An employer-sponsored investment plan that allows
individuals to set aside tax-deferred income for retirement
or emergency purposes. 401(k) plans are provided by
employers that are private corporations. 403(b) plans
are provided by employers that are not for profit
Some administrators of 401(k)/403(b) plans allow for
loans against the monies you have accumulated in these
plans. Loans against 401K plans are an acceptable
source of down payment for most types of loans.
Abstract of title
The condensed history of a title to a particular parcel
of real estate, consisting of a summary of the original
grant and all subsequent conveyances and encumbrances
affecting the property and a certification by the
abstractor that the history is complete and accurate.
The joining, reaching, or touching of adjoining land.
Abutting pieces of land have a common boundary.
The clause in a mortgage or deed of trust that can
be enforced to make the entire debt due immediately
if the borrower defaults on an installment payment
or other covenant.
An offeree’s consent to enter into a contract
and be bound by the terms of the offer.
Accessed value is the valuation placed on property
by a public tax assessor for purposes of taxation.
Acquiring title to additions or improvements to real
property as a result of the annexation of fixtures
or the accretion of alluvial deposits along the banks
The increase or addition of land by the deposit of
sand or soil washed up naturally from a river, lake
On a closing statement, items of expense that are
incurred but not yet payable, such as interest on
a mortgage loan or taxes on real property.
A formal declaration made before a duly authorized
officer, usually a notary public, by a person who
has signed a document.
A measure of land equal to 43,560 square
feet, 4,840 square yards, 4,047 square meters, 160
square rods or 0.4047 hectares.
The legal process that results in the tenant's
being physically removed from the leased premises.
Express information or fact; that which is
known; direct knowledge.
Additional principal payment
A payment by a borrower of more than the scheduled
principal amount due in order to reduce the remaining
balance on the loan.
Adjustable-Rate Mortgage (ARM)
A loan characterized by a fluctuating interest
rate, usually one tied to a bank or savings and loan
association cost-of-funds index.
The financial interest that the Internal Revenue Service
attributes to an owner of an investment property for
the purpose of determining annual depreciation and
gain or loss on the sale of the asset. If a property
was acquired by purchase, the owner's basis is the
cost of the property plus the value of any capital
expenditures for improvements to the property, minus
any depreciation allowable or actually taken. This
new basis is called the adjusted basis.
The date on which the interest rate changes for an
adjustable-rate mortgage (ARM).
The period that elapses between the adjustment dates
for an adjustable-rate mortgage (ARM).
On an adjustable rate mortgage, the time between changes
in the interest rate and/or monthly payment, usually
one, three or five years
Money that the buyer and sellers credit each other
at the time of closing. Often includes taxes and down
A man/woman appointed by a court to settle the estate
of a deceased person when there is no will. Contrast
Ad val orem tax
A tax levied according to value, generally
used to refer to real estate tax. Also called the
The actual, open, notorious, hostile and
continuous possession of another's land under a claim
of title. Possession for a statutory period may be
a means of acquiring title.
Affidavit of title
A written statement, made under oath by a seller or
grantor of real property and acknowledged by a notary
public, in which the grantor
(I) identifies himself or herself and indicates marital
(2) certifies that since the examination of the title
on the date of the contracts no defects have occurred
in the title and
(3) certifies that he or she is in possession of the
property (if applicable).
An entity related to a Seller that is subject to common
operating control and that is operated as part of
the same system or enterprise. The Seller typically
owns less than a majority of the voting stock or the
Seller and the entity are subsidiaries of a third
A detailed analysis of your ability to afford the
purchase of a home. An affordability analysis takes
into consideration your income, liabilities, and available
funds, along with the type of mortgage you plan to
use, the area where you want to purchase a home, and
the closing costs that you might expect to pay.
Subsidized secondary financing or other financial
assistance provided under an established, documented
secondary financing or financial assistance program
that has formal procedures in place to provide applicant
qualification, loan processing, and loan program administration
on an ongoing basis.
The relationship between a principal and
an agent wherein the agent is authorized to represent
the principal in certain transactions.
Agency coupled with an interest
An agency relationship in which the agent
is given an estate or interest in the subject of the
agency (the property).
An authorized person who manages or transacts business
for another. Laws governing real estate--especially
relating to agents--vary considerably from state to
state. While some standardization has been achieved,
it is best to check the particulars in each state.
Agreement of sale
Known by various names, such as contract of purchase,
purchase agreement, or sales agreement according to
location or jurisdiction. A contract in which a seller
agrees to sell and a buyer agrees to buy, under specific
terms spelled out in writing and signed by both parties.
A designated airspace over a piece of land.
An air lot, like surface property, may be transferred.
The right to use the open space above a property,
usually allowing the surface to be used for another
The act of transferring property to another.
Alienation may be voluntary, such as by gift or sale,
or involuntary, as through eminent domain or adverse
The clause in a mortgage or deed of trust
that states that the balance of the secured debt becomes
immediately due and payable at the lender's option
if the property is sold by the borrower. In effect
this clause prevents the borrower from assigning the
debt without the lender's approval.
A system of land ownership in which land
is held free and clear of any rent or service due
to the government; commonly contrasted to the feudal
system. Land is held under the allodial system in
the United States.
