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Real Estate Glossary

Buying and selling a home can be a scary experience, even if it isn’t your first one. Use this glossary to make yourself more prepared for the professionals and documents you’ll encounter in your real estate experiences.

Click on any letter below to find a real estate term that begins with that letter.

a   b   c   d   e   f   g   h   i   j   k   l   m   n   o   p   q   r   s   t   u   v   w   z

A

abstract
of title

A condensed version of the title history to a piece of
land or property. Lists any transfers in ownership and any
liabilities attached to it, such as mortgages.

abutting
Bordering upon or next to; the joining or touching of
adjoining land; sharing a common boundary.

acceleration
clause

Allows the lender (mortgage company) to demand immediate
payment of the outstanding loan balance (interest and
principal) if the borrower (mortgager) defaults, misses
payment(s), or when/if the home is sold (in this case,
also know as the due-on-sale clause).

accretion
An addition to or expansion of land through natural
causes. An increase of land along the shore of a body of
water through water-borne sediment.

acre
A measurement of land equal to 4,840 square yards or
43,560 square feet.

additional
principal payment

Monies paid by the borrower in addition to the principal
amount due, usually monthly. If you have extra money
occasional months, it’s a good idea to make additional
principal payments in order to more quickly reduce your
remaining balance.

adjustable
rate mortgage (ARM)

Mortgage loans in which the interest rate is adjusted
periodically based on predetermined factors such as an
assigned index or designated market factor (such as the
weekly average of US Treasury Bills over a one-year
period). There is typically a limit to how often and by
how much the interest rate can fluctuate. Also known as renegotiable
rate mortgages
or variable rate mortgages. The adjustment
date
is the date the interest rate changes. The adjustment
interval
(or adjustment period) is the time
between changes in the interest rate and/or the monthly
payment (typically one, three or five years).

adjusted
basis

Original cost of the property plus capital expenditures
for improvements minus depreciation.

adjustments
Any money that the buyer and seller "credit"
each other at closing, such as taxes, down payments, etc.

ad
valorem

In proportion to the value, according to value.

amortization
The loan payment is made up of two parts: one portion will
be applied to pay the accruing interest on a loan and the
other portion is 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.
Typical amortization periods are 15 or 30 years.
Therefore, an amortized mortgage is one that
requires periodic payments that include both interest and
principal. An amortization schedule is a table that
provides a breakdown of the principal and interest
payments and the amount owed at any given point during the
amortization period.

annual
percentage rate (APR)

An interest rate reflecting the cost of a mortgage as a
yearly rate. Because it takes into account points and
other credit costs, the APR is likely to be higher than
the mortgage rate. It is a basis of comparison for
mortgage loan costs.

affordability
analysis

A detailed analysis of the borrower’s ability to buy a
home, made up of factors such as: income, holdings, debts,
the type of mortgage that will be used, the location of
the home, and closing costs.

amenity
A feature of a home (like a pool or a garage) which isn’t
crucial to the home’s existence. Things like a roof and
doors are not amenities.

appraisal,
appraised value

An appraiser’s estimate of the value of the property.
Banks require appraisals to determine how much money it
will lend you.

appreciation
An increase in the value of a property due to changes in
market conditions or for other reasons, such as additions
and renovations. Opposite of depreciation.

assessment
A local tax levied against a property for a specific
purpose, such as a sewer or streetlights. An assessor is a public official who establishes the value of a
property for taxation.

asset
Anything with a dollar value that you own. Banks consider
your assets when determining how much you can borrow.

assignment
The transfer of a mortgage from one person to another.

assumable
mortgage

A mortgage that can be taken over by the next buyer of the
home. The agreement between buyer and seller in which the
buyer takes over the payments on an existing mortgage from
the seller is called an assumption. Assuming a loan
is usually beneficial to both seller and buyer. Because it
is an existing mortgage debt, it lessens the costs and red
tape involved, unlike a new mortgage where closing costs
and new (possibly higher) interest rates may apply.
However, the lender usually charges the buyer an assumption
fee
if the buyer assumes an existing mortgage.

