Real Estate Glossary

451 searchable terms — from abstract to zoning. Click any term for details and closing examples.

Real Estate Glossary

Your Real Estate Dictionary — 451 Terms

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31 terms

Abstract

A summary of all recorded deeds, mortgages, and leases affecting the title to a piece of land.

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Abstract Plant

A geographically indexed collection of title records maintained by a title company, used to compile abstracts of title efficiently without searching county records from scratch each time.

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Abstracting

The process of making and compiling an abstract of title.

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Acceleration

The right of a lender to demand immediate repayment of the entire outstanding loan balance upon the occurrence of a specific event, such as a missed payment or sale of the property.

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Acceleration Clause

A provision in a mortgage that allows the lender to demand the entire balance due immediately if the borrower defaults on payments or violates other loan terms.

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Acre

A unit of land measurement equal to 43,560 square feet, or roughly the size of a football field without the end zones.

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Actual Cash Value

A method of valuing insured property based on replacement cost minus depreciation. Pays less than replacement cost coverage because it accounts for the age and wear of the item.

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Adjudication

A formal legal judgment or decision by a court regarding the rights of parties in a dispute, including disputes over property ownership or boundaries.

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Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index. The rate is typically fixed for an initial period (3, 5, 7, or 10 years) and then adjusts annually.

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Adverse Possession

Unauthorized occupation of another's land which, if continued for a fixed period of time, may grant the occupier legal title.

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Affidavit

A written statement made under oath, typically used in real estate to confirm facts about the property, identity, or transaction.

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ALTA

American Land Title Association — the national trade organization for the title insurance industry. ALTA develops industry standards, best practices, and policy forms used across the country.

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Amortization

Paying off an existing debt through regular partial payments of principal and interest over a set period. Early payments are mostly interest; later payments are mostly principal.

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Amortization Schedule

A detailed table showing each mortgage payment broken down into principal and interest, the remaining balance after each payment, and the cumulative interest paid over the life of the loan.

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Annual Income

The total amount of money earned in a year before taxes and deductions. Lenders use annual income to calculate qualifying ratios for mortgage approval.

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Annual Percentage Rate (APR)

The total yearly cost of a mortgage expressed as a percentage, including the interest rate, points, mortgage insurance, and certain fees. The APR is always equal to or higher than the interest rate.

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Appraisal

A professional estimate of a property's market value performed by a licensed appraiser. Lenders require an appraisal to confirm the property is worth at least the purchase price.

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Appraised Value

The dollar value assigned to a property by a licensed appraiser after analyzing comparable sales, property condition, and local market data.

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Appreciation

An increase in the value of a property over time due to market conditions, improvements, or inflation.

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Arbitration

A method of resolving disputes outside of court where an impartial third party (the arbitrator) hears both sides and makes a binding decision.

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Assessed Value

The value assigned to a property by a local tax assessor for the purpose of calculating property taxes. Often differs from the market value or appraised value.

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Assessor

A local government official who determines the assessed value of properties within a jurisdiction for the purpose of levying property taxes.

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Asset Depletion Loan

A mortgage qualification method that allows borrowers to use liquid assets (savings, investments, retirement accounts) instead of traditional income to qualify, calculated by dividing total assets over the loan term.

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Assumable Mortgage

A mortgage that allows a new buyer to take over the seller's existing loan terms, including the interest rate and remaining balance.

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Assumption Clause

A provision in a mortgage that allows or prohibits a new buyer from assuming (taking over) the existing mortgage when the property is sold.

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Attorney Opinion Letter

A written statement from a licensed attorney certifying the status of a property's title after reviewing public records, used in some states as an alternative to title insurance.

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Automated Underwriting System (AUS)

A computerized system (such as Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Prospector) that evaluates a mortgage application and issues a recommendation to approve, refer, or deny the loan.

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Automated Valuation Model (AVM)

A technology-based tool that uses data from public records, MLS listings, and algorithms to estimate a property's market value without a physical inspection.

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Assignment

The transfer of a mortgage, contract, or other interest from one party to another. When your mortgage is assigned (sold) to a new servicer, your loan terms remain the same.

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As-Is

A property sold in its current condition without any obligation from the seller to make repairs or improvements. Buyers can still perform inspections but the seller is not required to fix anything.

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Abstract of Judgment

A summary of a court judgment that, when recorded in the county records, creates a lien against any real property owned by the debtor in that county.

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Back-to-Back Closing

Two closings on the same property occurring on the same day — typically when an investor buys a property and immediately resells it, or when a homeowner simultaneously sells one home and buys another.

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Balloon Mortgage

A mortgage with relatively small monthly payments for a fixed period, followed by a large lump-sum payment (the 'balloon') due at the end of the term.

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Bank Statement Loan

A type of non-QM mortgage where the borrower qualifies using 12-24 months of bank statements instead of tax returns or W-2s, designed for self-employed borrowers whose tax deductions reduce their reported income.

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Basic Rate

The standard rate charged to title insurance consumers who do not qualify for reduced rates such as reissue or refinance rates.

Basis Point

One-hundredth of one percentage point (0.01%). Used to describe small changes in interest rates or fees.

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Beneficiary

The person or entity entitled to receive benefits from a trust, will, insurance policy, or deed of trust. In a deed of trust, the beneficiary is the lender.

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Binder (Insurance)

A temporary insurance agreement providing coverage until a permanent policy is issued. In title insurance, a binder is a commitment to insure. In homeowner's insurance, it is proof of coverage.

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Biweekly Payment

A mortgage payment plan where the borrower makes half the monthly payment every two weeks, resulting in 26 half-payments (13 full payments) per year instead of 12, accelerating payoff.

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Breach

A violation of a contractual obligation or legal duty. In real estate, a breach of contract occurs when one party fails to perform their obligations under the purchase agreement.

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Bridge Loan

A short-term loan that allows homeowners to use their current home's equity as a down payment on a new home before the current home sells.

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Broker

An agent who negotiates sales or purchases of property for a fee or commission. A mortgage broker shops multiple lenders on your behalf.

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Broker Price Opinion (BPO)

An estimate of property value provided by a real estate broker, typically less detailed than a full appraisal.

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Building Code

Local government regulations that set minimum standards for construction, renovation, plumbing, electrical, and structural safety of buildings.

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Building Permit

A government authorization required before constructing, renovating, or making significant changes to a building, ensuring the work complies with building codes and zoning regulations.

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Buydown

A financing technique where the borrower pays an upfront fee to reduce the interest rate for the first few years of the loan (temporary buydown) or the entire term (permanent buydown).

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Buyer's Agent

A real estate agent who represents the buyer's interests in a transaction, helping find properties, negotiate offers, and navigate closing.

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Buyer's Market

A real estate market condition where there are more homes for sale than buyers, giving purchasers more negotiating power on price, concessions, and terms.

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Blanket Mortgage

A single mortgage that covers two or more parcels of real estate, commonly used by developers who purchase and develop multiple lots under one loan.

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Boundary Survey

A survey that establishes the exact property lines and corners of a parcel of land based on the legal description in the deed, identifying any encroachments or discrepancies.

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44 terms

Cap

A limit on how much an adjustable-rate mortgage's interest rate or payment can change at each adjustment period or over the life of the loan.

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Capitalization Rate (Cap Rate)

A measure of a property's investment return, calculated by dividing the net operating income by the property's market value. Used primarily for investment properties.

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Cash Flow

The net amount of money coming in and going out from a rental or investment property after all expenses (mortgage, taxes, insurance, maintenance) are paid.

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Cash Reserves

Liquid assets a borrower has available after closing, typically measured in months of mortgage payments. Many lenders require 2-6 months of reserves.

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Cash-Out Refinance

A refinancing transaction in which the new mortgage is larger than the existing one, allowing the borrower to receive the difference in cash to use for any purpose.

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Caveat Emptor

A Latin phrase meaning 'let the buyer beware.' A legal principle that places the burden on the buyer to perform due diligence before purchasing, though modern disclosure laws have shifted much of this responsibility to the seller.

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Certificate of Compliance

A document issued by a local government confirming that a property meets applicable building codes, zoning regulations, or other municipal requirements.

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Certificate of Occupancy (CO)

A document issued by a local government certifying that a building complies with building codes and is safe for occupancy. Required for new construction and major renovations.