Non monetary benefits and satisfactions derived from
property ownership, such as a pleasant view, pride
in home ownership, etc.
American Land Title Association (ALTA) policy
A title insurance policy that protects the
interest in a collateral property of a mortgage lender
who originates a new real estate loan.
A modification to an existing contract, mutually agreed
to by all parties. Examples might include a change
in the pruchase price due to a low appraisal, or a
change in the closing date.
The operation of paying off indebtedness, such as
a mortgage, by installments. The conventional amortization
periods are15 or 30 years.
A timetable for payment of a mortgage loan. An amortization
schedule shows the amount of each payment applied
to interest and principal and shows the remaining
balance after each payment is made.
The amount of time required to amortize the mortgage
loan. The amortization term is expressed as a number
of months. For example, for a 30-year fixed-rate mortgage,
the amortization term is 360 months.
To repay a mortgage with regular payments that cover
both principal and interest.
A loan in which the principal as well as
the interest is payable in monthly or other periodic
installments over the term of the loan.
A mortgage requiring periodic payments that include
both interest and principal.
The amount that is charged annually for having a line
of credit available. Often charged regardless of whether
or not you use the line.
Annual mortgagor statement
A report sent to the mortgagor each year. The report
shows how much was paid in taxes and interest during
the year, as well as the remaining mortgage loan balance
at the end of the year.
Annual Percentage Rate (APR)
The relationship of the total finance charges
associated with a loan. This must be disclosed to
borrowers by lenders under the Truth-in-Lending Act.
An amount paid yearly or at other regular intervals,
often on a guaranteed dollar basis.
The appraisal principle that holds that value
can increase or decrease based on the expectation
of some future benefit or detriment produced by the
Laws designed to preserve the free enterprise
of the open marketplace by making illegal certain
private conspiracies and combinations formed to minimize
competition. Most violations of antitrust laws in
the real estate business involve either price-fixing
(brokers conspiring to set fixed compensation rates)
or allocation of customers or markets (brokers agreeing
to limit their areas of trade or dealing to certain
areas or properties).
An initial statement of personal and financial information,
which is required to approve your loan.
Fees that are paid upon application. Charges for property
appraisal and a credit report are usually included
in the application fee.
An estimate of the quantity, quality or value of something.
The process through which conclusions of property
value are obtained; also refers to the report that
sets forth the process of estimation and conclusion
An estimate of the present worth.
A person qualified by education, training, and experience
to estimate the value of real property and personal
An increase in the worth or value of a property due
to economic or related causes, which may prove to
be either temporary or permanent; opposite of depreciation.
A right, privilege or improvement belonging to, and
passing with, the land.
An easement that is annexed to the ownership
of one parcel and allows the owner the use of the
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise
or lower the mortgage interest rate according to a
set index, such as six-month Treasury bills.
Asking (List) price
The price placed on property for sale.
The combining of two or more adjoining lots into one
larger tract to increase their total value.
The valuation placed on property by a public tax assessor
for purposes of taxation.
The imposition of a tax, charge or levy,
usually according to established rates.
Report that appraisers use to record property values,
marketability analyses and any pertinent comments
regarding the subject property. Assessment reports
are classified as appraisal reports or inspection
A local government official who determines the value
of the property for taxation purposes.
Anything of monetary value that is owned by a person.
Assets include real property, personal property, and
enforceable claims against others (including bank
accounts, stocks, mutual funds, and so on).
A person to whom a property right is transferred.
For example, an assignee may take over a lease from
a tenant who wants to permanently move out before
the lease expires. The assignee takes control of the
property and assumes all the legal rights and responsibilities
of the tenant, including payment of rent. However,
the original tenant remains legally responsible if
the assignee fails to pay the rent.
The transfer in writing of interest in a
bond, mortgage, lease or other instrument.
An existing mortgage that can be taken over by the
buyer on the same terms given to the original borrower.
The transfer of the seller’s existing mortgage
to the buyer. See assumable mortgage.
A provision in an assumable mortgage that allows a
buyer to assume responsibility for the mortgage from
the seller. The loan does not need to be paid in full
by the original borrower upon sale or transfer of
The fee paid to a lender (usually by the purchaser
of real property) resulting from the assumption of
an existing mortgage.
Assumption of mortgage
Acquiring title to property on which there
is an existing mortgage and agreeing to be personally
liable for the terms and conditions of the mortgage,
The act of taking a person's property into
legal custody by writ or other judicial order to hold
it available for application to that person's debt
to a creditor.
One who holds a power of attorney from another to
execute documents on behalf of the grantor of the
Attorney's opinion of title
An abstract of title that an attorney has
examined and has certified to be, in his or her opinion,
an accurate statement of the facts concerning the
Something on a piece of property that attracts children
but also endangers their safety. For example, unfenced
swimming pools, open pits, farm equipment and abandoned
refrigerators have all qualified as attractive nuisances.
A public sale of property to the highest bidder.
A clause in a listing agreement that states
that the agreement will continue automatically for
a certain period of time after its expiration date.
In many states, use of this clause is discouraged
The sudden tearing away of land, as by earthquake,
flood, volcanic action or the sudden change in the
course of a stream.