B

back-end
ratio, or debt ratio

The amount you pay in monthly debt (car payments, credit
cards, student loans, etc.) divided by your gross monthly
income.

balloon
payment mortgage, term mortgage

A short-term fixed-rate loan which involves small payments
for a certain time period and then one large payment (the balloon
payment
, for the remainder of the loan) at a
predetermined date.

betterment
An improvement (such as renovations and additions) that
increases a property’s value, different from routine home
maintenance and repairs.

bill
of sale

A written document that attests the transfer of the
ownership (title) of personal property.

biweekly
payment mortgage

A mortgage in which you make payments every two weeks
instead of once a month. The result is that instead of
making 12 monthly payments during the year, you make 13.
The total amount you pay equals the amount of 13 payments,
because you pay a total of 26 half-payments (one every
other week) rather than 12 whole payments (one every four
weeks or so, depending on the month). The extra payment
helps you reduce the principal, substantially reducing the
time it takes to pay off a 30-year mortgage.

blanket
mortgage

A mortgage covering two or more pieces of real estate.

blended
payments

A repayment method by which the same amount is paid each
month, but the composition of the interest and principal
changes with each payment. With each payment, the amount
allocated to the principal increases as the amount
allocated to interest decreases. Most mortgages use
blended payments because it provides a consistent monthly
payment amount for the borrower.

bona
fide

Authentic; made or carried out in good faith; real;
sincere; genuine.

borrower
(mortgager)

One that mortgages property; a person who applies for and
receives a mortgage loan.

breach
To break or violate an agreement.

broker
A mortgage broker is an individual whose business
is to help arrange funds or negotiate contracts for a
client but who doesn’t loan money himself. A real
estate broker
(real estate agent) helps you
find a house. See realtor.

building
codes

Local regulations regarding the design and construction
buildings.

buy
down

A fixed-rate mortgage where the interest rate is
"bought down" for a temporary period, usually
one to three years. After that time, the borrower’s
payment is calculated at the note rate. In order to
temporarily buy down the initial rate, a lump sum is paid
to the lender and held in an account used to supplement
the borrower’s monthly payment. These funds usually come
from the seller as an incentive to induce someone to buy
their property.

C

call
option

A clause in the mortgage that gives the lender the right
to "call" the mortgage due and payable at the
end of a given length of time, for whatever reason.

capital
expenditure

The cost of an improvement made either to extend the life
of a property or to increase its value.

capital
improvement

Any item, structure or addition which is a permanent
improvement to the property.

caps
(interest)

Limits on the amount that the interest rate on an ARM can
change per year and/or during the life of the loan.
Payment caps limit the amount that monthly payments for an
ARM may change.

cash
flow

The amount of cash gained over a period of time from an
income-producing property. It should be enough to pay the
expenses for that property (mortgage payment ,
maintenance, utilities, etc.)

certificate
of deposit

A certificate from a bank stating that the named party has
a specified sum on deposit, usually for a given period of
time at a fixed rate of interest.

certificate
of eligibility

A document given to qualified veterans entitling them to
VA loans for homes or businesses.

certificate
of reasonable value (CRV)

An appraisal issued by the VA showing a property’s current
market value.

certificate
of title

A document which confirms that the title to a property is
legally held by the current owner.

certificate
of veteran status

The document given to veterans or reservists who have
served 90 days of continuous active duty (including
training time). This document enables veterans to obtain
lower down payments on certain FHA-insured loans.

chain
of title

The history of all of the title transfers (conveyances and
encumbrances) to a piece of real estate.

change
frequency

The frequency of payment and/or interest rate changes in
an ARM, usually expressed in months.

chattel
Personal property.

clear
title

A title that is free of liens and mortgages.

closing
The final meeting between the buyer, seller and lender (or
their agents) at which the property and funds legally
change hands.

closing
costs

Expenses incurred by buyers and sellers in transferring
ownership of a property, such as an origination fee,
taxes, title insurance, transfer fees , points, title
charges, credit report fee, document preparation fee,
mortgage insurance premium, inspections, appraisals,
prepayments for property taxes, deed recording fee, and
homeowners insurance.

closing
statement

A detailed written summary of the financial settlement of
a real estate transaction, showing all charges and credits
made, all cash received and paid.

cloud
on title

Anything found by the title search which indicates that a
property is not owned free and clear by the purported
owner.

collateral
Something of value (such as a car or a home) deposited
with a lender to guarantee the repayment of a loan. The
borrower risks losing the asset if the loan is not repaid
properly.

collection
Forcing a borrower to pay what he owes on a loan.

commission
The compensation paid to a real estate broker (or by the
broker to the salesman) for services rendered. It is
usually a predetermined percentage of the selling price.

commitment
A promise by a lender to make a loan to a borrower or
builder, or a promise by an investor to purchase mortgages
from a lender.

