Welcome to our glossary of terms. The home buying process is an extensive one and regardless of how well you do your homework to prepare yourself for the endeavor, you will still very likely run into vocabulary that's simply foreign to you. There's a lot of shop talk in this industry that is simply not used in otherwise everyday speech. Feel free to take the time to familiarize yourself some of it with this compendium. We at the Ring the Doorbell Team want to be viewed as a source of information so please use this as a reference should a term cross your path that you're unsure about.
Addendum - An addendum is a document added to the parties' purchase and sales agreement that includes additional contract terms not included in the agreement.
Agent - An agent is a person or business that acts on behalf of another person or business.
Amortization - Amortization refers to the repayment of your mortgage loan's principal and interest over time through monthly installments.
Appraisal - An appraisal is a licensed appraiser's opinion of a home's market value based on comparable recent sales of homes in the neighborhood.
APR - Annual Percentage Rate is a number that represents the total cost of a loan as a percentage, which allows you to compare total loan costs when deciding on a mortgage loan. APR takes into account your interest rate and all associated fees and rebates, spreads them out over the life of the mortgage, and expresses the total cost as a percentage rate.
ARM - (see also VRM) An Adjustable-Rate Mortgage is a mortgage loan in which the interest rate is not fixed but instead is adjusted at specific intervals during the life of your loan. For example, a 30-year loan with a 5/1 ARM means that you'll pay a fixed interest rate for five years, and then your rate will change each year after that for the remainder of the loan. The most common ARM loans are for five, seven, or ten years.
Attached Home - A category of housing that is defined by multiple living areas in a single shared structure (i.e. a row of townhouses).
Backup Offer - When a home has a status of "Backup Offer," it means the seller has accepted an offer from a buyer but is still accepting offers from other buyers. Sellers usually accept backup offers if they think the current offer may fall through.
Balloon Mortgage - A mortgage loan that usually requires monthly payments over a relatively short period of time (usually a number of months or a few years) after which the remaining mortgage balance is due in one large lump-sum or "balloon" payment. Balloon mortgages sometimes feature lower interest rates because the loan is fully repaid or refinanced within a shorter period of time than traditional 30-year mortgage loans.
Bill of Sale - (see also PSA) A written contract to buy and sell real estate which contains all of the agreed-upon terms for the transaction, such as the final sale price.
BPO - Broker Price Opinion, this is a collection of highly detailed market data collected by the listing agent and used by asset managers to derive list prices for their properties.
Bridge Loan - (see also Swing Loan) A short-term loan intended to "bridge" a gap in available financing. For example, buyers may use a bridge loan to purchase another home before they are able to sell their current one.
Broker - An agent who functions as an intermediary between two or more parties in negotiating agreements.
Buyer/Broker - The Buyer/Broker form is a legal document that establishes a fiduciary relationship between the client and the agent acting on their behalf.
Buyer's Market - A buyer's market is one in which the supply of homes significantly exceeds demand. Since supply is greater than demand, the price of homes is pushed lower, making them more attractive to buyers. In contrast, a seller's market is one in which there are more buyers and relatively fewer homes for sale, which leads to multiple-offer situations that drive up prices.
Cash Deal - A cash deal is one where there is no lender involved and the property is bought and paid for outright.
CC&Rs - Covenants, Conditions & Restrictions are limits and rules placed on a group of homes or condominium complex by a builder, developer, neighborhood association, or HOA. When living in a home or condominium that is restricted by CC&Rs, an owner gives up certain freedoms in order to be part of a shared community. For example, most condominium building associations have smoking restrictions, parking and noise level rules, aesthetic guidelines for paint color, height restrictions, and minimum and maximum square footage requirements. Sometimes buyers can get access to the documents before making an offer, but in most cases, buyers get a complete list of CC&Rs and community restrictions promptly after signing the initial Purchase and Sale Agreement.
CD - The Closing Disclosure is a final statement of loan terms and closing costs that the lender must provide to the borrower at least three business days before closing in most transactions that involve a loan. The statement lists the loan terms, projected monthly payments, cash necessary to close the sale, and a detailed accounting of the closing costs. The three-day review period allows the borrower time to review the Closing Disclosure and compare it with the Loan Estimate, which the borrower should have received when he or she applied for the loan.