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Certificate of Title

A written attorney opinion stating who holds title to a property, based on examination of an abstract of title.

Chain of Title

The complete history of ownership transfers for a property, from the original grant through every subsequent deed, forming an unbroken chain to the current owner.

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Chattel

Personal property that is movable, as opposed to real property which is permanently attached to land. Appliances, furniture, and window treatments may be considered chattel.

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Clear to Close (CTC)

The final approval from your lender's underwriter confirming all conditions have been met and the loan is ready to fund. This is the green light for closing.

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Closing

Also called 'settlement' — the final step in a real estate transaction where documents are signed, funds disbursed, and ownership transferred from seller to buyer.

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Closing Agent

The person who conducts the closing — a title agent, escrow officer, settlement agent, or attorney depending on state requirements.

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Closing Costs

Fees and expenses — beyond the purchase price — that buyers and sellers pay to complete a real estate transaction. Typically 2-5% of the purchase price for buyers.

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Closing Disclosure (CD)

A five-page standardized document provided at least three business days before closing that details all final mortgage terms, projected payments, and itemized closing costs.

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Closing Protection Letter

A document issued by a title insurance underwriter to the lender guaranteeing that the closing agent will follow the lender's instructions for handling funds and documents.

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Cloud on Title

Any irregularity, possible claim, lien, or encumbrance that could potentially affect or impair the title to a property.

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Co-Borrower

A person who applies for and shares responsibility for a mortgage loan equally with the primary borrower. Both borrowers' income, assets, and credit are used to qualify.

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Co-Signer

A person who signs a mortgage note along with the primary borrower, agreeing to repay the loan if the borrower defaults, but who does not hold an ownership interest in the property.

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Commitment Fee

A fee charged by a title company or lender for issuing a commitment — a promise to provide title insurance or a mortgage loan under specified terms.

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Common Area

Portions of a property that are shared by all owners or residents, such as lobbies, hallways, pools, gyms, and landscaped areas in condominiums or planned communities.

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Comparable Sales (Comps)

Recently sold properties similar to the subject property in size, location, condition, and features. Used by appraisers and agents to determine market value.

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Compound Interest

Interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest grows exponentially over time.

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Concurrent Closing

Multiple real estate transactions closing simultaneously, often involving the same property or parties, such as when a seller's closing and a buyer's closing happen at the same time using the same funds.

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Condominium

A form of ownership where the buyer owns an individual unit within a multi-unit building or complex, plus a shared interest in common areas like lobbies, grounds, and amenities.

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Community Property

A form of property ownership in certain states where any property acquired during marriage is equally owned by both spouses, regardless of who earned the income or whose name is on the title.

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Conforming Loan Limit

The maximum loan amount that Fannie Mae and Freddie Mac will purchase or guarantee, set annually by the Federal Housing Finance Agency (FHFA). Loans above this limit are considered jumbo loans.

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Consideration

Something of value exchanged between parties to form a legally binding contract. In real estate, the consideration is typically money paid by the buyer for the property.

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Construction Loan

A short-term loan used to finance the building of a new home or major renovation. Funds are disbursed in stages as construction progresses and the loan typically converts to a permanent mortgage upon completion.

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Constructive Notice

Legal notice provided by recording documents in the public records. Once recorded, everyone is considered to have notice of the document's contents, whether or not they actually read it.

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Consumer Financial Protection Bureau (CFPB)

A federal agency created in 2010 that regulates consumer financial products and services, including mortgages. The CFPB enforces TRID, RESPA, TILA, and other consumer protection laws.

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Contingency

A condition in a purchase agreement that must be met before the sale can proceed. Common contingencies include financing, inspection, and appraisal.

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Conventional Loan

A mortgage not insured or guaranteed by a government agency (FHA, VA, USDA). Typically requires 3-20% down and a credit score of 620+.

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Conveyance

The transfer of property ownership from one person to another through a written document such as a deed.

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Cooperative (Co-op)

A form of residential ownership where buyers purchase shares in a corporation that owns the building, rather than owning their individual unit directly. The shares entitle the buyer to a proprietary lease on their unit.

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Covenant

A formal agreement containing promises and assurances between parties regarding property use or restrictions, often recorded against the property.

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Credit Report

A detailed record of your borrowing and repayment history from the three major credit bureaus (Equifax, Experian, TransUnion). Lenders use it to assess risk.

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Credit Score

A numerical rating (typically 300-850) that represents a borrower's creditworthiness based on payment history, amounts owed, length of credit history, new credit, and credit mix.

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Credit Utilization

The percentage of your available credit that you are currently using across all revolving accounts. A key factor in your credit score, ideally kept below 30%.

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Curative

Relating to actions taken to fix or resolve defects, issues, or irregularities in a property's title so that a clean title insurance policy can be issued.

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Curative Work

Actions taken by a title company to resolve defects or issues found during the title search before a policy can be issued.

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Certificate of Eligibility (COE)

A document issued by the U.S. Department of Veterans Affairs confirming a veteran's eligibility for a VA home loan, based on military service history and discharge status.

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Clear Title

A title to property that is free of liens, defects, encumbrances, or other legal questions as to ownership, making it eligible for transfer and title insurance.

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25 terms

Debt Consolidation

Combining multiple debts into a single payment, often through a new loan or refinancing. Homeowners sometimes use a cash-out refinance or home equity loan to consolidate higher-interest debts.

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Debt-to-Income Ratio (DTI)

The percentage of your gross monthly income that goes toward monthly debt payments. Lenders use front-end DTI (housing costs only, target <28%) and back-end DTI (all debts, target <43%).

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Declarations Page

The first page of a homeowner's insurance policy that summarizes key details including the policyholder's name, property address, coverage amounts, deductibles, premium, and policy period.

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Deductible

The amount you must pay out of pocket before your insurance coverage kicks in on a claim. Higher deductibles typically result in lower premium costs.

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Deed

A written legal document that conveys ownership of real property from one party (grantor) to another (grantee). Must be signed, witnessed, and recorded.

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Deed of Trust

A document used in some states instead of a mortgage, involving three parties: the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee) who holds the title.

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Deed Restriction

A limitation on how a property can be used, written into the deed itself. Deed restrictions run with the land and bind all future owners.

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Default

Failure to perform a promised task or pay an obligation when due, such as missing mortgage payments.

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Default Judgment

A court ruling in favor of the plaintiff when the defendant fails to respond to or appear in a lawsuit. In real estate, a default judgment can result in a lien on the property.

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Defect

A blemish, flaw, or imperfection in a property's title — a defective title is irregular and may not be legally valid or transferable.

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Deficiency Judgment

A court order holding a borrower personally liable for the remaining balance after a foreclosure sale if the sale proceeds do not cover the full mortgage debt.

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Depreciation

A decrease in the value of property due to wear, age, or changing market conditions.

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Depreciation Schedule

A timeline showing how the value of an asset decreases over time. For investment properties, the IRS allows depreciation of residential rental property over 27.5 years.

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Discount Points

Upfront fees paid to the lender at closing to permanently reduce the interest rate. One point equals 1% of the loan amount.

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Down Payment

The portion of the purchase price paid in cash by the buyer at closing. The remainder is financed through a mortgage.

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Down Payment Assistance (DPA)

Programs offered by state and local governments, nonprofits, or employers that provide grants, forgivable loans, or low-interest loans to help homebuyers cover the down payment and closing costs.

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Dry Closing

A closing where all documents are signed but funds are not disbursed on the same day. The transaction is completed when funds are transferred, which may happen one or more days later.

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Dry Funding

The disbursement of loan funds after all closing documents have been signed and recorded, rather than at the time of signing. Required in some states by law.

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Due Diligence

The period after a purchase agreement is signed during which the buyer investigates the property through inspections, appraisal, title search, and other research.

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Due-on-Sale Clause

A provision in a mortgage that requires the full loan balance to be paid when the property is sold or transferred.

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Duplex

A residential building containing two separate living units, each with its own entrance, kitchen, and bathroom, under a single roof.

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Dwelling Coverage

The portion of a homeowner's insurance policy that covers the cost to repair or rebuild the physical structure of your home if it is damaged or destroyed by a covered event.

