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Real Estate Terms


Abstract Of Title
The abstract of title includes transfers, grants, wills and conveyances, liens and encumbrances. It also provides any evidence or proof of satisfaction or other facts or information pertinent to a piece of property. All potential buyers of a property should request this to determine the status of the property.

Adjustable Rate Mortgage (ARM)
A mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill rate or the prime rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates. The mortgage holder is protected by a maximum interest rate (called a ceiling), which might be reset annually. ARMs usually start with better rates than fixed rate mortgages, in order to compensate the borrower for the additional risk that future interest rate fluctuations will create.

Adverse Possession
Regulations surrounding adverse possession can vary from jurisdiction to jurisdiction, and the definitions of the legal requirements are open to interpretation. Adverse possession is sometimes called "squatter's rights". This is because in some jurisdictions if a person occupies another person's land for a certain period of time (without paying rent) and the owner takes no legal action to remove that person, he or she can gain legal title to the property. In most cases, the squatter must occupy the land for an extended period of time, such as 15 to 20 years.

Affidavit Of Title
A document provided by the seller of a piece of property that explicitly states the status of potential legal issues involving the property or the seller. The affidavit is a sworn statement of fact. For example, someone looking to sell a piece of real estate would have to provide an affidavit of title indicating that the property is truly owned by the seller, that the property is not being sold to another party, that there are no liens against the property and that the seller is not in bankruptcy proceedings.

The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.

Annual Percentage Rate (APR)
This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works sort of like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual note rate on your loan.

An apartment (in American English) or flat (in British English) is a self-contained housing unit (a type of residential real estate) that occupies only part of a building.

Application Form
A form to use when making an application

Application Money

The increase in the value of a property due to changes in market conditions, inflation, or other causes.

ARM Margin
A fixed percentage rate that is added to an index value to determine the fully indexed interest rate of an adjustable rate mortgage (ARM). The margin is constant throughout the life of the mortgage, while the index value is variable. For example, the index might be the prime rate, which varies according to market conditions, and the margin might be 2%. If the prime rate were 5% and the margin 2%, then the fully indexed interest rate would be 7%. If the prime rate rises to 6% (the margin remains constant), the fully indexed interest rate would be 8%.

Assessed Value
The valuation placed on property by a public tax assessor for purposes of taxation.

The placing of a value on property for the purpose of taxation.

A public official who establishes the value of a property for taxation purposes.

Items of value owned by an individual. Assets that can be quickly converted into cash are considered "liquid assets." These include bank accounts, stocks, bonds, mutual funds, and so on. Other assets include real estate, personal property, and debts owed to an individual by others

Attorney (Lawyer) Fees