CDIF - Consumer Disclosure Information Form, this document explains dispute resolution over a variety of issues that may arise in purchasing property. It advises that you mediate before you legislate.
CFPB - The Consumer Financial Protection Bureau is an agency of the United States government responsible for consumer protection in the financial sector.
Chain of Title - The sequence of historical transfers of title to a property.
Clear Title - Phrase used to state that the owner of real property owns it free and clear of encumbrances.
Client - A customer with whom a fiduciary relationship has been established.
Closing - (see also Settlement) Closing occurs when the buyers, sellers, and their agents sign the closing documents of a transaction, and the closing agent or attorney facilitates payment of all closing costs.
Closing Costs - The expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal, lender fees, and other services carried out during closing. For buyers taking out a mortgage loan, closing costs are listed on the closing disclosure statement the buyer should receive from the lender at least three days before closing. Closing cost amounts vary depending on the buyer's loan program, but they typically range from 2%–5% of the purchase price. The buyer's down payment must also be paid at closing, but it is listed separately from the closing costs.
Clouded Title - This is a term used for when there is some type of a standing adverse issue with the property's title. Usually some type of lien, this is when someone else can lay claim to the property at hand in some way.
CMA - A Comparative Market Analysis is an evaluation of a home's value based on similar, recently sold homes (called comparables) in the same neighborhood. A comparative market analysis is not the same as an appraisal, which is performed by a licensed appraiser.
COA - Condominium Owners Association. Residential condominiums are frequently constructed as apartment buildings, but there has been an increase in the number of "detached condominiums", which look like single-family homes but in which the yards, building exteriors, and streets are jointly owned and jointly maintained by a COA.
Contingency - An event or condition that must occur before the deal can close. Typically, a buyer will reserve the right to recover their earnest money if the contingency is not satisfied.
Conventional Loan - A conventional loan is a mortgage loan that is not insured or guaranteed by any government program. It is the most common type of mortgage loan.
Comparables - Comparables or "comps" are homes of similar size, condition, age, and style that recently sold in a certain neighborhood. Evaluating comparable homes and their prices can help determine a fair market value for a home.
Condominium - Condo for short, a condominium is an apartment house, office building, or other multiple-unit complex, the units of which are individually owned. Each owner receives a recordable deed to the individual unit purchased, including the right to sell, mortgage, etc., that unit and sharing in joint ownership of any common grounds.
Condo Owners Association or Property Owners Association Acknowledgement - Rather self explanatory, this document establishes weather the property in question is a participant of a COA or POA
Condo Owners Association or Property Owners Association Receipt Form - If applicable, this document acknowledges the receipt of the condo package by the buyer.
Condo Package - A comprehensive collection of the CC&Rs of a given association. Usually contains enough paper to fill a large 3 ring binder.
Consumer Credit Protection Act - Enacted May 29, 1968, it's composed of several titles relating to consumer credit, mainly title I, the Truth in Lending Act, title II related to extortionate credit transactions, title III related to restrictions on wage garnishment, and title IV related to the National Commission on Consumer Finance.
Contract - A contract is an agreement between two parties that is enforceable by law.
Co-Op - With a cooperative, or co-op, a buyer buys shares in a corporation that owns an apartment building. In exchange, the buyer receives the right to live in a specific unit. Co-ops are unlike condominiums in that the buyer does not acquire and own a specific unit. The buyer simply becomes a shareholder in the corporation.
Transactions involving co-ops can be more complicated, because there may be an interview process for prospective buyers, and lenders may not finance a co-op purchase without the ability to foreclose on a specific unit or home.
Customer - As it pertains to real estate, a customer is a person that receives services from a real estate professional. Only certain services can legally be provided at the customer level.
Deed - A legal document filed with the county that documents the transfer of home ownership. The seller signs a deed in favor of the buyer when the deal closes. After recording, the original deed is provided to the buyer and the seller receives a copy.
Detached Home - A free standing residential building with a single living area.