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Dual Agency

A situation where one real estate agent or brokerage represents both the buyer and seller in the same transaction. Legal in some states but raises conflict-of-interest concerns.

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Disintermediation

The process of removing the middleman from a transaction. In real estate, this refers to technologies or services that connect buyers and sellers directly, reducing commissions and fees.

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Documentary Stamp Tax

A state or local tax imposed on the transfer of real property, calculated as a fixed amount per dollar of the sale price or mortgage amount. Also called a doc stamp or deed stamp.

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Earnest Money

A deposit — typically 1-3% of the purchase price — given by the buyer to show good faith when making an offer. Held in escrow and credited toward closing costs.

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Easement

The legal right to use or make limited use of another person's real property for a specific purpose, such as a shared driveway, utility lines, or drainage.

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Eminent Domain

The government's constitutional right to take private property for public use (roads, schools, utilities) with fair compensation to the owner.

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Encroachment

A structure, building, fence, or improvement that extends across the boundary line onto an adjoining property.

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Encumbrance

Any claim, right, lien, or interest in a property held by someone other than the owner that may diminish the property's value or restrict its use.

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Endorsement

An amendment or addition to an insurance policy that modifies coverage, either expanding or restricting what the policy covers. Common in both title insurance and homeowner's insurance.

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Equal Credit Opportunity Act (ECOA)

A federal law that prohibits lenders from discriminating against mortgage applicants based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance.

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Equity

The difference between your property's market value and the total amount you owe on it. Equity grows as you pay down your mortgage and as the property appreciates.

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Equity Stripping

A predatory lending practice or asset protection strategy where the equity in a property is reduced through excessive borrowing, liens, or fees, leaving the owner with little or no ownership value.

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Escrow

The deposit of money or documents with an impartial third party pending the completion of a transaction. Also refers to the account where your lender holds funds for property taxes and insurance.

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Escrow Account

An account maintained by the mortgage servicer to collect and hold funds for property taxes and homeowner's insurance, paid from monthly mortgage payments.

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Escrow Holdback

Funds held in escrow after closing to cover specific items such as incomplete repairs, seasonal work that cannot be completed at closing, or lender-required conditions.

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Escrow Shortage

A deficit in your escrow account that occurs when the actual costs of property taxes or insurance exceed the amounts that were collected. The shortage must be repaid.

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Escrow Surplus

An excess of funds in your escrow account when taxes or insurance costs were lower than anticipated. Surpluses above $50 must be refunded to the borrower.

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Estoppel

A legal principle that prevents a person from denying or asserting something contrary to what they previously established as truth. In condos, an estoppel letter confirms the unit's financial standing.

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Examination of Title

A review and interpretation of the title search results to determine the status of property ownership and identify any defects, liens, or encumbrances.

Exclusion

A specific condition, event, or type of property that an insurance policy does not cover. Knowing your exclusions is essential to understanding your actual coverage.

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Extended Coverage

An enhancement to a standard title insurance policy that expands protection beyond the basic policy to cover additional risks such as post-closing forgery, encroachment issues, and zoning violations.

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Egress

The right or means to exit a property. Along with ingress (entry), egress ensures a property owner can access and leave their property.

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Environmental Assessment

An evaluation of a property for potential environmental hazards such as lead paint, asbestos, radon, underground storage tanks, or soil contamination.

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Escalation Clause

A provision in a purchase offer that automatically increases the buyer's bid by a specified amount above competing offers, up to a maximum price.

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Exchange (1031 Exchange)

A tax-deferred transaction under Section 1031 of the Internal Revenue Code that allows an investor to sell one investment property and purchase another of like-kind without paying capital gains taxes at the time of exchange.

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Equitable Title

The beneficial interest in a property held by a buyer under a purchase contract who has not yet received the legal title (deed). The buyer has the right to obtain full ownership upon meeting all contract terms.

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Enclosure

An area of land enclosed by a fence, wall, hedge, or other barrier. In real estate, an enclosure may or may not correspond to the actual property boundaries.

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Fair Housing Act

A federal law enacted in 1968 that prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, familial status, or disability.

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Fair Market Value

The price a willing, informed buyer would pay and a willing, informed seller would accept in an open market transaction with no unusual pressure on either party.

Fannie Mae (FNMA)

Federal National Mortgage Association — a government-sponsored enterprise that buys and guarantees mortgages from lenders, providing liquidity to the housing market.

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Federal Housing Administration (FHA)

A government agency within the U.S. Department of Housing and Urban Development that insures mortgage loans made by approved lenders, enabling lower down payments and more flexible qualification criteria.

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FHA Loan

A mortgage insured by the Federal Housing Administration, requiring as little as 3.5% down payment with a credit score of 580+. Requires mortgage insurance premium (MIP).

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Fee Simple

The highest and most complete form of property ownership — unqualified ownership with full power to sell, mortgage, gift, or use the property as desired, subject only to government restrictions.

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FICO Score

A credit score developed by the Fair Isaac Corporation, ranging from 300 to 850, used by most mortgage lenders to evaluate a borrower's creditworthiness. Higher scores typically result in lower interest rates.

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Fiduciary

A person or entity legally obligated to act in the best interest of another party. Real estate agents, trustees, and escrow officers owe fiduciary duties to their clients.

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Final Walkthrough

The buyer's last inspection of the property, typically within 24-48 hours of closing, to verify the home is in agreed-upon condition, repairs are completed, and no new damage has occurred.

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First Mortgage

A mortgage that has first priority over all other mortgages, liens, or claims on the property. In case of default, the first mortgage is paid before any subordinate liens.

First-Time Buyer

As defined by most federal programs, a person who has not owned a principal residence in the past three years. This broader definition means even previous homeowners may qualify for first-time buyer programs.

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Fixed-Rate Mortgage

A mortgage with an interest rate that remains constant for the entire term of the loan, providing predictable monthly payments.

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Fixture

An item of personal property that has been permanently attached to or incorporated into the real property and is therefore considered part of the real estate.

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Flood Certification

A determination of whether a property is located in a FEMA-designated flood zone, which would require flood insurance.

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Floor Plan

A scaled drawing showing the layout of rooms, dimensions, and the relationship between spaces within a building, viewed from above.

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Flood Zone

A geographic area designated by FEMA on Flood Insurance Rate Maps (FIRMs) based on the level of flood risk. Zone A and Zone V are high-risk areas where flood insurance is mandatory for federally backed mortgages.

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Forbearance

A temporary agreement between a lender and borrower to reduce or suspend mortgage payments for a specified period due to financial hardship, without triggering foreclosure.

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Foreclosure

A legal proceeding in which a lender takes possession of a property after the borrower defaults on mortgage payments, selling it to recover the outstanding debt.

Freddie Mac (FHLMC)

Federal Home Loan Mortgage Corporation — a government-sponsored enterprise similar to Fannie Mae that buys and guarantees mortgages to support the housing market.

Funding

The disbursement of mortgage loan proceeds from the lender to the closing agent or escrow company, enabling the transaction to be completed and the deed to be recorded.

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Funding Fee

An upfront fee charged on VA and USDA loans in lieu of mortgage insurance. The VA funding fee is 2.15% for first-time use and can be financed into the loan.

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For Sale By Owner (FSBO)

A property sale handled directly by the owner without a listing agent, intended to save on real estate commissions.

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Floodplain

A flat area of land adjacent to a river, stream, or other body of water that is subject to periodic flooding. Properties in a floodplain typically require flood insurance and may face building restrictions.

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Gap Coverage (Insurance)

Additional homeowner's insurance that covers the difference between the amount owed on a vehicle or property and its actual cash value at the time of a total loss.

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Gap Search

A title search conducted between the date of the original title commitment and the recording date of the deed, checking for any new liens, judgments, or encumbrances filed during that gap period.

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General Warranty Deed

The strongest form of deed warranty, guaranteeing clear title against all claims — past and present — and providing the buyer with the most protection.

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Gift Letter

A written statement from a family member or other approved donor confirming that funds given to a homebuyer for the down payment or closing costs are a gift and not a loan that must be repaid.

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Good Faith Estimate (GFE)

A former disclosure document replaced by the Loan Estimate in 2015 under the TRID rule. It provided an estimate of settlement charges.

