RE Glossary: I-R

3 pages: A - I, I - R, R - Z

Insurance: A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.

Insurance binder: A document that states that insurance is temporarily in effect. Because that coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Interest: The fee charged for borrowing money.

Interest rate: The arte of interest in effect for the monthly payment due.

Investment property: A property that is not occupied by the owner.

Joint and several liability: A situation in which more than one party is liable for repayment of a debt or obligation and a creditor can obtain compensation from one or more parties, either individually or jointly.

Joint tenancy: A form of co-ownership that gives each tenant equal interest and equal rights in the property, including the right to survivorship.

Judgment: A decision made by a court of law. In judgments that require the repayment of a debt, the court may place a lien against the debtor's real property as collateral for the judgment's creditor.

Judgment lien: A lien on the property of a debtor resulting from the decree of a court.

Landlord: The lessor or the owner of leased real property.

Late charge: The penalty a borrower or tenant must pay when a payment is made a stated number of days after the due date.

Law: The body of rules by which society governs itself.

Lease: A written agreement between the property owner and a tenant that stipulates the conditions under which the tenant may possess the real estate for a specified period of time and rent.

Leasehold estate: A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

Legal description: A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

Lessee: The person to whom property is rented or leased; called a tenant in most residential leases.

Lessor: The person who rents or leases property to another. In residential leasing, he/she is often referred to as a landlord.

Letter of compliance: A letter issued by the cities of Morgantown and Westover that the rental property has been inspected and meets the doctrine of implied warranty of habitability. Properties inspected every three years by Code Enforcement Officials.

Liabilities: A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.

Liability insurance: Insurance coverage that offers protection against claims alleging that a property owner's negligence or inappropriate action resulted in bodily injury or property damage to another party.

Lien: A legal claim against a property that must be paid off when the property is sold.

Line of credit: An agreement by a commercial bank or other financial institution to extend credit to a certain amount for a certain time to a specified borrower.

Liquid asset: A cash asset or an asset that is easily converted into cash.

Loan: A sum of borrowed money (principal) that is generally repaid with interest.

Loan origination: The process by which a mortgage lender brings into existence a mortgage secured by real property.

Loan-to-value (LTV) percentage: The relationship between the principal balance of the mortgage and the appraised value (or sales price if it is lower) of the property. For example, a $100,000 home with an $80,000 mortgage has a LTV percentage of 80 percent.

Management Agreement: A contract between the owner of income-providing property and the individual or firm who will manage that property.

Maturity: The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable.

Mechanic's lien: A statutory lien created in favor of material man and mechanics to secure payment for materials supplied and services rendered in the improvement, repair, or maintenance of real property.

Modification: The act of changing any of the terms of the mortgage.

Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.

Mortgagee: The one who receives and holds a mortgage as security for a debt.

Mortgage banker: A company that originates mortgages exclusively for resale in the secondary mortgage market.

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.

Mortgage: The lender in a mortgage agreement.

Mortgage insurance: A contract that insures the lender against loss caused by a mortgagor's default on a governmement 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 a virtually all of the mortgage loan.

Mortgagor: The borrower in a mortgage agreement.

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.

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 worth: The value of all a person's assets, including cash, minus all liabilities.

Normal wear and tear: That physical deterioration which occurs with the normal use of a property, without negligence, carelessness, accident, or abuse of the premises, equipment, or chattels by the occupant, members of the occupants household, or their guests.

Note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Notice of default: A formal notice to a borrower that a default has occurred and that legal action may be taken.

Nuisance: Conduct or activity which results in an actual physical interference with another person's reasonable use or enjoyment of his/her property for any lawful purpose.

Ordinances: The rules regulations, and codes enacted into law by local governing bodies.

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.

Owner financing: A property purchase transaction in which the property seller provides all or part of the financing.

Partial payment: A payment that is not sufficient to cover the scheduled monthly payment on a mortgage loan or rent.