Discount Points - A discount point is a type of mortgage loan fee that enables a borrower to lower monthly interest rate payments by paying more upfront. A discount point may cost approximately 1% of the loan amount and can lower a borrower's interest rate by 0.25%–0.5%. Point options vary by lender but borrowers should think about how much they're ready to invest upfront and the length of time they expect to have the mortgage loan when deciding whether to buy points. If a buyer expects to own the home for a long time, buyers will often consider paying more upfront to benefit from a lower interest rate for the life of the loan. On the other hand, if a buyer plans to refinance or sell the home, buyers are more likely to avoid discount points and accept the higher interest rate.
Down Payment - The amount of money a buyer pays at closing to fund a home purchase, usually expressed as a percentage of the total home price. The required down payment amount varies depending on the type of loan, ranging from as little as 3% for an FHA loan to more than 20% for some conventional loans. Mortgage insurance is required for borrowers with a down payment of less than 20%. Down payments are usually paid via cashier's check or wire transfer and must be paid at closing.
DPOR - An acronym for the Department of Professional and Occupational Regulation. This is the board responsible for the licensing of real estate professionals. This is also an industry term for the residential property disclosure statement, since the document is originated by the department and bears their letterhead.
Dual Agency - Dual agency occurs when the same real estate agent represents both the seller and buyer.
Duplex - A house having separate apartments for two families with two separate entrances.
Easement - An easement is a limited right to use another person's land for a specific purpose. For example, an easement may be granted by a homeowner to a neighbor to cross the homeowner's land for access to a road. The easement allows the neighbor to use the land for that specific purpose, and the neighbor has no right of possession or the authority to build or plant on the land without the homeowner's permission. Other common examples are easements granted for the placement of utility poles, water lines, and sewer lines. Easements are documented in a title report and may affect what a buyer can build or plant on a property.
EMD - An Earnest Money Deposit is the money you pay soon after a home seller has accepted your offer on a home. How much earnest money you pay varies, but it's typically 1%–3% of the sale price of the home. You'll pay earnest money by cashier's check, personal check, or wire transfer and your earnest money will be deposited into an escrow account. Once the sale of the home has been completed, the earnest money you paid will be applied toward your closing costs. If you back out of the sale due to a failed contingency (e.g., inspection report), you can recover your earnest money in full. If you back out of the sale for reasons not covered by contingencies, you will forfeit your earnest money.
Encroachment - An encroachment occurs when a fence, roof, or something else on a neighboring property crosses the property line without permission. Encroachments usually occur by mistake, and disputes over encroachments can be resolved by a property line adjustment or by granting an easement that allows the encroachment on specific terms. Either solution is likely to be documented on title.
Encumbrance - A right to, interest in, or legal liability on real property that does not prohibit passing title to the property but that may diminish its value.
Escrow - Escrow is a neutral third party or attorney that handles the exchange of money and documents in compliance with the Purchase and Sale Agreement and any escrow instructions. Escrow handles the transfer of the buyer's loan documents and property taxes and works with a buyer's lender and real estate agent to make sure the title of the home is clear of liens before the transfer of ownership.
Equity - The monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc.
Fair Housing Act - The Fair Housing Act is a law enacted as part of civil rights legislation that prohibits discrimination in home sales, rentals, and financing based on race, color, national origin, religion, sex, familial status, or disability.
FHA - The Federal Housing Administration provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories.
FNMA - Commonly known as "Fannie Mae", the Federal National Mortgage Association is a US government-sponsored enterprise who's purpose is to expand the secondary mortgage market by securing mortgages in the form of MBS (Mortgage-Backed Securities).
Fiduciary - A fiduciary relationship is one in which by law one party (agent) must act on behalf of another (client) with the best interests of that party in mind.
FHLMC - Commonly known as "Freddie Mac". the Federal Home Loan Mortgage Corporation is a public US government sponsored enterprise created in 1970 to expand the secondary market for mortgages in the US. Along with the Federal National Mortgage Association (Fannie Mae), Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a MBS (mortgage-backed security) to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.
Foreclosure - A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
Hard Money Loan - a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.
HOA - (see also POA) A Home Owners Association is a private association often formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision. Typically the developer will transfer ownership of the association to the homeowners after selling a predetermined number of lots. Generally any person who wants to buy a residence within the area of a homeowners association must become a member and therefore must obey the governing documents.