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Good Funds

Funds that are immediately available and guaranteed, such as wire transfers, cashier's checks, or certified checks. Required for closing transactions in most states.

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Government Recording Fee

Fees charged by the county recorder's office to officially record real estate documents such as the deed, mortgage, and any other instruments in the public records.

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Government-Sponsored Enterprise (GSE)

A financial services corporation created by Congress to enhance the flow of credit to specific economic sectors. Fannie Mae and Freddie Mac are the primary housing GSEs.

Grantee

The person or entity receiving ownership of property through a deed — the buyer in a real estate transaction.

Grantor

The person or entity transferring ownership of property through a deed — the seller in a real estate transaction.

Gross Monthly Income

Your total monthly income before taxes and deductions. Lenders use this figure to calculate your debt-to-income ratio.

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Guarantee Fee

An upfront and annual fee charged on USDA loans (similar to FHA's MIP or VA's funding fee) that funds the USDA loan guarantee program.

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Guardian

A person appointed by a court to manage the legal and financial affairs of someone who cannot manage their own, such as a minor or incapacitated adult. A guardian may need court approval to sell property.

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Gift Funds

Money received from a family member, domestic partner, or other approved donor to be used toward a home purchase down payment or closing costs. Lenders require documentation that the funds are a true gift, not a loan.

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Grace Period

A set number of days after the mortgage payment due date during which the payment can be made without incurring a late fee. Most mortgages have a 15-day grace period.

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Ground Rent

A periodic payment made by a property owner to the owner of the land on which the property sits, common in leasehold arrangements in states like Maryland.

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Gross Rent Multiplier (GRM)

A simple ratio used to evaluate rental property investments, calculated by dividing the property's purchase price by its gross annual rental income.

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Habendum Clause

The clause in a deed that defines the extent of ownership being granted, beginning with the words 'to have and to hold.' It specifies whether the grantee receives full ownership or a limited interest.

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Hazard Insurance

Insurance protecting the property against damage from fire, windstorms, hail, vandalism, and other covered perils. Often used interchangeably with homeowner's insurance.

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Heir

A person who is legally entitled to inherit property from a deceased person, either through a will or by state intestacy laws if no will exists.

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HELOC

Home Equity Line of Credit — a revolving credit line secured by your home's equity, allowing you to borrow as needed up to a set limit during a draw period.

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HOA (Homeowners Association)

An organization in a subdivision or condo complex that makes and enforces rules, maintains common areas, and collects dues from homeowners.

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Hold Harmless

A clause in a contract where one party agrees to protect the other from liability or legal claims arising from the transaction or activity.

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Home Equity

The portion of your property's value that you actually own — the difference between the home's current market value and any outstanding mortgage balances.

Home Equity Loan

A fixed-rate loan that allows homeowners to borrow a lump sum against the equity in their home, repaid in fixed monthly installments over a set term.

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Home Inspection

A professional examination of a property's physical condition, including structure, roof, plumbing, electrical, HVAC, foundation, and more. Typically costs $300-$500.

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Home Mortgage Disclosure Act (HMDA)

A federal law requiring financial institutions to report data about their mortgage lending activity, including the race, ethnicity, income, and geographic location of borrowers, to ensure fair lending practices.

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Home Price Index (HPI)

A statistical measure that tracks changes in residential property prices over time, published by organizations such as the Federal Housing Finance Agency (FHFA) and S&P/Case-Shiller.

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Homeowner's Insurance

A comprehensive insurance policy covering the home's structure, personal property, liability, and additional living expenses. Required by mortgage lenders.

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Homestead Exemption

A legal provision that reduces the taxable value of a primary residence, lowering the property tax bill. Available in many states with varying amounts and eligibility requirements.

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Housing Ratio

The front-end debt-to-income ratio that compares monthly housing costs (PITI plus HOA) to gross monthly income. Most lenders prefer this ratio to be at or below 28%.

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HUD

The U.S. Department of Housing and Urban Development — a federal agency that oversees housing programs, enforces fair housing laws, and regulates FHA lending.

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HUD-1 Settlement Statement

A former closing document replaced by the Closing Disclosure in 2015. It itemized all charges to the buyer and seller in a real estate transaction.

Home Warranty

A service contract that covers the repair or replacement of major home systems and appliances (HVAC, plumbing, electrical, water heater, kitchen appliances) that fail due to normal wear and tear during the coverage period.

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Hurricane Insurance

Specialized insurance coverage for wind and storm damage caused by hurricanes, often required as a separate policy or endorsement in coastal areas where standard homeowner's policies exclude or limit wind coverage.

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16 terms

Impound Account

Another term for an escrow account — funds collected monthly by the lender for property taxes and insurance.

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Imputed Interest

The minimum interest rate the IRS assumes on certain loans, even if the actual rate charged is lower. Applies to seller-financed transactions and below-market loans.

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Indemnity

An agreement in which one party compensates another for a loss or damage. In title insurance, the policy is an indemnity contract that reimburses the insured for covered losses.

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Index Rate

A benchmark interest rate used to calculate the adjustable rate on an ARM. Common indexes include SOFR (Secured Overnight Financing Rate) and the 1-Year Treasury.

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Ingress

The right or permission to enter a property — the means or place of entry such as a right-of-way or easement providing access.

Insured Closing Letter

A letter issued by a title insurance underwriter to the lender guaranteeing that the title agent will handle the closing in accordance with the lender's written instructions.

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Interest Rate

The percentage charged by a lender for borrowing money, expressed as an annual percentage. Different from APR, which includes fees.

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Interest Rate Lock

A lender's commitment to hold a specific interest rate for a set period (typically 30-60 days), protecting you from rate increases before closing.

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Interest-Only Mortgage

A mortgage where the borrower pays only interest for a set initial period (typically 5-10 years), after which payments increase to include principal amortization for the remaining term.

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Investment Property

Real estate purchased with the intention of earning a return through rental income, appreciation, or both, rather than as a primary residence.

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Intestate

Dying without a valid will. When a property owner dies intestate, state law determines how the property is distributed among heirs.

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IRRRL (Interest Rate Reduction Refinance Loan)

A VA streamline refinance program that allows eligible veterans to refinance an existing VA loan to a lower interest rate with minimal documentation and no appraisal requirement.

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Improvement

Any addition to or modification of real property that increases its value, such as buildings, fences, driveways, landscaping, or utility installations.

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Indemnification

A contractual obligation by one party to compensate another for losses or damages arising from a specified event or action, commonly found in real estate purchase agreements and closing documents.

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Inspection Contingency

A clause in a purchase agreement that gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs, credits, or cancellation based on the findings.

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Interim Financing

A short-term loan used to bridge the gap between the purchase of a new property and the sale of an existing one, or to fund construction until permanent financing is obtained.

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8 terms

Joint Tenancy

A form of co-ownership where two or more persons hold equal, undivided interests with the right of survivorship — meaning a deceased owner's share automatically passes to the surviving owners.

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Joint Venture

A business arrangement in which two or more parties agree to pool resources and share profits, losses, and control of a specific real estate project or investment.

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Judgment

A court order requiring one party to pay money or take action. A judgment against a property owner becomes a lien against their real estate.

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Judgment Lien

A lien placed on a property as the result of a court judgment. Must be paid or resolved before the property can be sold with clear title.

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Jumbo Loan

A mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac ($806,500 in most areas for 2025, higher in high-cost areas).

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Jurisdiction

The geographic area or subject matter over which a court or government body has legal authority. Property transactions are governed by the jurisdiction where the property is located.

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Joint Liability

A legal obligation shared equally by two or more parties, where each party is individually responsible for the entire debt or obligation. Common with co-borrowers on a mortgage.

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Junior Lien

A lien that is subordinate in priority to a previously recorded lien. In the event of foreclosure, senior liens are paid first, and junior liens receive whatever remains.

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4 terms

Kick-Out Clause

A provision in a purchase agreement that allows the seller to continue marketing the property and accept a better offer, giving the original buyer a set time to remove their contingency or be replaced.

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Knowledge-Based Authentication (KBA)

An identity verification method used in Remote Online Notarization (RON) where the signer answers questions about their personal history that only they would know.