comps,
comparables

Comparable properties; properties in close proximity which
have sold recently that are about the same size with
similar amenities, used to determine value of a property
by comparison.

compound
interest

Interest computed on the principal and the unpaid
accumulated interest of a loan.

condominium
A building (or group of buildings) in which individuals
own separate portions of the building(s) and possibly
share common areas.

construction
loan (interim loan)

A loan to provide the funds necessary to pay for the
construction of buildings or homes. The lender advances
funds to the builder at periodic intervals as the work
progresses.

contingency
A specific condition that must be met before a contract is
legally binding. Usually that the house must pass the home
inspection and the borrower must get a loan.

contract
for deed (conditional sales contract, installment
contract)

A contract for the sale of real estate where the deed
(title) of the property is transferred only after all
payments have been made. This is a risky contract, because
buyers can lose their entire investment if the owner
declares bankruptcy before the deed has been transferred.

contract
of sale

Agreement between the buyer and seller which conveys title
after certain conditions are met, outlining purchase
price, terms, etc.

conventional
loan

A mortgage loan not insured by the FHA or guaranteed by
the VA.

convertibility
clause

A clause in some ARMs which allows the buyer (borrower) to
change to a fixed-rate mortgage at a specified time.

conveyance
A written document (such as a deed or lease) that
transfers ownership interest in a property from one person
to another.

cooperative
(co-op)

Residents of co-op housing complexes own shares in the
cooperative corporation that owns the property. Each
resident has the right to occupy a specific dwelling, but
they don’t actually own it–they own shares in the
corporation that owns it.

creditor
A person or entity (a bank or other lender) who funded the
loan and to whom a debt is owed.

cul-de-sac
A dead-end street with a turn-around space at the end.
These are attractive to some homeowners because the ending
street cuts down on ‘thru’ traffic, speeding, etc.

D

debt-to-income
ratio

The ratio (expressed as a percentage) which describes a
borrower’s monthly payments on long-term debts divided by
their "net effective income" (for FHA and VA
loans) or gross monthly income (for conventional loans).

deed
of trust

Used in place of a mortgage to secure the payment of a
note (not in every state).

default
Failure to make your monthly payments.

deferred
interest

Unpaid interest added to the loan balance.

delinquency
Failure to make payments on time.

Department
of Veterans Affairs (VA)

An independent governmental agency which guarantees
long-term, low- or no-money-down mortgages to eligible
veterans.

depreciation
A decline in a property’s value.

discrimination
in advertising

HUD does not allow the use of words of a discriminatory
nature in any printed or published material. For example,
adult building, Jewish home, restricted, private,
integrated and traditional.

down
payment

Usually 10-20 percent of the sales price (on conventional
loans) paid by the buyer at the time of purchase.
Comprises the difference between the purchase price and
the mortgaged amount.

due-on-interest
A mortgage clause that allows a lender to call a loan due
and payable upon the transfer of the property. Known as
"paragraph 17" in FNMA/FHLMC mortgages.

due-on-sale
clause

A provision that allows a lender to demand the immediate
repayment of the mortgage balance if the borrower sells
the home.

E

earnest
money

Money given by a buyer to a seller as a form of deposit
(part of the purchase price) in order to bind a
transaction or to ensure payment.

easement
A right of way which gives people other than the owner access to a property.

encroachment
An illegal intrusion on someone else’s property.

encumbrance
A lien or claim on a property.

entitlement
VA home loan benefit are known as entitlement and/or
eligibility.

Equal
Credit Opportunity Act (ECOA)

A federal law that requires lenders and other creditors to
make credit equally available without discrimination based
on race, color, religion, national origin, age, sex,
marital status, or receipt of income from public
assistance programs.

equity
The value an owner has in real estate over and above the
debt of the property. For example, if a homeowner owns a
house valued at $100,000 and has a mortgage balance of
$20,000, the homeowner’s equity is $80,000 (the value
minus the mortgage balance). The homeowner’s equity
increases or decreases accordingly as the value of the
house increases or decreases. The lender’s equity is equal
to the value of the outstanding loan.

escrow
Funds that are set aside and held in trust. Usually used
for payment of taxes, insurance, etc.

F

Fannie
Mae, Federal National Mortgage Association (FNMA)

A corporation created by Congress that purchases and sells
conventional, FHA and VA residential mortgages. Makes
mortgage money more available and affordable.

