Real Estate Vocabulary Guide to Passing the PSI Real Estate Exam

Real Estate Vocabulary (Guide to Passing the PSI Real Estate Exam) Flashcards closingThis has different meanings in different states. In some states a real estate transaction is not consider "closed" until the documents record at the local recorders office. In others, the is a meeting where all of the documents are signed and money changes hands.breach of contractFailure, without legal excuse, of one of the parties to a contract to perform according to the contract.amortizationThe liquidation of a financial burden by installment payments, which include principal and interest. The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off in the specified time.bill of saleA written document that transfers title to personal property.For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require it (in addition to other items) to help document this source of funds.air rightsThe right to use the open space above one's property. It can be sold to build a sky-walk or for the utility company to erect power lines, adjustment dateThe date the interest rate changes on an adjustable-rate mortgage.assumptionThe term applied when a buyer assumes the seller's mortgage.brokerUsually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. As a normal definition, anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.actual noticeExpress information or fact; that which is known; actual knowledge.accessionTitle to improvements or additions to real property is acquired as a result of the accretion of alluvial deposits along the banks of streams or as a result of the annexation of fixtures.accrued depreciationThe actual depreciation that has occurred to a property at any given date, the difference between the cost of

replacement new (as of the date of the appraisal) and the present appraised value.

air lotA designated airspace over a piece of land, like suface property, may be transferred.Credit historyA record of an individual's repayment of debt. Credit histories are reviewed my mortgage lenders as one of the underwriting criteria in determining credit risk.alluvionThe actual soil increase resulting from accretion.avulsionA sudden tearing away of land by the action of natural forces.certificate of depositA time deposit held in a bank which pays a certain amount of interest to the depositor.closing costsNon-recurring are any items which are paid just once as a result of buying the property or obtaining a loan."Pre-paids" are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring items and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.amendmentsChanges to previously approved and adopted written agreements.conventional loanLoan that is not insured or guaranteed by a government agency.amenitiesNeighborhood facilities and services that enhance a property's value, outside of the property (swimming pools, three-car garages).appraised valueAn opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in question, the appraisal usually comes out at the purchase price.clear titleIs free of liens or legal questions as to ownership of the property.conveyanceA written instrument that evidences transfer of some interest in real property from one person to another.applicationThe form used to apply for a mortgage loan, containing information about a borrower's income, savings, assets, debts, and more.comminglingThe illegal act of a real estate broker who mixes the money of other people with that of his or her own; brokers are required by law to maintain a separate trust account for other parties' funds held temporarily by the broker.blockbustingIllegal practice of inducing homeowners to sell their properties by making representations regarding the entry of minority persons into the neighborhood.

alienation clauseClause in a mortgage instrument that does not allow the borrower to sell (without lender approval) on assumption or contract-for-deed.biweekly mortgageA mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a thirty year mortgage.acceleration clauseA provision in a written mortgage, note, bond, or conditional sales contract that in the even of default, the whole amount of the principal and the interest may be declared due and payable at once.acknowledgementA declaration made by a person to a notary public or other pubic official authorized to take acknowledgments that an instrument was executed by his or her as a free and voluntary act.brokerageThe business of buying and selling for another for a commission.chain of titleAn analysis of the transfers of title to a piece of property over the years.cooperative (Co-op)A type of multiple ownership in which the residents of a multiunit housing complex own shares in the corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.boycottingTwo or more businesses conspire against other businesses to reduce competition.capital gainProfit earned from the sale of an asset.base lineSet of imaginary lines running east and west used by surveyors under the rectangular survey system (or government survey method) of property description.annual percentage rate (APR)This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage.It works sort of like this, but not exactly, so only use this as

a guideline: deduct the closing costs from your loan

amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. Because you are using the same payment on a smaller amount, it is always higher than the actual not rate on your loan.appraisalA written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar homes nearby.