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Key Money

A payment made by a tenant or buyer to a landlord, property owner, or current tenant to secure the right to lease or purchase a property. Common in competitive urban rental markets.

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Knob-and-Tube Wiring

An early method of electrical wiring used in homes built before the 1940s, featuring individual wires run through ceramic knobs and tubes. Considered a fire hazard and often flagged by inspectors and insurers.

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20 terms

Land Patent

The original document by which the government grants ownership of public land to a private individual. The very first title transfer in a property's chain of title.

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Lease

An agreement granting use and occupancy of property for a specified period in exchange for rent payments.

Leasehold

A form of property interest where the buyer holds a long-term lease on the land rather than owning it outright. Common in Hawaii, parts of New York, and on tribal lands.

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Lender Credits

Funds provided by the lender to the borrower at closing to offset closing costs, typically in exchange for accepting a higher interest rate on the loan.

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Lender's Title Insurance

A title insurance policy protecting the mortgage lender's financial interest in the property. Required by virtually all lenders. Paid by the buyer.

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Liability Coverage

The portion of a homeowner's insurance policy that protects you financially if someone is injured on your property or if you accidentally damage someone else's property.

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Lien

A legal claim against real property used as security for the payment of a debt. Common types include mortgage liens, tax liens, mechanic's liens, and judgment liens.

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Lis Pendens

A legal notice filed in public records warning that a lawsuit is pending that may affect the title to a specific property.

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Litigation

The process of resolving a dispute through the court system, including lawsuits related to property ownership, contract disputes, or boundary disagreements.

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Loan Estimate (LE)

A three-page standardized document that lenders must provide within three business days of a mortgage application, detailing estimated interest rate, monthly payments, and closing costs.

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Loan Origination Fee

A fee charged by the lender for processing a new mortgage application. Usually expressed as a percentage of the loan amount (0.5-1%).

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Loan Policy

A title insurance policy issued to a mortgage lender protecting their interest against title defects, liens, and competing claims.

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Loan-to-Value Ratio (LTV)

The ratio of the mortgage amount to the appraised property value, expressed as a percentage. Higher LTV means more risk for the lender and usually requires mortgage insurance.

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Lock Period

The time frame during which a lender guarantees a specific interest rate. Common lock periods are 30, 45, and 60 days.

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Loss Payee

The party designated on an insurance policy to receive payment in the event of a covered loss. Your mortgage lender is listed as the loss payee on your homeowner's insurance.

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Lot

A specific parcel of land with defined boundaries, identified by a lot number on a recorded plat map or subdivision plan.

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Loan Servicer

The company that manages your mortgage after closing, including collecting monthly payments, managing the escrow account, and handling customer service. May be different from the original lender.

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Legal Description

A formal description of a property that precisely identifies it for legal purposes, using methods such as lot and block, metes and bounds, or the government survey system.

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Land Use

The way in which a parcel of land is utilized, such as residential, commercial, agricultural, or industrial. Land use is regulated by local zoning ordinances and comprehensive plans.

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Latent Defect

A hidden flaw or deficiency in a property that is not visible or apparent during a reasonable inspection and that the seller may be legally obligated to disclose if known.

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ALTA Member Spotlight

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20 terms

Margin

The fixed percentage added to the index rate to determine the interest rate on an adjustable-rate mortgage at each adjustment. The margin remains constant for the life of the loan.

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Marketable Title

A title free of material defects, liens, and encumbrances — one that a reasonable buyer would accept and a court would require a buyer to accept.

Market Value

The most probable price a property would bring in an open, competitive market where both buyer and seller are acting prudently and without unusual pressure.

Master Policy

A single title insurance policy issued to cover multiple properties or transactions, typically used by large lenders or developers to streamline coverage across a portfolio.

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Mechanic's Lien

A lien filed by a contractor, subcontractor, or material supplier who performed work on a property and was not paid. Takes priority from the date work began.

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Mediation

A voluntary dispute resolution process where a neutral third party (mediator) helps the parties negotiate a settlement, without making a binding decision.

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Metes and Bounds

A legal method of describing property boundaries using compass directions, distances, and physical landmarks, starting from a defined point of beginning.

MIP (Mortgage Insurance Premium)

The insurance premium on FHA loans, consisting of an upfront premium (1.75% of the loan, financed into the balance) and an annual premium (0.55% of the loan, paid monthly).

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Modification (Loan Modification)

A permanent change to one or more terms of an existing mortgage — such as the interest rate, loan term, or principal balance — to make payments more affordable and help the borrower avoid foreclosure.

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Mortgage

A legal instrument that pledges property as security for repayment of a loan. If the borrower defaults, the lender can foreclose to recover the debt.

Mortgage Broker

A licensed professional who shops multiple lenders on behalf of the borrower to find the best loan terms, earning a commission from the lender or borrower.

Mortgage Commitment

A formal, written promise from a lender to provide a mortgage loan under specific terms and conditions, issued after the loan has been fully underwritten and approved.

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Mortgage Insurance

Insurance that protects the lender if the borrower defaults. Required on conventional loans with less than 20% down (PMI), FHA loans (MIP), and USDA loans (guarantee fee).

Multi-Family Property

A residential building designed to house more than one family in separate units, such as duplexes, triplexes, fourplexes, and apartment buildings.

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Mineral Rights

The ownership rights to natural resources (oil, gas, coal, metals) beneath the surface of a property. Mineral rights can be severed from surface rights and sold separately.

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Multiple Listing Service (MLS)

A database maintained by real estate brokers where listed properties are shared among agents, providing comprehensive information about homes for sale in a given area.

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Mortgage Rate

The interest rate charged on a mortgage loan, which determines the cost of borrowing and directly affects the monthly payment amount.

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Move-In Costs

The total upfront expenses a buyer faces when purchasing a home, including down payment, closing costs, prepaid items, moving expenses, and any immediate repairs or furnishing.

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Mortgage Note

The legal document that serves as evidence of a debt and the borrower's promise to repay the mortgage loan according to specified terms including interest rate, payment schedule, and maturity date.

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Moratorium

A temporary suspension or delay of an activity or obligation, such as a government-imposed halt on foreclosures, evictions, or new construction in a specific area.

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14 terms

Named Peril

A type of insurance policy that only covers losses caused by specific perils that are explicitly listed in the policy, such as fire, theft, or windstorm.

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National Flood Insurance Program (NFIP)

A federal program administered by FEMA that provides flood insurance to property owners in participating communities, since standard homeowner's policies exclude flood damage.

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Negative Amortization

A situation where monthly payments are so low that they don't cover the interest due, causing the unpaid interest to be added to the loan balance — the amount owed actually increases over time.

Net Worth

The total value of all your assets (savings, investments, property, retirement accounts) minus all your liabilities (debts, loans, obligations).

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Non-QM Loan (Non-Qualified Mortgage)

A mortgage that does not meet the Consumer Financial Protection Bureau's qualified mortgage standards but is still a legitimate loan product for borrowers who don't fit traditional lending criteria.

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Notarization

The official act of a notary public witnessing the signing of a document, verifying the signer's identity, and applying their seal as evidence of authenticity.

Notary Public

A state-commissioned official authorized to administer oaths, witness signatures, and certify documents. Required for real estate deeds and mortgage documents.

Note (Promissory Note)

A written, signed document containing a promise to pay a specified sum of money at a stated time. The note is your personal promise to repay the mortgage.

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Notice of Default (NOD)

A formal written notice from a lender to a borrower stating that the borrower is in default on their mortgage and that foreclosure proceedings may begin if the default is not cured.

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Non-Conforming Loan

A mortgage that does not meet the guidelines set by Fannie Mae or Freddie Mac, either because the loan amount exceeds conforming limits (jumbo loan) or because the borrower or property doesn't meet standard criteria.

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Notice to Proceed

A formal written authorization from a lender, buyer, or project owner directing that work or a specific phase of the transaction may begin, commonly used in new construction and renovation loans.

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Net Listing

A listing agreement in which the seller sets a minimum acceptable net price and the broker keeps any amount above that as commission. Illegal or discouraged in most states due to conflict-of-interest concerns.

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Negative Equity

A situation in which the outstanding balance on a mortgage exceeds the current market value of the property, meaning the owner owes more than the home is worth.