Homeowners Insurance - A combination of property insurance, which protects homeowners from future damages to a home, and liability insurance, which protects homeowners from claims by third parties for accidents that happen in the home. The form of the policy will vary depending on the type of property being insured (e.g. condominium, mobile home, single-family residence, etc.) and the amount of coverage the owner desires. Lenders require that buyers obtain homeowners insurance so insurance premiums will automatically be included in monthly mortgage payments and the transaction closing costs.
Homescan of Virginia LLC - Hampton Road's premier Matterport® affiliate. We have partnered with them to produce high quality virtual tours to market our client's properties worldwide.
Home Inspection - This is a top to bottom checkup for your home. It is an optional out of pocket expense for the buyer to be paid for at the time of service. It's performed by a licensed third party inspector, usually costs around $300-$400 depending on the size of the home and can take as much as four hours or more to complete.
HouseHunt - HouseHunt.com is a regional community website that we have partnered with in order to broaden our sphere of influence nationally.
HUD - United States Department of Housing and Urban Development is a cabinet department in the executive branch of the US federal government. HUD serves many functions, not the least of which is selling REO properties. These differ slightly from their Fannie Mae and Freddie Mac brethren.
HUD-1 - The HUD-1 Settlement Statement was a standard form in use in the US which was used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate. As part of new rules established by the Consumer Financial Protection Bureau effective October 3, 2015, the HUD-1 Settlement Statement became obsolete. It has been replaced by a document called the Closing Disclosure that consolidates the HUD-1, Good Faith Estimate, and Truth in Lending Act Disclosure.
Improvement - In real estate, when you buy a home the actual purchase transaction is for the land that the house sits on. Any structures within the lot are what's considered "improvements" upon the land.
Interactive 3D - There are a few types of virtual tour available on the market today. Interactive refers to the user's ability to interact with the environment as opposed to just passively viewing it.
Inspection Report - An inspection is a thorough investigation of a home by a licensed inspector. A thorough inspection is necessary to discover any material defects or necessary repairs before buying the home. The inspector may also recommend an additional inspection of the roof, sewage system, or other part of the house by a specialist. The inspector's findings will be comprised into a written report and if there is an inspection contingency, buyers have a chance to negotiate with sellers to cover the costs of certain repairs, ask for concessions, or even back out of the sale altogether using this report as justification.
Interest - Payment from a borrower to a lender of an amount borrowed, at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party.
Interest Rate - The amount charged by a lender in exchange for loaning money to a buyer. It is expressed as a yearly percentage of the total loan amount and is paid on a monthly basis as part of the mortgage payments.
Inventory Drip - This is the term for the flow of listings that you will receive once your personal search criteria has been established and input into the MLS portal.
Jumbo Mortgage - A loan whose principal value exceeds the standard limits for Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy loans from banks. As a result, the interest rates on these loans are higher because lenders don't have the assurance that Fannie or Freddie will guarantee the purchase of the loans. Brokers and lenders must be willing to take on greater risk to fund jumbo mortgages.
LBP Disclosure - Lead Based Paint disclosure form, applicable for homes constructed prior to 1978 and advises that lead based paint may be present.
LMI - (see also PMI) Lenders Mortgage Insurance protects the mortgage lender against loss if a borrower defaults on a loan. LMI is required for borrowers of conventional loans with a down payment of less than 20%. FHA loans and VA loans are essentially lenders mortgage insurance, as borrowers pay higher insurance premiums in exchange for a low down payment. These funds allow the FHA to insure lenders against losses if borrowers default on FHA-approved loans. Mortgage insurance costs are included as part of the monthly loan payment.
Lien - A legal claim against the property of another, usually to secure an unpaid debt. Liens commonly arise when a homeowner pledges his or her home as collateral to borrow money. Utility companies, contractors, local governments, and other creditors can also sometimes file a lien to collect unpaid amounts. Buyers should review title reports closely with this in mind. If the report contains any liens, the buyer should consult an escrow agent or attorney to investigate. Such liens may need be cleared before the buyer can legally own the home.
Listing - A listing is the term used for a property that is for sale by a real estate professional and is "listed" on the area's local MLS.