Personal property: Any property that is not real property.

Planning commission: An official agency usually organized on the city/county level, to direct and control the use, design, and development of land and real property.

Point: A one-time charge by the lender for originating a loan. A point is 1 percent of the amount of the mortgage.

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.

Prepayment: Any amount paid to reduce the principal balance of a loan before the due date. Payment in full on a mortgage that may result from a sale of the property, the owner's decision to pay off the loan in full, or a foreclosure. In each case, prepayment means payment occurs before the loan has been fully amortized.

Pre-qualification: The process of determining how much money a prospective home buyer will be eligible to borrow before he or she applies for a loan.

Prime rate: The interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates, including mortgage interest rates.

Principal: The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage; one of the main parties to a transaction.

Principal balance: The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges.

Principal, interest, taxes, and insurance (PITI): The four components of a monthly mortgage payment. 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.

Private mortgage insurance (MI): Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan-to-value (LTV) percentage in excess of 80 percent.

Promissory note: A written promise to repay a specified amount over a specified period of time.

Property Management: That aspect of the real estate profession devoted to the leasing, management, marketing, and overall maintenance of the property of others.

Public auction: A meeting in an announced public location to sell property to repay a mortgage that is in default.

Planned unit development (PUD): A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

Qualifying ratios: Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quitclaim deed: A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

Quiet enjoyment: The right of an owner or lessee legally in possession of property to uninterrupted use of the property without interference from the former owner, lessor, or any third party claiming superior title.

Radon: A radioactive gas found in some homes that in sufficient concentrations could cause health problems.

Real estate: The physical land at, above, and below the earth's surface with all appurtenances, including any structures; any and every interest in land whether corporeal or incorporeal, freehold or no freehold; for all practical purposes synonymous with real property.

Real estate agent: A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real estate settlement procedures act (RESPA): A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Real property: Land and appurtenances, including anything of permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

REALTOR®: A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS®.

Recorder: The public official who keeps records of transactions that affects real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk".

Recording: The noting in the registrar's office of the details of a property executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

Rent: Fixed periodic payment made by a tenant or occupant of property to the owner or they're representative for the possession advise thereof.

Rent loss insurance: Insurance that protects a landlord against loss of rent or rental value due to fire or other casualty that renders the leased premises unavailable for use and as a result of which the tenant is excused from paying rent.

Repayment plan: An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions".

Right of ingress or egress: The right to enter or leave designated premises.

Right of survivorship: In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Private mortgage insurance (MI): Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require MI for a loan-to-value (LTV) percentage in excess of 80 percent.

Promissory note: A written promise to repay a specified amount over a specified period of time.

Property Management: That aspect of the real estate profession devoted to the leasing, management, marketing, and overall maintenance of the property of others.

Public auction: A meeting in an announced public location to sell property to repay a mortgage that is in default.

Planned unit development (PUD): A project or subdivision that includes common property that is owned and maintained by a homeowners' association for the benefit and use of the individual PUD unit owners.

Qualifying ratios: Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio and total debt obligations as a percent of income ratio.

Quitclaim deed: A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.

Quiet enjoyment: The right of an owner or lessee legally in possession of property to uninterrupted use of the property without interference from the former owner, lessor, or any third party claiming superior title.

Radon: A radioactive gas found in some homes that in sufficient concentrations could cause health problems.

Real estate: The physical land at, above, and below the earth's surface with all appurtenances, including any structures; any and every interest in land whether corporeal or incorporeal, freehold or no freehold; for all practical purposes synonymous with real property.

Real estate agent: A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real estate settlement procedures act (RESPA): A consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Real property: Land and appurtenances, including anything of permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

REALTOR®: A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS®.

Recorder: The public official who keeps records of transactions that affects real property in the area. Sometimes known as a "Registrar of Deeds" or "County Clerk".

Recording: The noting in the registrar's office of the details of a property executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.