Sell Your Home: Definitions

Selling your home is all about financial
transactions and legalities. Bottom line, you
need to understand the lingo. Here is an
abbreviated list of terms you should know.

personal property
Any property that is not real property, consisting of things that are temporary or movable..
Acronym for the four primary components of a monthly mortgage payment: principal, interest, taxes, and insurance.
PITI reserves
A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home. The reserves for payment of principal, interest, taxes, and insurance (PITI) must be enough to cover PITI for a predefined number of months.
One percent of the amount of a mortgage loan.
power of attorney
A legal document that authorizes an individual to act on another’s behalf. Power of attorney can grant complete authority or can be limited to certain acts or periods of time.
Any amount paid to reduce the principal balance of a loan before the scheduled due date. Prepayment in full on a mortgage may be triggered by sale of the property, a foreclosure, or winning the lottery, but in any case, it means that payment is completed before the loan has been fully amortized.
prepayment penalty
A fee that may be charged to a borrower for paying off a loan before it is due.
The amount borrowed or remaining unpaid, not including interest. The part of the monthly payment that reduces the remaining balance of a mortgage.
principal balance
The amount owed on a loan minus the amount already repaid; sometimes called the outstanding or unpaid principal balance. The principal balance does not include interest or any other charges.
purchase agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
quitclaim deed
A deed that releases a person’s interest in a property without stating the nature of that person’s interest or rights and making no warrany of ownership. Though a quitclaim does not validate the grantor’s current claim to the property, it does prevent the grantor from claiming any interest in the property in the future.
real estate agent
A person licensed to negotiate and transact the sale of real estate.
real property
Land and anything permanently attached to it, such as buildings and other structures, trees, and minerals.
A real estate agent, broker, or associate, who holds active membership in the National Association of REALTORS®
right of first refusal
A provision in an agreement that requires the owner of a property to give another party the opportunity to purchase or lease the property before it is offered for sale or lease to anyone else.
A transaction in which the buyer leases a property back to the seller for a specified period of time.
A precise measurement of a property that delineates its legal boundaries and shows the location of improvements, easements, rights of way, encroachments, and other physical features.
sweat equity
Contribution to the value of a property in the form of labor or services rather than cash; also, a borrower’s contribution to the down payment for a property in the form of labor or services rather than cash.
The right to, and ownership of, property. Title to real estate is usually conveyed by a written document, known as a deed, that transfers ownership from the seller to the buyer. Title is sometimes used to mean the evidence of proof of ownership of land.
title company
A company that specializes in examining and insuring titles to real estate.
title insurance
Insurance that protects lenders or buyers against loss arising from legal problems that were not discovered during a title search and from disputes over ownership of a property. Typically, only the lender is protected by the insurance issued at closing. Borrowers may purchase similar insurance to protect themselves.
title search
A check of public records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding against the property.
transfer of ownership
Any means by which the ownership of a property changes hands. Lenders consider all of the following situations to be transfer of ownership: purchase of a property subject to a mortgage, the assumption of the mortgage debt by the property purchaser, and any exchange of possession of the property under a land sales contract or any other land trust device.
transfer tax
State or local tax payable when title passes from one owner to another.