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Net Operating Income (NOI)

The total income generated by a rental or investment property minus all operating expenses (taxes, insurance, maintenance, management), but before mortgage payments and income taxes.

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10 terms

Open Peril

A type of insurance policy (also called 'all-risk') that covers all causes of loss except those specifically excluded in the policy. Provides broader protection than named peril coverage.

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Origination

The process of creating a new mortgage loan, from application through underwriting, approval, and funding.

Origination Points

Fees paid to the lender at closing for processing and originating the mortgage loan, expressed as a percentage of the loan amount. One origination point equals 1% of the loan.

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Owner's Policy

A title insurance policy protecting the homeowner's property rights and investment for the life of ownership and their heirs' interest. Purchased for a one-time fee at closing.

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Owner-Occupied

A property that is used as the owner's primary residence, as opposed to a second home or investment property. Owner-occupied properties qualify for better loan terms.

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Occupancy Permit

A document issued by a local government certifying that a property meets all applicable building codes and is suitable for occupancy. Similar to a certificate of occupancy, often required before a new owner can move in.

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Open House

A scheduled period during which a property for sale is open for public viewing without requiring individual appointments, allowing prospective buyers to tour the home.

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Option Period

A negotiated time frame (typically 5-14 days) during which the buyer has the unrestricted right to terminate the purchase contract for any reason, usually in exchange for a non-refundable option fee paid to the seller.

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Offer to Purchase

A formal written proposal from a buyer to a seller specifying the price, terms, and conditions under which the buyer is willing to buy the property. Also called a purchase offer or bid.

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Outstanding Balance

The remaining unpaid principal amount on a mortgage or other loan at any given point in time, not including future interest payments.

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31 terms

Par Rate

The interest rate at which a lender offers a mortgage with no discount points and no lender credits — the baseline rate before any adjustments for points or credits.

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Parcel

A specific, legally defined piece of real estate identified by a unique parcel number assigned by the county tax assessor for taxation and identification purposes.

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Partition

A legal proceeding to divide co-owned property among the owners when they cannot agree on its use or disposition. The court may order the property physically divided or sold.

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Personal Property Coverage

The portion of a homeowner's insurance policy that covers your belongings (furniture, electronics, clothing, appliances) against theft, damage, or destruction.

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Piggyback Loan

A second mortgage taken out simultaneously with the first mortgage to avoid paying private mortgage insurance (PMI), typically structured as an 80-10-10 or 80-15-5.

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PITI

Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment.

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Plat

A map drawn to scale showing the division of a piece of land into lots, blocks, streets, and common areas, recorded in the county records as the official map of a subdivision.

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PMI (Private Mortgage Insurance)

Insurance required on conventional loans when the borrower puts less than 20% down. Protects the lender if the borrower defaults. Can be removed once equity reaches 20%.

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Policy Jacket

The standard pre-printed terms and conditions that form part of every title insurance policy, containing the general provisions, definitions, exclusions, and conditions that apply.

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Policy Limits

The maximum amount an insurance policy will pay for a covered loss. In homeowner's insurance, separate limits apply to dwelling, personal property, and liability coverage.

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Portfolio Loan

A mortgage that the lender keeps in its own investment portfolio rather than selling to Fannie Mae, Freddie Mac, or investors. This allows more flexible underwriting guidelines.

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Post-Closing

The period and activities that occur after the closing documents are signed, including recording the deed, disbursing funds, issuing title insurance policies, and resolving any remaining conditions.

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Power of Attorney (POA)

A legal document authorizing one person to act as another's agent in legal and financial matters, including signing closing documents.

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Pre-Approval

A lender's conditional commitment to lend a specific amount based on verified income, assets, credit, and employment. Stronger than pre-qualification.

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Pre-Closing

The period and activities leading up to the closing date, including finalizing documents, completing the title search, clearing conditions, and scheduling the closing.

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Preliminary Title Report

A report showing current property ownership, existing liens, easements, and encumbrances. Issued before the final title insurance policy.

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Prepaid Items

Expenses paid at closing that cover costs in advance, such as prepaid interest, the first year's homeowner's insurance premium, and initial property tax deposits.

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Prepayment Penalty

A fee charged by some lenders if the borrower pays off the mortgage early, either through refinancing or selling the property.

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Pre-Qualification

An informal estimate of how much a buyer might be able to borrow, based on unverified financial information provided by the borrower.

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Principal

The amount of money borrowed, or the portion of a monthly payment that reduces the outstanding loan balance (as opposed to interest, taxes, or insurance).

Probate

The legal process of administering a deceased person's estate, including validating the will, paying debts, and distributing property to heirs. Probate can significantly delay the sale of inherited property.

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Pro Forma

A preliminary or projected document showing estimated figures. In title insurance, a pro forma policy is a draft version showing what the final policy will look like.

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Promissory Note

A written promise to pay a specified sum at a stated time. In real estate, it's the borrower's personal obligation to repay the mortgage.

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Property Tax

A tax assessed by local government based on a property's assessed value. Used to fund schools, roads, emergency services, and other public services.

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Proration

The allocation of property expenses (taxes, HOA dues, utilities) between buyer and seller based on the closing date.

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Public Records

Official records maintained by a county recorder's office containing transcriptions of all recorded instruments affecting real property — deeds, mortgages, liens, easements, and more.

PUD (Planned Unit Development)

A type of residential development that combines single-family homes, townhomes, or other housing types with shared common areas and amenities, governed by a homeowners association.

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Purchase Agreement

A legally binding contract between buyer and seller that outlines the terms and conditions of a real estate sale, including price, contingencies, closing date, and what's included.

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Purchase Money Mortgage

A mortgage provided by the seller to the buyer as part of the purchase transaction, where the seller acts as the lender and finances part or all of the purchase price.

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Pest Inspection

A professional inspection of a property for wood-destroying organisms such as termites, carpenter ants, and wood-boring beetles, as well as evidence of dry rot or fungus damage.

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Planned Community

A residential development with shared amenities, common areas, and an established homeowners association that enforces community standards through covenants, conditions, and restrictions (CC&Rs).

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ALTA Member Spotlight

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3 terms

Qualified Mortgage (QM)

A category of mortgage that meets specific standards set by the Consumer Financial Protection Bureau, including limits on fees, loan features, and debt-to-income ratios, providing certain legal protections to lenders.

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Quiet Title Action

A lawsuit filed to establish clear ownership of a property by eliminating or 'quieting' any competing claims or clouds on the title.

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Quitclaim Deed

A deed that transfers whatever interest the grantor may have in a property without making any warranties about the quality of that title.

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27 terms

Rate Cap

The maximum amount an adjustable-rate mortgage's interest rate can increase during a single adjustment period or over the full life of the loan.

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Rate Lock

A lender's commitment to hold a specific interest rate and points for a defined period, protecting the borrower from rate increases before closing.

Raw Land

Undeveloped land with no improvements, utilities, roads, or structures. Raw land typically requires significant investment before it can be built upon.

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Real Estate Settlement Procedures Act (RESPA)

A federal law that requires lenders to provide borrowers with disclosures about settlement costs, prohibits kickbacks between settlement service providers, and limits escrow account requirements.

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Real Property

Land and anything permanently attached to it — buildings, fences, landscaping, and fixtures. Distinguished from personal property (movable items).

Recasting

A mortgage recast recalculates your monthly payment based on the current remaining balance and original loan term after a large lump-sum payment toward principal, without changing the interest rate or loan term.

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Recording

Filing a document in the public records at the county recorder's office to provide constructive notice of the transaction to the public.

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Refinance

Replacing an existing mortgage with a new one, typically to obtain a lower interest rate, change the loan term, or access home equity (cash-out refinance).

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Refinance Rate

A reduced title insurance premium available when refinancing, since the title company already has a recent search on file for the property.

Regulation Z

The federal regulation that implements the Truth in Lending Act, requiring lenders to disclose the true cost of credit to consumers, including the APR, finance charges, and total payments.

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Re-Inspection Fee

A fee charged by the appraiser to return to the property and verify that required repairs or conditions have been completed satisfactorily.

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Remote Online Notarization (RON)

A technology-enabled process allowing a notary public to notarize documents via live audio-video communication. Available in 45 states and DC as of 2026, with ALTA and MBA leading advocacy efforts.