Listing Agent - Legal term for the real estate agent that represents the seller.
Loan Estimate - A three-page form created by the CFPB that provides a borrower with important details about a loan the borrower has applied for, including an estimate of the interest rate, monthly payment amount, and total closing costs. If the loan has special features, such as early payment penalties or increases in mortgage loan balances, the form will also include these details. The lender is required to provide a borrower with this form within three business days after receipt of the loan application. All lenders are required to use the same Loan Estimate form, making it easier for borrowers to compare mortgage loans. The Loan Estimate is not an approval or denial of a loan application, but shows a borrower the terms the lender expects to offer if the borrower decides to move forward with the loan.
Loan Officer - When you do business with a bank or mortgage company there are many people involved behind the scenes from underwriters, processors, etc. The loan officer is our point of contact with that lending institution.
Lot - (see Plot) An individually owned parcel of land.
LTV - A Loan-To-Value Ratio is the ratio of the amount of money borrowed over the appraised value of the home, expressed as a percentage. The difference between these two numbers is the amount of the buyer's down payment.
Matterport® - A name brand 3D and VR rendering company. They are at the forefront of this state of the art industry.
Matterport® Space - Term used for an interactive 3D virtual tour rendered by the Matterport® company. These tours are used to host an online "virtual open house" that's available 24 hours a days worldwide.
Mechanic's Lien - This is a claim on a property's title for unpaid work done to the said property.
MBS - Mortgage-Backed Securities are a type of asset-backed security which is secured by a mortgage or collection of mortgages.
MLS - Multiple Listing Service, this is the network where licensed real estate brokers "list" the properties that they have for sale.
Mortgage - A conveyance of an interest in property as security for the repayment of money borrowed. The mortgage is essentially the agreement to pay, not the actual loan itself; this is a popular misconception.
Multiple-Offer Situation - This is when several offers for a property are submitted within a short period of time. Usually this results in what's called a "highest and best," this is where the fact that there are multiple offers on the table is made public and a deadline is given for all interested parties to offer a single final bid. Then, when the deadline is met, the seller will choose the offer with the best terms for them.
Non-Conventional Loan - Loans for which interest rates are set by statute. Each mortgage lender, bank or mortgage broker will offer different rates, terms and fees for conventional loans, so it's best to get a good faith estimate from a number of different places to find the best loan. Examples of non-conventional loans include an FHA loan or VA loan.
Open House - An "open house" is where your agent "opens" up your house to the public in an attempt to sell it. These are what all those signs on the side of the road on Saturday afternoons are all about.
Owner Occupant - When dealing with REO properties you may find yourself dealing with what's called the owner occupant period. This is a timeframe in which only people who intend to physically occupy the property are allowed to bid on it. This is in place to incentivize home ownership in the community as opposed to selling to an investor who is simply going to flip the thing for a quick buck. This gives you, as an owner occupant, a significant advantage over investors. This time period varies depending on which group it is that you're dealing with but it is usually several weeks!
PICA - The Property Inspection Contingency Addendum is a document that establishes that you are requesting a home inspection. It also gives you the option to do additional inspections (such as a land survey) at your own expense. This is a time sensitive document, usually limited to 10 -14 days in which to have all desired inspections completed.
PICRA - The Property Inspection Contingency Removal Addendum. If repairs are requested and an agreement has been reached as to how to address the requests, this document will be completed to advise what repairs will be made or if that no repairs will be made at all.
Plot - (see also Lot) An individually owned parcel of land.
PMI - (see also LMI) Private Mortgage Insurance protects the mortgage lender against loss if a borrower defaults on a loan. PMI is required for borrowers of conventional loans with a down payment of less than 20%. FHA loans and VA loans are essentially public mortgage insurance, as borrowers pay higher insurance premiums in exchange for a low down payment. These funds allow the FHA to insure lenders against losses if borrowers default on FHA-approved loans. Mortgage insurance costs are included as part of the monthly loan payment.
POA - (see also HOA) A Property Owners Association is a private association often formed by a real estate developer for the purpose of marketing, managing, and selling homes and lots in a residential subdivision. Typically the developer will transfer ownership of the association to the homeowners after selling a predetermined number of lots. Generally any person who wants to buy a residence within the area of a homeowners association must become a member and therefore must obey the governing documents.
