Real Estate Terms |
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| There are 942 entries in the glossary. | ||
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| Term | Definition | |
| Managing risk | The steps taken by an investor or manager to control or reduce investment risk. | |
| Manufactured Housing | Homes and dwellings that are not built at the home site and are moved to the location are considered manufactured housing. Manufactured housing units must be built on a permanent chassis at a factory and then transported to a permanent site and attached to a foundation. All manufactured homes must be built to meet standards set forth by the U.S. Department of Housing and Urban Development (HUD). The standards focus on such aspects as design, strength, energy efficiency, and fire resistance. Manufactured housing represents one of the fastest-growing housing markets in the United States. Nearly all of the mortgage products are available for owners of manufactured housing. | |
| Margin | For an adjustable-rate mortgage (ARM), the amount that is added to the index to establish the interest rate on each adjustment date, subject to any limitations on the interest rate change. | |
| Margin (also known as Spread) | The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. | |
| Market approach | The process of comparing the subject property to equivalent properties sold recently to arrive at an estimate of value for a property being appraised. | |
| Market interest rate | Interest rate currently demanded by lenders and investors. | |
| Market rent | The current rent that real estate would bring if available for rent. | |
| Market Value | You can get a good feel for the market value of a home by asking whether the listing agent compiled a "comparative market analysis" (CMA). This written report on the property examines comparable homes in the area that have recently been sold, are currently on the market, or are currently under contract. The CMA will help you figure out whether the asking price is in line with other comparable houses in the neighborhood. | |
| Marketable title | A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection. | |
| Master Association | A homeowners' association in a large condominium or planned unit development (PUD) project that is made up of representatives from associations covering specific areas within the project. In effect, it is a "second-level" association that handles matters affecting the entire development, while the "first-level" associations handle matters affecting their particular portions of the project. | |
| Maturity | The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable. | |
| Maximum Claim Amount | Your maximum claim amount is the lesser of two figures: (1) Your home's appraised value; (2) HUD 203(b) limit. The HUD 203(b) limit is the maximum loan amount that FHA will insure for residences in your geographical area. Check with your lender to get the latest figures for your area. | |
| Maximum Financing | A mortgage amount that is within 5 percent of the highest loan-to-value (LTV) percentage allowed for a specific product. Thus, maximum financing on a fixed-rate mortgage would be 90 percent or higher, because 95 percent is the maximum allowable LTV percentage for that product. | |
| Meander line | The approximate border of a natural body of water. | |
| Meandered | Area such as a lake on which taxes are not paid. | |
| Mechanic's lien | A lien that can be filed by mechanics or material suppliers; it is against real property created by statute for the purpose of securing payments for services performed or materials furnished in the construction or repair of buildings or making other improvements to land. | |
| Merged Credit Report | A credit report that contains information from three credit repositories. When the report is created, the information is compared for duplicate entries. Any duplicates are combined to provide a summary of a your credit. | |
| Meridian | Map lines running north and south to locate land under the governmental survey system. | |
| Metes and bounds | A method of legal description using measurements, boundaries, and directions. | |
| Mixed-Income | Refers to a resident mix that includes families with various income levels within one development. Mixed-income developments combine public housing families with other residents in order to decrease the economic and social isolation of these families. | |
| Modernization | Program authorized by the Housing Act of 1937 for upgrading low-rent public housing projects. | |
| Modification | The act of changing any of the terms of the mortgage. | |
| Money Market Account | A savings account that provides bank depositors with many of the advantages of a money market fund. Certain regulatory restrictions apply to the withdrawal of funds from a money market account. | |
| Money Market Fund | A mutual fund that allows individuals to participate in managed investments in short-term debt securities, such as certificates of deposit and Treasury bills. | |
| Monthly Fixed Installment | That portion of the total monthly payment that is applied toward principal and interest. When a mortgage negatively amortizes, the monthly fixed installment does not include any amount for principal reduction. | |
| Monthly housing costs | The total of a homeowner's mortgage loan pay-ment and expenses for utilities, general home repair, and upkeep. | |
| Monthly Payment Mortgage | A mortgage that requires payments to reduce the debt once a month. Your monthly mortgage payment is composed of four components. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. All four of these elements are often referred to as PITI. Your monthly mortgage payment due may be mailed to you in a book of coupons each year, or in a separate coupon every month. Ask your lender if the automated underwriting system is used, which may reduce costs associated with your mortgage. | |
| Moratium | A period of time when a lender may waive interest and/or principal payment on a loan. | |
| Mortgage | A legal document that pledges a property to the lender as security for payment of a debt. Simply put, the mortgage is the legal document that gives the lender a legal claim against your house should you default on your loan payments. The mortgage indicates that a specific amount of money will be loaned at a specific interest rate so that you can buy your home. Another way of thinking of the mortgage is that you have possession of the property but the lender has ownership until you have repaid your loan. The items stated in the mortgage include the homeowner's responsibility to: Comments: Need Help? | |