Farmers
Home Administration (FmHA)

An organization that finances loans for farmers and other
qualified borrowers who are unable to obtain loans
elsewhere.

Federal
Housing Administration (FHA)

A division of the Department of Housing and Urban
Development (HUD) which insures residential mortgage loans
made by private lenders and sets standards for
underwriting mortgages. FHA loans are insured by
the FHA and open to all qualified homebuyers for
moderately priced homes almost anywhere in the country.
Borrowers need to be able to put 3-4 percent down, and
higher qualifying ratios make it easier to qualify for FHA
loans. FHA mortgage insurance is a way of insuring
an FHA loan. It requires a small fee (up to 3.8 percent of
the loan amount ) paid at closing or a portion of the fee
added to each monthly payment. Also requires an annual fee
of 0.5 percent of the current loan amount, paid in monthly
installments . The lower the down payment, the more years
the fee must be paid.

first
mortgage

The mortgage which is the primary lien against a property.

fixed-rate
mortgage

A mortgage with a set interest rate for the entire loan,
regardless of interest rate fluctuations. This creates
consistent, predictable payments, but it’s not always the
cheapest option.

foreclosure
A legal process through which the lender forces the sale
(or repossession ) of a mortgaged property because the
borrower has defaulted on (not met the terms of) the
mortgage.

Freddie
Mac, Federal Home Loan Mortgage Corporation (FHLMC)

A quasi-governmental agency that purchases conventional
mortgage loans from insured depository institutions
(savings and loans) and HUD-approved mortgage bankers.

front-end
ratio

Your prospective monthly mortgage payments divided by your
gross monthly income. This comes out to a percentage, and
a lender uses this percentage to get an idea of how much
of your income will be going to pay your loan. If they
like the number (say, below 29%) then they will be more
inclined to sell you the loan.

G

Ginnie
Mae, Government National Mortgage Association (GNMA)

A governmental agency that provides sources of funds for
residential FHA-insured or VA-guaranteed mortgages.

government
mortgage

A mortgage insured by the FHA or guaranteed by the VA or
the Rural Housing Service (RHS).

graduated
payment mortgage (GPM)

A type of flexible-payment mortgage where the payments
increase for a period of time and then level off.

guaranteed
mortgage, guaranteed loan

A mortgage guaranteed by a third party.

guaranty
An agreement by which one person assumes responsibility of
assuring payment or fulfillment of another’s debts or
obligations, or something given as security for the
execution, completion, or existence (or payment) of
something else.

H

hazard
insurance

A form of insurance that protects the insured from
specified losses due to hazards such as fire, flood, wind
damage, etc.

home
equity line of credit

A loan against the amount of equity you have in a
property. The equity serves as security for the new loan.

home
inspection

A complete and thorough inspection of the physical
condition of a property, including all major systems and
structural elements, conducted by someone who knows what
to look for and who will disclose the findings to you.

homeowner’s
insurance

An insurance policy required by many lenders when you take
ownership that combines personal liability insurance and
hazard insurance for the home as well as its contents.

homeowner’s
warranty

A warranty provided by the seller (or the builder on new
homes) as a condition of the sale. Covers repairs to
specified parts of a house for a specific period of time.

hot
market

A market in which houses are selling fast. Also known as a seller’s market, because the seller will benefit by
selling their house at or above their asking price
because, theoretically, high demand drives the price up.

housing
expenses-to-income ratio

A borrower’s housing expenses divided by his /her net
effective income (for FHA/VA loans) or gross monthly
income (for conventional loans). Expressed as a
percentage.

HUD-1
statement, closing statement, settlement sheet

An itemized listing of whatever costs must be paid at
closing, such as real estate commissions, loan fees,
points, and initial escrow amounts.

I

impound,
reserves

A portion of the monthly payment held by the lender to pay
for things like taxes, hazard insurance and mortgage
insurance as they become due.

index
A published interest rate against which lenders measure
the difference between the current interest rate on an ARM
and that earned by other investments (such as one-,
three-, and five-year U.S. Treasury security yields, the
monthly average interest rate on loans closed by savings
and loan institutions, and the monthly average
costs-of-funds incurred by savings and loans).

initial
interest rate, start rate, teaser

The interest rate of the mortgage at the time of closing.

interest
The amount of money charged for the use of the money
borrowed.

interest
adjustment

If the closing (the date on which the buyer takes
possession of the property) occurs at a time of the month
other than the date on which the mortgage payment is due,
the borrower will pay an amount to cover interest from the
interest adjustment date.

interest
rate ceiling

The maximum interest rate for an ARM loan.

interest
rate floor

The minimum interest rate for an ARM loan.

interim
financing

A construction loan made during completion of a building
or a project which is replaced by a permanent loan once
the building is completed.

investor
A source of money for a lender to loan.

