Real Estate Glossary


A legally binding contract component that involves an act of accepting an offer to enter into a contract. A contract cannot exist without both an offer and acceptance. Acceptance is binding and legal when both parties agree to the initial terms or after both parties have accepted all counter offers.

Additional principal payment:

A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan and amortize the loan at a faster rate.

Adjustable rate:

An interest rate that is adjusted or floats periodically on the basis of changes in a specified index and in relation to a specified margin.

Adjustable rate mortgage (ARM):

A mortgage that permits the lender to adjust its interest rate periodically on the basis of changes in a specified index and in relation to a specified margin.

Adjusted basis:

A tax basis calculation referring to the original cost of a property plus the cost of any improvements or other step-ups less depreciation.

Adjustment date:

The date on which the interest rate changes or adjusts for an adjustable-rate mortgage (ARM) or other loan. The adjustment date is found in the legal document known as the note.

Adjustment period:

The time period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM). The adjustment period is found in the legal document known as the note.

Affordability analysis:

A detailed analysis of one’s ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage, the area of the home, and the closing costs that one might expect to pay. Such a calculation is often included in the Form 1008, which is known as the Uniform Underwriting and Transmittal Form and also contains a particular borrower’s income and expense ratios.


A component of real property or an improvement that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include waterfront, lakefront scenic views of the surrounding area, etc. Improvement amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.


The timed repayment of a mortgage loan by installments. A loan that must be repaid over 25 years is said to have a 25-year amortization.

Amortization schedule:

A timetable for the payment of a mortgage loan. An amortization schedule provides the amount of each payment broken down into interest and principal and shows the remaining principal balance after each payment on the schedule is made.

Amortization term:

The amount of time required to amortize the mortgage loan. The amortization term is referenced as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months. A 2/28 ARM is a mortgage with payments that are based on a 28-year amortization but the loan has a two-year term before the interest rate adjusts.


To repay a mortgage with regular payments that cover both principal and interest over a period of time.

An intention to sell:

A form of notice made by a lender or other secured party as part of the initiation of foreclosure proceedings of the intent to sell the secured property at a public or private sale at the conclusion of foreclosure proceedings. 

Annual mortgagor statement:

A tax purposes report issued by the lender (mortgagee) sent to the mortgagor (borrower) each year. The report shows how much was paid in real property taxes and mortgage interest during the year, as well as the remaining mortgage loan balance at the end of the year.

Annual percentage rate (APR):

The interest rate cost of a mortgage stated as a yearly rate; the APR sometimes includes and imputes such items as mortgage insurance and loan origination fees (points). Comparing the Annual Percentage Rates of different loans is regarded as a better way to gauge the overall cost of a loan than simply comparing only the face amount of interest rates because it takes all of these factors into consideration.


An investment vehicle wherein a return amount is paid yearly or at other regular intervals, often on a guaranteed dollar basis as opposed to market fluctuations.


A legal pleading that is usually filed in response to a complaint responding to or answering to allegations contained therein. If a foreclosure complaint was filed and the defendant was current on the mortgage payments, an answer could be filed to dispute the default allegations.


An application form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor (borrower) and the proposed security. This is commonly known as Form 1003 – the Uniform Residential Loan Application – and is a standard underwriting requirement for FNMA and FHLMC loans.

Application fee:

An upfront fee that may be charged by a lender, mortgage broker or mortgage banker to accept and process a mortgage loan application.

Application for an order of appraisal:

As part of a foreclosure proceeding, an action to have an independent determination of the value of a property being foreclosed for purposes of assessing the validity of bids, fair market value and any prospective deficiency.


A written analysis of the estimated value of a property prepared by a qualified appraiser operating under a set of approved guidelines promulgated by the Appraisal Institute.

Appraisal fee:

A fee charged to complete an estimate of the value of real property through an appraisal. This fee may be paid to the lender or directly to the appraiser, but it is the lender that usually retains the fee.

Appraised value:

An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property and on guidelines established by the Appraisal Institute.


An individual who is qualified to estimate the value of real and personal property. Appraisers have different designations and qualifications, the highest of which is the MAI designation.


An increase in the value of real property because of changes in market conditions, inventory, supply and demand or other causes such as interest rates.


An uncontested agreement to undertake a legal act or the waiver of a particular legal right.

Assessed value:

The determined value placed on real property by a public tax assessor/collector for purposes of determining property taxes. The real property tax is determined by multiplying the assessment against the tax rate. In some areas assessments are below market and an equalization rate is used to determine true taxable value.


The process of placing a charge related to property for the specific purpose of taxation or collection of special fees called a levy (tax) against property for a special purpose such as a sewer assessment, water assessment or other municipal improvement.


A public official also known as a tax assessor who establishes the value of a property and makes other related determinations for taxation or assessment purposes.


Anything of monetary value that is owned by a person or other entity such as a corporation. Assets include real property, personal property, enforceable claims against others, bank accounts, stocks, mutual funds, etc.


The transfer of a mortgage or other asset, contract or legal right from one party to another.

Assumable mortgage:

Refers to a mortgage that can be taken over or "assumed" by a third-party. Some assumable mortgages have a fee known as an assumption fee required before the mortgage can be assumed.


The act of transferring the seller's existing mortgage to the buyer. See assumable mortgage.

Assumption clause:

A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller or mortgagor. Such a mortgage instrument does not need to be paid in full by the original borrower upon sale or transfer of the property encumbered.

Assumption fee:

The fee paid to an underlying lender (mortgagee), usually by the purchaser of real property, resulting from the assumption of an existing mortgage encumbering the property.


An individual licensed to practice law in a particular state or other jurisdiction.

Attorney’s fees:

Fees usually in the form of hourly charges billed by the attorney or law firm conducting the foreclosure process. Such fees are for the preparation of legal documents, attendance at court hearings or foreclosure sales and related matters. Most loan documents have provisions whereby borrowers must pay both attorney’s fees and costs in any foreclosure proceeding. Costs relate to filing fees, clerk fees, advertising fees, and related expenses.


Legal reference to a party who holds a power of attorney from another to execute documents or undertake other action on behalf of the grantor of the power of attorney.

Auditor of the county:

An oversight branch of county government that examines the procedural and legal sufficiency of various county-run functions, including foreclosure sales.

Automatic stay:

Under the bankruptcy code, when a party files a bankruptcy petition it has the same effect as stopping or staying most proceedings or legal actions involving the debtor. Because no additional application needs to be made to the bankruptcy court to effectuate the stay, it is deemed to be "automatic" upon the filing of a bankruptcy petition. In a foreclosure context, many debtors will file a bankruptcy petition shortly before a foreclosure sale is set to take place. This action stays the process and will delay the foreclosure until the bankruptcy court can address the situation.

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