| Mortgage agreement | A document signed by a borrower and a lender giving the lender the right to take the borrower's house if the borrower does not repay the loan. | |
| Mortgage Banker | A company that originates mortgages exclusively for resale in the secondary mortgage market. Mortgage companies originate and service mortgages. In other words, they make loans to consumers. Mortgage companies then typically sell these loans to other lenders and investors. Some mortgage companies may be subsidiaries of depository institutions or their holding companies but do not receive money from individual depositors. | |
| Mortgage Bankers Association of America | National organization which seeks to improve mortgage practices and marketing activities. | |
| Mortgage Banking Companies | Mortgage companies originate and service mortgages. In other words, they make loans to consumers. Mortgage companies then typically sell these loans to other lenders and investors. Some mortgage companies may be subsidiaries of depository institutions or their holding companies but do not receive money from individual depositors. | |
| Mortgage Broker | An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. The National Association of Mortgage Brokers defines a mortgage broker as "an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages." There are an estimated 20,000 mortgage brokerage operations from coast to coast. They originate more than half of the residential loans in the U.S. A mortgage broker has professional expertise that can assist mortgage seekers in finding the best loan for them. The mortgage broker is also experienced in offering many applicable financing options for a consumer's specific needs. | |
| Mortgage commitment | A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house. | |
| Mortgage Insurance | A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency such as the Federal Housing Administration (FHA). Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan. | |
| Mortgage Insurance Premium | The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company. | |
| Mortgage insurance premium (MIP) | The fee paid by a borrower to FHA or a private insurer for mortgage insurance. | |
| Mortgage interest rate | The rate of interest in effect for the monthly payment due. | |
| Mortgage Life Insurance | A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the principal balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds. | |
| Mortgage margin | The set percentage the lender adds to the index value to determine the interest rate of an ARM. | |
| Mortgage note | A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time-, the mortgage note is secured by a mortgage. | |
| Mortgage note (also none as Promissory N | Mortgage note (also none as Promissory Note or Note) A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actua l amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment. | |
| Mortgage-Related Closing Costs | Mortgage-related closing costs generally are costs associated with your loan application. They vary, but here are some of the most common ones: | |
| Mortgagee | The lender in a mortgage agreement. | |
| Mortgagor | The borrower in a mortgage agreement. | |
| Multidwelling Units | Properties that provide separate housing units for more than one family, although they secure only a single mortgage. | |
| Multifamily Mortgage | A residential mortgage on a dwelling that is designed to house more than four families, such as a high-rise apartment complex. | |
| Multiple listing | Sharing of property sales listings by a number of real estate brokers with an agreement as to how the costs and commissions are to be split. | |
| Mutual Mortgage Insurance Fund (MMI) | One of four separate funds within the FHA Fund; provides funds for home mortgage insurance. | |
| National Association of Home Builders | An organization which represents home builders at all levels of government and provides information on new developments in the housing industry. It is also responsible for initiating the Homeowners Warranty Corporation which provides a guarantee of workmanship in residential homes. | |
| National Association of Housing and Rede | An organization which develops new techniques related to the finance, design, construction and management of housing. The NAHRO also plays a key role by consulting with Federal Agencies and the Congress on U.S. housing policy. | |
| National Association of Real Estate Brok | The oldest minority trade association in America founded in 1947 on the principle that all citizens have the right to equal housing opportunities, regardless of race, creed, or color. Internet Site: www.nareb.com | |
| National Association of Realtors (NAR) | An organization which represents the interests of realtors and promotes education, professional standards, and modern techniques in real estate practices. | |
| National Tenants Organization (NTO) | Organization which represents tenants in subsidized housing. | |
| Navigable water | A waterway capable of passage by watercraft; navigable if so designated by a U.S. or state map. | |
| Negative Amortization | A gradual increase in mortgage debt that occurs when the monthly payment is not large enough to cover the entire principal and interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization. | |
| Negative leverage | Situation where the cost of funds exceeds the rate of return on the real estate. | |
| Net Cash Flow | The income that remains for an investment property after the monthly operating income is reduced by the monthly housing expense, which includes principal, interest, taxes, and insurance (PITI) for the mortgage, homeowners' association dues, leasehold payments, and subordinate financing payments. | |
| Net lease | A lease agreement in which the tenant pays rent plus all taxes, insurance, repairs and other costs. | |
| Net Operating Income (NOI) | The property gross earnings less the operating expenses, but before interest and depreciation expenses are deducted. | |
| Net Present Value (NPV) | The sum of the present values of all future cash flows netted against the initial investment, discounted at a given rate. | |
| Net Worth | The value of all of a person's assets, including cash, minus all liabilities. | |
| Net-Net-Net Lease (NNN) | See tripple net lease. | |
| No Cash-Out Refinance | A refinance transaction in which the new mortgage amount is limited to the sum of the remaining balance of the existing first mortgage, closing costs (including prepaid items), points, the amount required to satisfy any mortgage liens that are more than one year old (if the borrower chooses to satisfy them), and other funds for the borrower's use (as long as the amount does not exceed 1 percent of the principal amount of the new mortgage). | |
