Kelly Real Estate

Serving Decorah and Northeast Iowa for 30 years.

Real Estate Glossary

Abstract of Title
An abstract of title is the condensed history of 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.
Addendum
An addition to a contract.
Amendment
A change either to alter add to or correct part of an agreement without changing its principal idea or essence.
Amortization Schedule
The time table of the payments to be made on an amortized loan showing the following information: the date and amount of each payment, the amount of each payment which will be applied to interest and to principal and the balance still outstanding on the loan after the payment is made.
Annual Percentage Rate
A rate designed to allow for the comparison of one type of loan to another. The APR reflects the cost of your mortgage loan as a yearly rate. It will often be higher than the interest rate designated on the note because it includes such items as interest, mortgage insurance, and loan origination fee (points).
Application Fee
The fees the lender charges the applicant. This fee may include costs of a property appraisal and a credit report on the applicant.
Appraisal
A written analysis made by a qualified person setting forth an estimation of the value of property, usually after an inspection of the property. The appraisal usually determines the amount of money that a lender will loan on the property.
Assessed Valuation
The value assigned to a property by a public tax assessor for purpose of taxation. This valuation does not necessarily correspond to the market valuation.
Balloon Mortgages
Usually a short-term fixed-rate loan that involves small payments for a certain period of time with the balance due in a single, large payment at a time specified in the contract.
Basis Point
One basis point equals 1/100 of 1% in interest. Basis points are used by Lenders to measure interest rates in yield calculations.
Borrower
A person or company (also known as Mortgager) who receives funds in the form of a loan in exchange for a written promise to repay principal with interest.
Bridge Loan
A loan used to fill a gap in financing. It is usually a temporary mortgage to help a borrower obtain the necessary cash funds to purchase another home, prior to the sale of their currently owned home.
Built-Ins
The features constructed as part of the house such as cabinets, dishwashers, and other appliances.
Closing
The culmination of a real estate transaction in which documents are signed and recorded, funds are exchanged and the property transferred.
Closing Costs
Expenses (over and above the price of the property) incurred by buyers and sellers in connection with the closing of a mortgage loan. This usually involves an origination fee, discount points, appraisal, credit report, attorney's fees, survey, and prepaid items such as taxes and insurance escrow payments.
Closing Statement
A document that details an account of the funds between a buyer and seller received and paid at the closing.
Collateral
Additional security for a debt, such as the real estate pledged as securityfor a mortgage. The lender has the right, if the debt is not paid, to sell the collateral to recoup the outstanding principal and interest on the loan.
Comparable Sales
Condominium
A development where individuals have title to their own dwelling units in a multi-family structure with joint ownership of common areas of structure and the land.
Contingency
A condition that must occur before a contract is legally binding. For example: The sale of a house is contingent upon the buyer obtaining financing.
Conventional Mortgage
A mortgage loan made by an institutional lender without the inclusion of government guarantees such as VA or FHA loans.
Convey/Conveyance
The process of transferring ownership of property from one party to another.
Counter Offer
A rejection of an offer by a Seller or Buyer along with an agreement to Sell or Buy the property on terms differing from the original offer.
Deed
The legal document conveying title of property from one owner to another.
Down Payment
The intital investment in purchasing a property--usually a percentage of the sale price that the buyer pays in cash and does not finance with a mortgage.
Earnest Money
A sum of money given to bind a sale of real estate in advance of a larger amount being expected in the future. Also known as a deposit.
Equity
A determination of the value a property owner has in real estate once the obligations and costs of selling are deducted.
Escrow
In general, a procedure whereby a disinterested third party handles legal documents and/or funds on behalf of a seller or buyer. These funds are set aside in an escrow account and held in trust usually to pay taxes and insurance on real estate.
Grantee
The person(s) to whom an interest in real property is conveyed.
Grantor
The person(s) conveying (selling) an interest in real estate.
Fixed Rate Mortgage
The interest rate you pay and the monthly principal and interest payments are agreed upon from the outset and will not change throughout the entire term of the mortgage.
A land description consists of the written words which delineate a specific piece of real property. Also known as a "Legal Description". In the written transfer of real property, it is universally required that the instrument of conveyance (deed) include a written description of the property.
Lien
A legal claim or security instrument against property for moneys owed.
Loan Origination Fee
A one-time set-up fee charged by the lender to cover the direct costs of arranging the loan.
Lock-In Rate
Some lenders will obtain a commitment from a lender to guarantee a certain interest rate or other loan feature for a set period of time, usually from thirty days to one year for a prepaid fee. This can protect a borrower from interest rates rising while the application and closing takes place.
Mortgage
A legal document secured against property to the lender for payment of a debt.
Note
A legal document that obligates a borrower to repay a debt, such as a mortgage note.
P.I.T.I.
This stands for Principal, Interest, Taxes and Insurance. It is representative of the borrower's actual monthly mortgage-related expenses.
Points
A one-time fee you pay the bank for originating your loan. A charge equal to 1% of the loan amount which increases or equalizes the lender's yield or rate of return. Lenders offer various rate/point combinations.
Power of Attorney
A legal document that authorizes another person to act on one's behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
Principal
It is the amount of the mortgage debt that is presently owed and remains unpaid. The principal is the part of the monthly payment that reduces the remaining balance of a mortgage.
Prorate
The seller and buyer allocate their proportionate share of an obligation paid or due. For example, real property taxes or condominium fees may be prorated.
Quit Claim Deed
A document that releases the deeding or giving up on one's interest in a property to another party.
Realtor
A professional real estate broker or associate who is an active member in a local real estate board that is affiliated with the National Association of Realtors. Not every broker is a realtor.
Refinance
To obtain or replace an existing mortgage with a new mortgage loan on property already owned. The new mortgage may have different terms thatn the old one.
Recording
The filing of documents affecting real property with the county recorder for public record.
Second Mortgage
A mortgage loan that is registered on title after a first mortgage is already recorded. It is behind the first mortgage in priority. In the event of default and sale of the property, the second mortgagee will only be be paid if there are funds left after the payment of the first mortgagee.
Secondary Mortgage Market
A market where the primary lenders can sell packaged home loans to obtain more funds to make additional loans.
Special Assessment
When a government unit funds a public project that directly, uniquely and specifically "benefits" (increases) the value of certain parcels of real estate (i.e., street lights, pavement, sidewalks, etc.) it may levy a charge against each specifically benefitted property as compensation for the benefit.
Title
A legal document evidencing proof of ownership.
VA Loans
Mortgage loans to veterans by banks, savings and loans, or other lenders that are guaranteed by the Veterans' Administration, enabling veterans to buy a residence with little or no money down.
Warranty Deed
A general warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee (buyer).