POF - A POF is a letter that states Proof Of Funds. This can take the form of a pre-qualification letter or a pre-approval letter from your lender or a bank statement showing that you possess the full purchase price of the property in question for a cash deal.
Pre-Approval - People interested in buying a house can often approach a lender, who will check their credit history, verify their income and then can provide assurances they would be able to get a loan up to a certain amount in a written document.
Pre-Qualification - A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them in a written document.
Principle - The amount due and owing to satisfy the payoff of the underlying obligation, less interest or other charges.
PSA - (see also Bill of Sale) A Purchase and Sale Agreement is a written contract to buy and sell real estate which contains all of the agreed-upon terms for the transaction, such as the final sale price.
Ratification - To ratify a contract is essentially to confirm what's in it. During negotiations, a contract will often go back and forth multiple times. During this process little things get changed, crossed out and sometimes even added right back in again. Once everything is looking the way it should and all the names are on the dotted line, either agent has the ability to ratify the contract, making it into a legal covenant.
Real Estate Transfer Disclosure - Document that advises the property’s risk factors of crash and noise level in conjunction with any nearby military installations.
Real Property - Term used for a particular plot of land and all attached improvements.
Refinance - Refinancing is the process of paying off one loan to get another with better terms. There are many reasons borrowers may refinance: lower interest rates, improved credit, debt consolidation, or to decrease home equity to free up cash.
REIN - Real Estate Information Network, this is Tidewater's local MLS and where the majority of our data is drawn from.
REO - Real Estate Owned is a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction.
Repair Cap - Usually 1% of the purchase price, this is the amount of repairs by way of cost that a seller cannot refuse. For example, if during your home inspection it's discovered that the water heater is damaged and in need of repair. Let's say that the purchase price is $200,000 and the cost to repair the water heater is $1000. 1% of $200,000 is $2000, that's the "cap". Since the repair cost of $1000 is less than the $2000 cap, the repairs cannot be contested and must be made at the seller's expense.
Residential Property Disclosure Statement - Known as the DPOR, the residential property disclosure statement is a document in which the seller discloses any kinds of issues, defects, or previous repairs for the home. The seller is legally required to be up-front and honest regarding any past issues.
RESPA - Short for Real Estate Settlement Protection Act, RESPA is a set of laws passed by Congress in 1974 to protect the rights of consumers during the closing of a real estate transaction. It aims to educate consumers about settlement services like escrow and title companies, as well as prohibit extra referral fees related to closing costs. When a home sale is financed, RESPA requires that lenders give borrowers a Loan Estimate that lists estimated closing costs associated with the loan within three business days of a loan application.
Seller's Market - A seller's market is one in which there are more buyers than homes for sale. Since supply is less than demand, homes are higher priced and more attractive to sellers in the market. In contrast, a buyer's market is one in which there are lots of sellers and relatively few buyers, which leads to lower prices.
Selling Agent - Legal term for the real estate agent that represents the buyer.
Selling Firm Brokerage Fee Notice - Document that establishes the commission split between the listing and the selling firms. Please note that in the state of Virginia, it is customary that the SELLER is responsible for the commission for both agents.
Settlement - (see also Closing) Settlement occurs when the buyers, sellers, and their agents sign the closing documents of a transaction, and the closing agent or attorney facilitates payment of all closing costs.
SFH - A Single Family Home is a stand alone, detached house or a free standing residential building in that the structure is maintained and used as a single dwelling unit.
Short Sale - A short sale is used to sell a property when the seller is underwater in their mortgage and they essentially owe more on the house than it's worth. To do this the seller must first seek permission from their lender and when a short sale is requested the bank or mortgage company begins to run what amounts to a rather extensive background check. This is done just in case the seller really has a bunch of money tucked away somewhere and is just trying to get over on the lender for a few thousand dollars. Short sales are usually used as a means by which to avoid foreclosure and since foreclosure is bad for everyone involved, the lender is likely to go along with it as a way to minimize their loss. Here is where the short sale can get tricky because we can go all the way through the process, have a ratified contract and now we must wait for lender approval to proceed with the sale. Sounds simple enough but the approval process can take as long as six months and during that time you are relegated to twiddling your thumbs waiting. You can't write any other offers for fear of at the end of the day buying two homes and the worst part is after potentially waiting as much as six months for lender approval, it may not be approved. If this happens you're now back to square one and you get to start the entire process over again, only this time six months later! So why would anyone want to put up with all this? Well, in short because if you're situation allows for this type of waiting game you can get a great deal this way!