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Renovation Loan

A mortgage product that finances both the purchase of a home and the cost of renovations in a single loan, such as the FHA 203(k) or Fannie Mae HomeStyle loan.

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Replacement Cost

The amount it would cost to rebuild or replace your home or belongings at current prices, without deducting for depreciation. Provides higher payouts than actual cash value coverage.

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Rescission

The cancellation or reversal of a contract, returning all parties to their original positions. In mortgage lending, federal law provides a right of rescission for certain refinance transactions.

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Reserves

Liquid assets (savings, investments, retirement funds) that a borrower must have remaining after closing, measured in months of mortgage payments. Lenders require reserves to ensure the borrower can handle unexpected expenses.

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RESPA

Real Estate Settlement Procedures Act — a federal law that requires lenders to provide borrowers with disclosures about settlement costs, prohibits kickbacks, and gives buyers the right to choose their own title company.

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Reverse Mortgage

A loan available to homeowners aged 62 or older that allows them to convert home equity into cash payments without selling the home or making monthly mortgage payments. The loan is repaid when the borrower moves, sells, or passes away.

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Rider

An addition or amendment to an insurance policy that modifies coverage, adding protection for specific items or situations not covered by the standard policy.

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Right of First Refusal

A contractual right that gives a party the first opportunity to purchase a property or match any offer before the owner can sell to someone else.

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Right of Way

The right to pass over another person's property, or the strip of land dedicated for roads, utilities, sidewalks, or other access purposes.

Run Sheet

A document used by the title company to organize and summarize all recorded instruments affecting a property in chronological order, serving as a working tool during the title examination.

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Radon

A naturally occurring radioactive gas that can seep into homes through cracks in the foundation, posing health risks at elevated levels. Radon testing is a common part of the home inspection process.

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Real Estate Agent

A licensed professional who represents buyers or sellers in real estate transactions, helping with property searches, negotiations, paperwork, and closing.

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Reissue Rate

A discounted title insurance premium offered when a previous title insurance policy exists on the property, typically available if the prior policy was issued within the last 10 years.

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Right of Survivorship

A legal right associated with joint tenancy and tenancy by the entirety that automatically transfers a deceased owner's share of the property to the surviving co-owner(s) without going through probate.

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Rent-Back Agreement

An arrangement where the seller remains in the property after closing as a tenant for a negotiated period, paying rent to the new owner. Also called a post-closing occupancy agreement or leaseback.

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29 terms

Safe Act

The Secure and Fair Enforcement for Mortgage Licensing Act — a federal law requiring mortgage loan originators to be licensed or registered, pass background checks, and complete continuing education.

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Schedule A

The section of a title commitment that lists the proposed policy details: the parties involved, purchase price, legal description, and type of policy to be issued.

Schedule B

The section of a title commitment that lists exceptions — specific items the title insurance policy will NOT cover. Must be reviewed carefully before closing.

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Scheduled Property

Specific high-value items individually listed on a homeowner's insurance policy with their own coverage amounts, providing broader protection than standard personal property coverage.

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Search

A thorough inspection and examination of public records to find all recorded instruments that affect the title to a specific property.

Seasoning

The length of time a borrower has held a mortgage, owned a property, or held funds in an account. Lenders often require seasoning periods before allowing certain transactions.

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Secure Act

Legislation affecting retirement accounts that changed required minimum distribution rules and allows penalty-free withdrawals for certain purposes including first-time home purchases (up to $10,000 from IRAs).

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Seller Concessions

Contributions from the seller toward the buyer's closing costs. Limited by loan type: conventional (3-9%), FHA (6%), VA (4%).

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Setback

The minimum distance a building or structure must be set back from the property line, street, or other boundary as required by local zoning regulations.

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Settlement

Also called 'closing' — the final step in completing a real estate transaction where documents are signed, funds disbursed, and ownership transferred.

Settlement Agent

The person or company responsible for conducting the closing — coordinating documents, collecting and disbursing funds, and recording the deed.

Short Sale

The sale of a property for less than the amount owed on the mortgage, with the lender's agreement to accept the reduced payoff. Used as an alternative to foreclosure when the homeowner can no longer make payments.

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Simultaneous Issue Rate

A discounted rate for purchasing both an owner's and lender's title insurance policy from the same company at the same time.

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Special Warranty Deed

A deed that warrants title only against claims arising during the seller's period of ownership, not against prior claims.

Spread

The difference between two interest rates, such as the difference between the rate a bank pays on deposits and the rate it charges on loans, or the difference between a benchmark rate and a mortgage rate.

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Starter (Title)

A copy of a previously issued title insurance policy or title report on a property, used as a starting point for a new title search, often making the process faster and less expensive.

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Statute of Limitations

The maximum time period within which a legal action can be filed. In real estate, statutes of limitations vary by state and type of claim.

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Streamline Refinance

A simplified refinancing process with reduced documentation and underwriting requirements, available for FHA (FHA Streamline) and VA (IRRRL) loans.

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Subdivision

A tract of land divided into individual lots for sale or development, with streets, utilities, and common areas, typically governed by recorded covenants and an HOA.

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Subordination

The process of changing the priority of a lien or mortgage, placing it behind another lien. A subordination agreement makes one lien junior to another.

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Subrogation

The right of an insurer who has paid a claim to step into the shoes of the insured and pursue recovery from the party that caused the loss.

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Supplemental Search

An additional title search conducted after the original search to check for any new recordings or changes that may have occurred since the initial examination.

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Survey

A professional measurement and mapping of a property's exact boundaries, area, and location of structures, easements, and encroachments.

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Seller's Market

A real estate market condition where there are more buyers than available homes, giving sellers the advantage in negotiations on price and terms.

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Seller Financing

An arrangement where the property seller provides financing to the buyer instead of or in addition to a traditional mortgage from a bank or lender.

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Special Assessment

An additional charge levied by an HOA or local government for specific improvements or unexpected expenses beyond what regular dues or taxes cover.

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Satisfaction of Mortgage

A document recorded in public records when a mortgage has been paid in full, releasing the lender's lien on the property.

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Sewer Lateral

The underground pipe that connects a building's plumbing system to the public sewer main, typically running from the house to the street. The property owner is usually responsible for its maintenance and repair.

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Sinking Fund

A reserve fund set aside by a homeowners association for future major repairs and capital improvements, such as roof replacement, repaving, or elevator modernization.

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29 terms

Table Funding

A closing method where the loan is funded by the lender at the closing table (or the same day as closing), with the documents and funds handled simultaneously.

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Tax Certificate

A document from the county tax collector confirming the current status of property taxes — whether they are paid, unpaid, or delinquent — and the amounts due.

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Tax Lien

A legal claim placed on property by a government entity for unpaid taxes. Tax liens take priority over most other liens, including mortgages.

Teaser Rate

A temporarily low introductory interest rate on an adjustable-rate mortgage that is below the fully indexed rate, used to attract borrowers. The rate increases after the introductory period ends.

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Tenants in Common

A form of co-ownership where two or more persons hold separate, undivided interests in a property with no right of survivorship — each owner's share passes to their heirs, not the other owners.

Three-Day Right of Rescission

A federal right under the Truth in Lending Act that allows borrowers to cancel certain mortgage transactions (primarily refinances of a primary residence) within three business days of closing, for any reason.

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TILA

Truth in Lending Act — a federal law requiring lenders to clearly disclose the APR, total interest cost, and all loan terms so borrowers can make informed decisions.

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Timeshare

A form of shared property ownership where multiple buyers purchase the right to use a vacation property for a specific period each year.

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Title

The legal right to ownership of real property, including the right to possess, use, and dispose of the property. Title is evidenced by a deed.

Title Commitment

A document issued by the title company offering to issue a title insurance policy, subject to specified requirements, exceptions, and exclusions.

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Title Company

A company that searches property records, issues title insurance, and often serves as the closing agent for real estate transactions.

Title Defect

Any outstanding claim, lien, irregularity, or document error that could impair the owner's title or create doubt about ownership.

Title Insurance

Insurance protecting property purchasers and lenders against financial loss from defects in title, liens, and encumbrances that were not known at the time of closing.

