Real Estate Glossary

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Abstract (of title)
A summary of public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any defects which must be cleared before a buyer can be issued a clear and insurable title.

Acceleration Clause
Stipulation in the mortgage that the entire unpaid balance of the debt may become due and payable if default of expressed conditions should occur.

Account Number
The identification number for a specific property. In some regions of the country, this number is used for tax assessment purposes. Also referred to as the assessor's parcel number, folio number and UPC number in different areas.

Acknowledgment
Formal declaration before a public official (typically a notary) that one has signed a document.

Acre
A measure of land equal to 43,560 square feet.

Adjustable-Rate Mortgage
A loan with an interest rate that changes periodically in keeping with a current index like one-year treasury bills. The rate of interest is the sum of the index plus a margin (the margin stays fixed for the life of the loan).

Adjustment Date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment Period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

Agent
A representative authorized to act on behalf of another in dealings with third parties.

Agreement of Sale
An agreement between parties for the sale of real estate. In some areas it is also known as a purchase agreement or land contract.

Amortization
The method of repayment whereby, the amount you borrow is repaid gradually through regular blended monthly payments of principal and interest.

Amortization Schedule
A table showing the amounts of principal and interest due and the remaining outstanding balance with each payment to be made on a mortgage.

Amortization Term
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.

Annual Debt Service
The amount of money required each year for the payment of all mortgage interest and principal.

Annual Membership
Amounts that may be charged annually for having a line of credit available. Often charged regardless of whether or not you use the line. Also referred to as a "participation fee".

Annual Percentage Rate (APR)
A term used in the Federal Truth-In-Lending Act that expresses as a percentage the measure of the cost of credit expressed as a yearly rate. Includes such items as interest, mortgage insurance, and loan origination. This is one way to compare loan programs offered by different lenders.

Application
A form, commonly referred to as a 1003 form, used to apply for a mortgage and to provide information regarding a prospective mortgagor and the proposed security.

Appraisal
A report made by a qualified appraiser that sets forth an opinion or estimate of value of a parcel of real estate. In general, the value is based on three approaches: cost, market, and income.

Appraised Value
Estimated worth of a property determined by someone qualified in valuation.

Appraiser
A person qualified by education, training, and experience to estimate the value of real property and personal property. Appraisers render a "professional" service.

Appreciation
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Arrears
A payment made after its due date. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.

Assessed Value
Worth established for each unit of real property for tax purposes by a county property appraiser.

Assessed Value Ratio
Ratio of actual sale price to assessed value. This shows the percentage that the sale price is over or under the assessed value. For example, a ratio of 1.1 means the sale price is 10% more than the assessed value. An average of 3 to 4 assessed value ratios can be applied to a subject property to approximate the sale price of that property.

Assessment
The imposition of a tax or charge according to a preset rate; the allocation of the proportionate individual share of a common expense in a condo or co-op building.

Assessor's Parcel Number
The assessor's identification number for a specific property. In some regions of the country, this number is used for tax assessment purposes. Also referred to as the account number, folio number and UPC in different areas.

Asset
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, etc).

Assignment
The transfer of the rights and obligation under a contract from one person or entity to another.

Assumable Mortgage
A mortgage whose terms permit it to be taken over ("assumed") by a party other than the original borrower. Lenders generally require credit review of the new borrower and may charge a fee for the assumption.

Assumption
Agreement by a buyer to assume the liability and repaying of an existing mortgage.

Assumption Clause
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 property.

Assumption Fee
The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

Attached Home
A home that has one or more common walls adjoining another home. Condominiums and duplexes are examples of attached homes.

Attorney In Fact
One who holds a Power of Attorney granted by another which authorizes the holder ("attorney in fact") to execute certain documents on behalf of the grantor.