J

jumbo
loan

A loan which is larger than the limits set by the FNMA and
the FHLMC.

K

key
lot
The one
property in a development that is key to the entire
development ‘s success.

kicker,
equity kicker, lender participation
A lender or
investor’s right to share any income from a property, in
addition to loan payments.

L

lease-purchase
mortgage loan

A way for homebuyers to lease a home with an option to buy
from a nonprofit organization. A portion of each month’s
rent payment goes toward principal, interest, taxes,
insurance and a down payment.

lien
A claim upon real or personal property for the
satisfaction of some debt or obligation.

listing
price

The price at which a house is listed for sale; the asking
price.

loan-to-value
ratio

The relationship between the amount of the mortgage loan
and the appraised value of the property.

lock-in
A written agreement from the lender to offer a specified
interest rate if the mortgage closes in a certain time
period.

M

margin
The amount a lender adds to the index on an ARM to
establish the adjusted interest rate.

market
value

The amount that a seller may expect to obtain in the open
market .

maturity
The date at which a note or bond is due.

mortgage
A conveyance of or lien against property until it is paid
or until other stipulated terms are met.

mortgage
banker

An individual who originates mortgages for resale in the
secondary mortgage market.

mortgage
broker

An individual or company that offers loans to borrowers
from numerous sources and is paid a commission for their
services.

mortgage
insurance

Money paid to insure the mortgage when the down payment is
less than 20 percent.

mortgage
insurance premium (MIP)

The 0.5 percent borrowers pay each month on FHA-insured
mortgage loans. It is insurance from the FHA to the lender
against incurring a loss on account of the borrower’s
default.

mortgagee
The lender; one who holds a mortgage.

mortgagor
The borrower or homeowner; one who mortgages.

N

negative
amortization

When your monthly payments are not large enough to pay all
the interest due on the loan, the unpaid interest is added
to the unpaid balance of the loan. The homebuyer ends up
owing more than the original amount of the loan.

negotiable
rate mortgage

A loan in which the interest rate is adjusted periodically
.

net
effective income

Gross income minus federal income taxes.

no-doc
loan

A loan requiring very little loan documentation. These
loans usually require large (25%) down payments.

non-assumption
clause

A statement in a mortgage contract forbidding the
assumption of the mortgage without the lender’s approval.

note
A signed obligation to pay a debt.

O

origination
fee

The fee (usually a percentage of the loan) a lender
charges to prepare loan documents, make credit checks,
inspect and sometimes appraise a property , etc.

P

permanent
loan

A long-term mortgage (10 years or more).

PITI
Principal, interest, taxes and insurance.

pledged
account mortgage (PAM)

When the borrower places money in a pledged savings
account, and these funds, plus interest earned, are
gradually used to reduce mortgage payments.

points
Prepaid interest assessed at closing by the lender. Each
point equals 1 percent of the loan amount. (2 points on a
$100,000 mortgage would cost $2,000 )

power
of attorney

A legal document authorizing one person to act on behalf
of another.

prepaid
expenses

Money necessary to create an escrow account or to adjust
the seller’s existing escrow account. Can include taxes,
hazard insurance, private mortgage insurance and special
assessments.

prepayment
A privilege in a mortgage which allows the borrower to
make payments before they are due.

prepayment
penalty

Fees for early repayment of debt, allowed in 36 states and
the District of Columbia.

primary
mortgage market

Lenders making mortgage loans directly to borrowers such
as savings and loan associations, commercial banks, and
mortgage companies. These lenders sometimes sell their
mortgages into the secondary mortgage markets such as FNMA
or GNMA, etc.

principal
The amount of debt, not counting interest, left on a loan.

private
mortgage insurance (PMI)

Default insurance for conventional loans, normally
required with smaller down-payment loans.

Q

qualification
rate
Rate of
interest used to calculate whether or not a borrower
qualifies for a mortgage.

qualification
requirements
guidelines
used by lenders to decide whether to loan money to an
applicant.

qualified
acceptance, conditional acceptance
acceptance
for a loan (or other contract) provided that certain
conditions are met.

qualified
buyer

A person who has been pre-approved for a mortgage loan .

quantum
A quantity
or amount, a specified portion.

quit
claim deed
A document
that transfers a title, right or claim to another person,
giving up all claims to a possession.