Showing - When you put your home up for sale with a licensed real estate agent, one of the first things they will do is to list it on the MLS and to put a REIN lockbox onto your front door. This grants other licensed agents access to the dwelling where they can "show" their clients the property.
Survey - A survey, or land survey; refers to the process of locating and measuring a property's boundary lines to determine the exact amount of land that a homeowner owns. A survey will also locate and measure any easements or encroachments on a property, which will be noted on a home's chain of title. Buyers have a property surveyed after making an offer to make sure any issues with easements or encroachments are documented and resolved before closing.
Swing Loan - (see also Bridge Loan) A short-term loan intended to "bridge" a gap in available financing. For example, buyers may use a swing loan to purchase another home before they are able to sell their current one.
Title - Title is the right to, or ownership of, a specific real estate property.
Title Company - This is the law office that will preform the title search on the property in question. This is a process by which they research the history of the recorded property title searching for any potential claims on the property.
Title Insurance - Title insurance compensates the insured buyer or lender if title defects, liens, or competing claims of ownership on a property arise after closing. If you have title insurance and you lose your home due to a title dispute, an owner's policy could compensate you for that loss and help cover legal fees related to the dispute.
Title Policy - An insurance policy on a piece of real estate for which the title deeds may be incomplete or not properly searched.
Title Report - Buyers get a preliminary title report from an escrow agent or attorney within a week after they reach mutual acceptance on an offer. The report identifies all parties with a legal claim to the property, what items need to be cleared from title before the new buyer can take possession, and if there are any recorded easements or encroachments on the property. Once the transaction closes, the buyers will receive a final title policy recording their names as the new legal owners, along with the amount of title insurance. This information is part of a county's public records.
Title Search - An examination of public records by a title company, lawyer, or escrow agent to determine the history of ownership of a particular piece of property and identify any liens, encroachments, easements, restrictions, or other factors that might affect the title. This step must be completed before a buyer can purchase title insurance.
Townhouse - An attached home with a first floor single living area, and no COA.
Truth-in-Lending Act - A set of U.S. government guidelines for lending practices to ensure that borrowers receive information about their loans. As part of the Consumer Credit Protection Act, it requires lenders to disclose information regarding loan origination fees, payment schedules, and APR, along with borrowers' limited rights to rescind their application within a certain timeframe without being charged. The Truth-in-Lending Act requires lenders to give borrowers a Loan Estimate within three business days of a loan application.
Underwriter - An individual working for mortgage lenders who determines whether or not a borrower's loan is approved. If a borrower gets a loan from a mortgage broker, the broker sends the loan documents to the lender's underwriter. The underwriter evaluates the entire loan application, including the appraisal of the home, and decides whether to approve or decline the application based on the risk presented by the loan.
VA - The United States Department of Veterans Affairs. This is a federal cabinet-level agency that provides a variety of services to eligible military veterans, including home loans.
Virtual Tour - A virtual tour is an online mockup of a property. Usually a type of highlight reel used for internet marketing.
Walkthrough - A walkthrough is the final inspection of a home by the buyer before closing. Buyers complete a final walkthrough to make sure any agreement to make repairs or do other things with regard to the property have been fulfilled before the closing papers are signed. A walkthrough can happen anywhere from a few days to a few hours before closing. If something isn't right, the buyer can ask the seller to fix the problem before the sale is closed.
WDI/Moisture Inspection - A licencend third-party inspector will check for Wood Destroying Insects such as termites and any existing moisture damage. This is a separate inspection from the home inspection.
203K - This is a loan product that is what's considered a "rehab" or rehabilitation loan. What this means is that in addition to the purchase price of the property, you receive additional lender funds for the purpose of having renovations done. Only certain lenders offer this option and all work done must be performed by an approved and licensed third party contractor.