Brief Definition of Terms
In the real estate industry, you will discover terms (jargon) that you've never heard before. What do they really mean? Here's a list that will guide consumers to understand terms commonly used in the real estate industry.
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Compound Interest |
Interest which is paid on the original principal and also on the unpaid interest that has accumulated. Most loans charge compound interest. Compare to simple interest. |
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Condominium (Condo)
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Real estate in which each unit is individually owned but the common areas are jointly owned by all of the owners. They usually form a homeowners association and each owner pays a monthly fee for upkeep of the common areas. |
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Counter Offer |
After a buyer makes an offer to purchase real estate from a seller, the seller may counter offer back with a slight change in terms or price. |
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Credit Bureau |
A business that maintains a database with each person’s credit history. There are 3 major credit bureaus, each with their own data. |
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Credit Report |
A document which shows the history of a borrower’s debt repayment. It may also list employment information and home addresses. |
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Credit Rating |
An evaluation, often a FICO score, of a credit worthiness of an individual based on their credit history. The better a person’s credit rating, the best loan rates and terms they can receive. |
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Debt to Income Ratio |
The amount of consumer debt (car payment and credit card payments) as compared to gross income. FHA lenders allow a borrower to have 28% debt to income ratio, whereas conventional lenders may allow up to 40%. |
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Deed of Trust or Trust Deed |
A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the "trustor." The party to whom the legal title is conveyed (and who may be called on to conduct a sale thereof if the loan is not paid) is the "trustee." The lender is the "beneficiary." When the loan is paid off, the trustee is asked by the beneficiary to issue a "recon" or reconveyance. This reconveyance corresponds to the release that the holder of a mortgage executes when the mortgage is paid off. The first trust deed is the mortgage. Junior trust deeds are those recorded in 2nd or higher positions. Trust deeds are recorded on file at the county courthouse. |
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Deferred Maintenance |
Lack of repairs and maintenance to a property. A property in this condition may be a "fixer". |
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Distressed Property |
Real estate undergoing foreclosure, bankruptcy, or on the verge of doing so. |
Disclaimer: Not intended as legal advice.
Consult your real estate attorney regarding your specific situation.
Check-out real estate glossary of terms (series) here:
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