R

radon
A radioactive gas which seeps up from the ground and can
cause health problems. A radon test is often part of the
home inspection.

realtor
A real estate broker or an associate holding active
membership in a local real estate board affiliated with
the National Association of Realtors.

recision
The cancellation of a contract.

recording
fees

Money paid to the lender for recording a home sale with
local authorities, making it public record.

refinance
Obtaining a new mortgage loan on a property already owned,
often to replace existing loans.

Real
Estate Settlement Procedures Act (RESPA)

A federal law that allows consumers to review information
on known or estimated settlement costs once after application
and once prior to (or at) settlement.

reverse
annuity mortgage (RAM)

A mortgage in which the lender makes periodic payments to
the borrower using the borrower’s equity in the home as
collateral.

right
of first refusal

A portion of an agreement that requires a property owner
to give one party the opportunity to buy or lease the
property before the property is made available to other
potential buyers.

S

sale
price

The price at which the house actually sold. The difference
between a home’s sale price and the listing price is
useful for buyers in making offers on comparable homes.

satisfaction
of mortgage, release of mortgage

The document issued by the mortgagee when the mortgage
loan is paid in full.

second
mortgage

A mortgage made subsequent to the primary mortgage.

secondary
mortgage market

The market in which primary mortgage lenders sell their
loans to obtain more funds to originate more new loans.

security
interest

Interest that a lender takes in the borrower’s property to
assure repayment of a debt.

servicing
The operations a lender performs to keep a loan in good
standing, such as collection of payments and payment of
taxes, insurance, property inspections, etc.

shared
appreciation mortgage (SAM)

A mortgage in which a borrower receives a below-market
interest rate and, in return, the lender (or other
investor) receives a portion of the future appreciation in
the value of the property.

simple
interest

Interest which is computed only on the principal balance.

soft
market

A market where houses aren’t selling much or quickly, so
the sales price is likely to be significantly lower than
the asking (listing) price. It’s a good time for buyers to
buy, but not the best time for prospective sellers to
sell.

survey
A detailed measurement of a property, including the
location of the land in reference to known points, its
dimensions, and the location and dimensions of any
structures on the land. Prepared by a registered land
surveyor.

sweat
equity

Equity created by a purchaser performing work on a
property being mortgaged.

T

term
The lifespan of the contract to repay a loan.

title
A document that gives evidence of an individual’s
ownership of property .

title
insurance

Insurance, usually issued by a title insurance company,
which insures a homebuyer against errors in the title
search. The cost of the policy is usually a percentage of
the property value.

title
search

The examination of municipal records by a title company to
determine the legal ownership of property.

truth-in-lending
A federal law requiring disclosure of the APR to
homebuyers shortly after they apply for the loan.

two-step
mortgage, premier mortgage

A mortgage in which the borrower receives a below-market
interest rate for a specified number of years (7-10) and
then receives a new interest rate adjusted (within limits)
to market conditions at that time.

U

underwriting
The decision whether to make a loan to a potential
homebuyer based on credit, employment, assets, and other
factors, and the matching of this risk to an appropriate
rate and term or loan amount.

usury
Interest charged in excess of the legal rate established
by law.

V

VA
loan

A long-term, low- or no-down-payment loan guaranteed by
the Department of Veterans Affairs restricted to those
qualified by military service or other entitlements .

VA
mortgage funding fee

A premium of up to 1-7/8 percent (depending on the size of
the down payment) paid on a VA-backed loan.

W

waive
To give up a
claim or right voluntarily, to relinquish. A waiver is
a document that evidences that relinquishment.

walk-through
inspection
A final
walk-through immediately prior to closing to verify that
no changes have taken place and no new damage has
occurred.

wear
and tear
Normal use
and the resulting reduction in value of a property .

wraparound
mortgage
A mortgage
that encompasses the balance of one mortgage plus an
additional mortgage loan. Payments are then made to the
mortgagee of the wraparound mortgage, who forwards
appropriate portions of that money to the mortgagee of the
first mortgage.

Z

zoning
City regulations determining the character or use of
property. Zoning laws divide cities into different
areas according to use, from single-family residences to
industrial plants. Zoning ordinances control the
size, location , and use of buildings within these
different areas.