Real Estate Terms Definitions Flashcards

Real Estate Terms & Definitions Flashcards ForeclosureThe legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.Real Estate Commissions & Bureausensures that real estate licensees are professionally qualified and promote a fair and honest market environment for those involved in real estate transactions throughout the state.Private Mortgage Insurance (PMI)Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent on the first loan.BrokerMost realtors are "agents" who work under a "broker." some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (see the home loan library that discusses the different types of lenders).As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.Real Estate Settlement Procedures Act (RESPA) A consumer protection law that requires lenders to give borrowers advance notice of closing costs.EscrowAn item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.Age Requirement for a Real Estate AgentBe at least 18 or 19 years old depending on state Pre-QualificationThis usually refers to the loan officer's written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.RealtorA real estate agent, broker or an associate who holds active membership in a local real estate board that is

affiliated with the National Association of Realtors.

LienA legal claim against a property that must be paid off when the property is sold. A mortgage or first trust deed is considered a lien.MortgageA legal document that pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.Clear TitleA title that is free of liens or legal questions as to ownership of the property.Origination FeeOn a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points." One point equals one percent of the loan amount. On a conventional loan, the loan origination fee refers to the total number of points a borrower pays.Short Sale (aka Mortgage Short Sale)The sale of a property by a financially distressed borrower for less than the outstanding mortgage balance due where the proceeds from the sale will be used to repay the lender.The lender then accepts the less-than-full repayment of the mortgage (and the borrower is released from the mortgage obligation) in order to avoid what would amount to larger losses for the lender if it were to foreclose on the mortgage.

NARNational Association of Realtors: members are known as

Realtors. It is a North American trade association for those who work in the real estate industry.DepreciationA decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term which shows the declining monetary value of an asset and is used as an expense to reduce taxable income. Since this is not a true expense where money is actually paid, lenders will add back depreciation expense for self-employed borrowers and count it as income.Closingalso referred to as completion or settlement, is the final step in executing a real estate transaction. The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the ownership of the property is transferred to the buyer.Title CompanyA company that specializes in examining and insuring titles to real estate.Title InsuranceInsurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.Escrow AccountOnce you close your purchase transaction, you may have an escrow account or impound account with your lender.This means the amount you pay each month includes an

amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner's insurance when they come due. The lender pays them with your money instead of you paying them yourself.Escrow AgentIs a person or entity that holds property in trust for third parties while a transaction is finalized or a disagreement is