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Title Search

A thorough review of public records — often spanning decades — to determine the status and history of a property's ownership, liens, easements, and encumbrances.

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Tort

A wrongful act or violation of a legal duty (other than a breach of contract) that causes harm or loss to another person, potentially resulting in civil liability.

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Township

A unit of land measurement used in the government survey system, typically a 6-mile-by-6-mile square (36 square miles) containing 36 sections of one square mile each.

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Tract

A defined area or parcel of land, often referring to a large piece of land that may be subdivided into smaller lots for development.

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Transfer Tax

A tax imposed by state or local government when real property is transferred from one owner to another, typically calculated as a percentage of the sale price or a flat rate per dollar of consideration.

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TRID

TILA-RESPA Integrated Disclosure rule — a 2015 CFPB regulation that combined older disclosure forms into the standardized Loan Estimate and Closing Disclosure used today.

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Trust Account

An account held by a title company, attorney, or broker in which funds are held in trust for the parties to a real estate transaction.

Trustee

A person or entity that holds and manages property or assets for the benefit of another party (the beneficiary). In a deed of trust, the trustee holds the property title until the loan is repaid.

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Truth in Lending Act (TILA)

A federal law enacted in 1968 that requires lenders to provide clear and standardized disclosure of loan costs and terms, enabling consumers to compare credit offers and make informed borrowing decisions.

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Title Abstract

A condensed history of all recorded documents and proceedings that affect the title to a specific parcel of real property.

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Title Exam

A thorough review and legal analysis of the title abstract and public records by a title examiner or attorney to identify any defects, liens, or issues affecting ownership.

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Townhouse

A multi-story residential unit that shares one or more walls with adjacent units but has its own entrance, and where the owner typically owns the land beneath the unit.

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Title Plant

A comprehensive, organized collection of title records maintained by a title company, indexed by property, to efficiently search titles without going to the county recorder each time.

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Title Vesting

The legal manner in which a property owner holds title, specifying the form of ownership such as sole ownership, joint tenancy, tenants in common, or trust.

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Title Opinion

A written statement by an attorney expressing a legal opinion on the status of a property's title based on a review of the abstract or title search, identifying any defects, liens, or encumbrances.

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Tax Abatement

A reduction or elimination of property taxes for a specified period, often offered by local governments as an incentive for new construction, renovation, or development in targeted areas.

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10 terms

Umbrella Policy

An insurance policy that provides additional liability coverage beyond the limits of your homeowner's, auto, or other underlying policies, typically in increments of $1 million.

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Underwater Mortgage

A situation where the outstanding mortgage balance exceeds the current market value of the property, also known as being 'upside down' on the loan.

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Underwriting

The lender's formal process of evaluating a borrower's creditworthiness, income, assets, and the property's value to determine whether to approve the loan.

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Underwriter

The person or company that evaluates and assumes the risk of insuring a title or mortgage. In title insurance, the underwriter issues the policy.

Update (Title)

A supplemental title search conducted to extend a previous title examination from its effective date to the current date, checking for new recordings.

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USDA Loan

A zero-down-payment mortgage program for properties in eligible rural and suburban areas, backed by the U.S. Department of Agriculture. Requires a guarantee fee instead of PMI.

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Usury

Charging interest on a loan at a rate that exceeds the maximum allowed by state law. Usury laws vary by state and are designed to protect borrowers from predatory lending.

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Utility Easement

A legal right granted to utility companies to access, install, maintain, or repair utility infrastructure (power lines, water pipes, gas lines) on private property.

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Unimproved Land

Land that has no buildings, structures, or site improvements such as roads, utilities, or grading. Similar to raw land but may have some basic infrastructure nearby.

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Uniform Residential Loan Application (URLA)

The standardized mortgage application form (Fannie Mae Form 1003/Freddie Mac Form 65) used by virtually all lenders to collect borrower information including income, assets, debts, and property details.

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10 terms

VA Entitlement

The amount the VA guarantees on a veteran's home loan, which determines the maximum loan amount available without a down payment. Veterans have both basic and bonus entitlement.

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VA Loan

A mortgage program for active-duty military, veterans, National Guard/Reserves, and eligible surviving spouses, guaranteed by the U.S. Department of Veterans Affairs. No down payment or monthly mortgage insurance required.

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Vacant Land

Land that is unoccupied and unused, which may or may not have utilities, roads, or other infrastructure available. Different from raw land, which has no improvements at all.

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Variance

Permission granted by a local government to deviate from zoning requirements for a specific property, such as building closer to the property line than normally allowed.

Vest

To give a person an immediate right to present or future possession or enjoyment of property. When title is vested, the owner has a confirmed legal right to the property.

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Vesting

The manner in which ownership title is held — methods include sole ownership, joint tenancy, tenants in common, community property, and trust ownership.

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Void

Having no legal force or effect. A void contract or deed is invalid from the beginning and cannot be enforced by either party.

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Voidable

A contract or deed that is valid until one party takes action to void it, typically due to fraud, duress, undue influence, or incapacity.

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Volume

A bound book of recorded documents maintained by the county recorder's office. Documents are identified by their volume (or book) and page number for reference.

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Vendee

The buyer or purchaser in a real estate transaction. The counterpart to the vendor (seller).

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9 terms

Waiver

The voluntary, intentional relinquishment of a known right, claim, or privilege.

Walk-Through

A final inspection of the property by the buyer, typically 24-48 hours before closing, to verify the property is in the agreed-upon condition and repairs have been completed.

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Warranty Deed

A deed containing one or more title covenants guaranteeing clear title from the grantor to the grantee — the strongest form of deed protection for the buyer.

Wet Funding

A closing where the loan is funded and all funds are disbursed on the same day that closing documents are signed, as opposed to dry funding where disbursement occurs later.

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Wetlands

Areas of land where the soil is saturated with water either permanently or seasonally, subject to strict federal and state regulations that may limit or prohibit development.

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Wire Fraud

A scheme targeting real estate transactions where criminals use spoofed emails or hacked accounts to redirect closing funds to fraudulent accounts.

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Wire Transfer

An electronic transfer of funds from one bank account to another. The primary method for transferring closing funds, requiring verified instructions.

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Wraparound Mortgage

A form of seller financing where the seller's existing mortgage remains in place and the buyer makes payments to the seller, who continues paying the original mortgage from those funds.

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Wood-Destroying Insect Report (WDI)

A formal inspection report documenting the presence or absence of termites, carpenter ants, powder post beetles, and other wood-destroying insects, often required by lenders before closing.

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1 term

X (Signature Mark)

A mark used in place of a signature by a person who is unable to write their name. In real estate documents, an X must typically be witnessed and notarized.

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4 terms

Year Built

The year a property was originally constructed, as recorded in public records. Year built affects property value, insurance rates, and potential issues like lead paint or outdated systems.

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Yield

The return on an investment expressed as an annual percentage. In mortgage lending, yield refers to the lender's effective return on a loan after accounting for fees, points, and other factors.

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Yield Spread Premium

A payment from a lender to a mortgage broker for delivering a loan with an interest rate above the par rate. Now largely regulated, it was a common practice that could increase borrowers' rates without their knowledge.

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Year-End Statement

An annual summary provided by your mortgage servicer (Form 1098) showing the total interest paid, property taxes paid from escrow, and mortgage insurance premiums for the tax year, used for income tax deductions.

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5 terms

Zero-Closing-Cost Mortgage

A mortgage where the lender covers all closing costs in exchange for a higher interest rate. No money is due at closing beyond the down payment, but the borrower pays more over the life of the loan.

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Zoning

Local government regulations that control how land in specific areas can be used — residential, commercial, industrial, agricultural, or mixed-use.

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Zoning Variance

A special exception granted by a local zoning board that allows a property owner to use their land in a way that deviates from the current zoning regulations.

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Zero-Lot-Line

A type of residential construction where a building is positioned on or very near the property boundary, maximizing usable yard space on one side. Common in townhomes and urban infill developments.

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Zone Change

A legislative act by a local government that officially changes the zoning classification of a parcel of land, such as from residential to commercial or from single-family to multi-family.

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ALTA Member Spotlight

First American Title

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First-Time Homebuyer? Start Here

Complete 5-phase roadmap with 27 expandable steps — from credit prep to closing day.