Adjustable-Rate Mortgage (ARM)
Loan whose interest rate is adjusted according to movements in the financial market. Many offer lower-than-market initial Interest rates that rise only gradually for the first few years.

Annual Percentage Rate (APR)
Annual cost of credit over the life of a loan including interest, service charges, points, loan fees mortgage insurance and other items.

Appraisal
Unbiased, professional opinion of a property's value based on its style and appearance, construction quality, usefulness and the value of comparable properties.

Assessment
Tax levied on a property or a value placed on the worth of property by a taxing authority.

Assumption
Transaction allowing a buyer to assume responsibility for an existing loan instead of getting a new loan.

Broker (Real Estate)
Person who receives a commission or fee for bringing buyer and seller together and assisting in the negotiation of contracts between them. A license is required in most states.

Building code
Local regulations controlling design, construction and materials used in construction. Building codes are based on safety and health standards.

Buydown
Subsidy (usually paid by a builder or developer) to reduce the monthly payments on a mortgage loan.

Buyers Agent
A real estate agent who represents only the buyer in a real estate transaction.

Callback
Request by home owner for builder to handle a service request.

Cap
Limit to the amount an interest rate or monthly payment can increase for an adjustable-rate loan either during an adjustment period or over the life of the loan.

Certificate of Occupancy
Document from an official agency stating the property meets the requirement of local codes, ordinances and regulations.

Chain of Title
History of all documents transferring title to a parcel of real property, starting with the last existing and ending with the most recent.

Change Order
Home Buyer's written authorization to add, delete or change an item specified in a contract.

Closing
Meeting to sign documents that transfer title from a seller to a buyer (also referred to as settlement).

Closing Costs
Charges paid at settlement for obtaining a mortgage loan and transferring a real estate title.

Commission
Agent's fee for negotiating a real estate or loan transaction, often expressed as percentage of the sales price or mortgage amount.

Conditions, Covenants and Restrictions (CC and Rs)
Standards that define how a property may be used and the protections the developer makes for the benefit of all owners in a subdivision.

Contingency
Condition that must be met before a contract is binding.

Convertibility
Ability to change a loan from an adjustable rate schedule to a fixed-rate schedule.

Covenant
Agreement between seller and buyer on a piece of property, restricting the use of that property (also called deed restriction).

Deed
Legal document representing property ownership.

Default
When a borrower fails to make the required payments of a mortgage contract.

Density
The number of homes built on a particular acre of land. Allowable densities are determined by local jurisdictions.

Debt-To-Income Ratio
Long-term debt expenses as a percentage of monthly income (used by lenders to qualify borrowers for mortgage loans).

Due-on-Sale
Clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property,

Earnest Money
Sum paid to the seller to show that a potential purchaser is serious about buying,

Easement
Right-of-way granted to a person or company authorizing access to the owners land. For example, a utility company may be granted easement to install pipes or wires. An owner may voluntarily grant an easement or can be ordered to grant one by a local jurisdiction.

Equity
Difference between the value of a home and what is owed on it.

Escrow
Handling of funds or documents by a third party on behalf of the buyer and/or seller.

Escrow Amount
Amount set up by a lender into which makes periodic payments, usually monthly, for taxes, hazard insurance assessments and mortgage insurance premiums funds are held in trust by the lender who pays the sums as they become due.

Fair Market Value
Price at which property is transferred between willing buyer and willing seller, each of whom has reasonable knowledge of all pertinent facts and neither being under compulsion to buy or sell.

Federal Housing Administration (FHA)
Federal agency that insures mortgages with lower down payment requirements than conventional loans.

Fixed-Rate Mortgage
Mortgage with an interest rate that remains constant over the life of the loan.

Hazard Insurance
Protection against damage caused by fire, wind storms or other common hazards. Many lenders require borrowers to carry it in an amount at least equal to the mortgage.

HVAC
Common building industry, abbreviation for heating, ventilation and air conditioning systems.

Index
Interest rate or adjustment standard that determines the changes in monthly payments for an adjustable rate loan.

Infrastructure 
Public facilities and services needed to support residential development, Including highways, bridges, schools and sewer and water systems.

Inspection
Examination of work completed on a structure to determine compliance with building code and other code requirements.

Joint Tenancy
Form of ownership in which the tenants own a property equally. If one dies, the other automatically inherits the entire property.

Loan Origination Fee
Lender will charge a fee for the cost of processing the loan, usually calculated as percentage of the loan amount.

Loan To Value Ratio
Relationship between amount of a home loan and the total value of a property.

Lock In Rate
Commitment from a lender to make a loan at a pre-set interest rate at some future date, usually for not more than 90 days. A fee may be charged to "lock-in" a rate.

Mortgage Commitment
Formal written communication by a lender agreeing to make a mortgage loan on a specific property, specifying the loan amount, length of time and conditions.

Mortgage origination Fee
Charge for the work involved in preparing and servicing a mortgage application (usually 1 Percent Of the loan amount).

Permit
Document issued by & local government agency allowing construction to be performed in conformance with local codes, Work may not commence until permits have been obtained, and each permit issuing agency must inspect the work at certain specified points during construction.

PITI
Principal, Interest, Taxes and Insurance (the four major components of monthly housing payments).

Point
One-time charge assessed by the lender at closing to increase the interest yield on a mortgage loan. Generally, it is 1 percent of the mortgage amount.

Presettlement Walk Through
Final inspection of a house prior to closing, conducted by the buyer.

Principal
Amount borrowed, excluding interest and other charges.

Property Survey
Survey to determine the boundaries of a piece of property. Cost depends on the complexity of the survey.

Recording Fee
Charge for recording the transfer of a property, paid to a city, county or other appropriate branch of government.

Specifications
Contractual document describing in detail the work to be performed; quality, type and manufacturer of materials and equipment for a particular project.

Tenancy In Common
Form of ownership in which the tenants own separate but equal parts. To inhere it the property, a surviving tenant would either have to be to mentioned in the will or, in the absence of a will, be eligible through state inheritance laws.

Title
Evidence (Usually in the form of a certificate or deed) of a person's legal right to ownership of a property.

Veterans Administration (VA) Federal
Federal agency that insures mortgage loans with very liberal down payment requirements for honorably discharged veterans and their surviving spouses.

Warranty
Promise, either written or implied, that the material and workmanship of product is free of defects or will meet the specified level of performance over a specified period of time. Written warranties on new homes are either backed by insurance companies or by the builders themselves.

Zoning
Regulations established by local governments regarding the location, height and use for any given piece of property within a specific area.