – A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

Discount Point – A fee paid by the borrower at closing to reduce the interest rate. A point equals one percent of the loan amount.

Down Payment – A portion of the price of a home, usually between 3-20%, not borrowed and paid up front in cash. Some loans are offered with zero down payment.

Due-on-Sale Clause – A provision in a mortgage that allows the lender to demand repayment in full of the outstanding balance if the property securing the mortgage is sold.

Dwelling – A house or other building which serves as a home.

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