| Nominal interest rate | The interest rate stipulated in an agreement. | |
| Non-recurring closing costs | See Closing costs. | |
| Nonconforming use | A use of land that lawfully existed before a zoning ordinance that is legally continued after the effective date of the ordinance, even though the use no longer conforms to the new zoning regulations. | |
| Nonliquid Asset | An asset that cannot easily be converted into cash. | |
| Nontraditional credit history | A record of credit performance shown with receipts and bill and check stubs from payments to landlords, utility companies, child-care providers, and others. A method for loan applicants who do not have a credit history from, for example, car-loan or credit card payments. | |
| Note | A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time. One way to think of the mortgage note is that it is a legal "IOU." Often called the promissory note, it represents your promise to pay the lender according to the agreed upon terms of the loan, including when and where to send your payment. The note lists any penalties that will be assessed if you don't make your monthly mortgage payments. It also warns you that the lender can "call" the loan -- demand repayment of the entire loan before the end of the term -- if you violate the terms of your mortgage. | |
| Note Rate | The interest rate stated on a mortgage note. | |
| Notice of Default | A formal written notice to a borrower that a default has occurred and that legal action may be taken. | |
| Nuisance | The wrongful interference by one person with the use and enjoyment of real estate owned by another. | |
| Occupancy Date | This provision is a good way to help ensure that your home will be ready for occupancy after the closing takes place. As part of your formal purchase offer, consider including a provision that holds the seller responsible for paying you rent should they not move out on or prior to the agreed-upon date. This allows you, for example, to use the money you receive to pay your own rent if you are leasing your current residence. | |
| Offer | When you make an offer on a house, it means you are making a formal bid to buy a home. You can work with your real estate sales professional to put together a written bid that abides by the laws in your state. Your offer should include such aspects as the address of the home, the sales price, the type of mortgage financing you will use to purchase the home, any personal property that might be included as part of the sale, and a target date for closing and occupancy. An earnest money deposit typically accompanies the offer. Your real estate sales professional can provide guidance on other elements of the offer. Once you have made an offer, the seller has the opportunity to accept, decline, or make a counter-offer. If your offer is accepted, you have a ratified sales contract. This contract is the starting point for working with an approved lender to get the mortgage that's right for you. | |
| One-Year Adjustable-Rate Mortgage | This adjustable-rate mortgage (ARM) offers a low initial interest rate with an interest rate that adjusts annually after the first year. The rate cap per annual adjustment is usually 2 percent; the lifetime adjustment caps can be 5 percent or 6 percent. This type of mortgage may be right for you if you anticipate a rapid increase in income over the first few years of your mortgage. That's because it lets you maximize your purchasing power immediately. It may also be the right mortgage for you if you plan to live in your home for only a few years. Advantages: | |
| Ongoing Costs | Home buyers should not forget that there are on-going costs associated with owning a home. They include, but are not limited to: | |
| Open-end mortgage | A mortgage that provides for the borrowing of additional funds. | |
| Operating expenses | Such as real estate taxes, insurance premiums, etc. | |
| Operating ratio | Ratio of operating expenses to effective gross income. | |
| Opportunity cost | The "cost" of selecting one alternative is the benefit foregone from the next best alternative. | |
| Option | A Contract given by the owner of a property to another person, giving the latter a right to buy or lease the property at a certain price within a specified period of time. | |
| Optionee | A person who holds an option. | |
| Optionor | An owner who gives an option to another person. | |
| Original Principal Balance | The total amount of principal owed on a mortgage before any payments are made. | |
| Origination | The process that a lender goes through to get complete and correct informa-tion about a loan applicant's income and credit. | |
| Origination Fee | A fee paid to a lender for processing a loan application. The origination fee is stated in the form of points. One point is 1 percent of the mortgage amount. The loan origination fee covers the administrative costs of processing the loan. It is often expressed in points. One point is 1 percent of the mortgage amount. For example, a $100,000 mortgage with a loan origination fee of 1 point would mean you pay $1,000. | |
| Overhang | The portion of a roof extending beyond the walls. | |
| Owner Financing | A property purchase transaction in which the property seller provides all or part of the financing. | |
| Package mortgage | A mortgage that includes personal property as part of the security. | |
| Partial Payment | A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan. | |
| Partially amortized | The payments do not repay the loan over its term and thus a lump sum mortgage loan (balloon) is required to repay the loan. | |
| Participation mortgage | A loan in which two or more lenders participate. | |
| Partnership | An association of two or more persons to carry on a business for profit as co-owners. | |
| Party wall | A wall erected on the line between two adjacent properties for the use of both parties. | |
| Payment cap | A provision of some ARMs limiting the amount by which a borrower's payments may increase regardless of any interest rate increase; may result in negative amortization. See Adjustable-rate mortgage. | |
| Payment Change Date | The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment adjustable-rate mortgage (GPARM). Generally, the payment change date occurs in the month immediately after the adjustment date. | |
| Percentage lease | A lease in which the rent amount is based on a percentage of gross sales (monthly or annually) made by the tenant. | |
| Percentage rent | The additional rent (over a base amount) paid by tenants to owners based on tenant sales over a specified dollar amount. | |
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| Glossary V2.0 | ||
