Real estate developed or improved with the purpose of its existence being to produce income.
To compensate someone for loss or damage.
An agreement by which one party agrees to repay another for any loss or damage the latter may suffer.
A person who is hired to do work for another person but who is not an employee or agent of that person.
The hiring person is not responsible for the actions of the Independent Contractor nor does he/she owe
that Independent Contractor the same legal duties owed by an Employer to an Employee under labor and employment
A number used as the basis for adjusting the interest rates of adjustable rate loans (ARM). Commonly used
indexes are the Prime Rate, the LIBOR and Treasury bills. A margin is added to the index to determine
the interest rate that will be charged on the ARM. This interest rate is subject to any caps that are
associated with the mortgage.
The rise in price of goods and services, or Consumer Price Index (CPI), when there is an increase in the
amount of money or credit available in relation to the amount of goods or services available. Moderate
inflation is a result of economic growth. Hyperinflation (rising at rates of 100% or more annually) causes
people to lose confidence in their economy and put their money in hard assets such as gold and real estate.
Over time, inflation reduces the purchasing power of a dollar, making it worth less.
The network of public facilities located within the community such as roads, parks, schools, sewers, utilities,
The state-imposed taxes on real and personal property received through an inheritance.
The introductory interest rate on a loan; signals that there may be rate adjustments later in the loan.
This rate changes for an adjustable-rate mortgage (ARM). Sometimes known as "start rate" or
A term for the older, central residential area of a municipality which, in many cases, has deteriorated
The regular periodic payment that a borrower agrees to make to a lender.
Borrowed money that is repaid in equal payments, known as installments. Also Installment Note.
A contract in which the buyer will pay installment payments to a seller. Title remains vested in the seller
until the contracted purchase price is paid in full.
of Real Estate Management
A professional organization of property managers. Affiliated with the National Association of Realtors.
A property title that a title insurance company is willing to insure.
A promise of compensation for specific potential future losses in exchange for a periodic payment.
A document that states that insurance is temporarily in effect. Because the coverage will expire by a
specified date, a permanent policy must be obtained before the binder's expiration date.
The total amount of insurance carried stated in monetary limits.
A mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance
(MI). If the borrower defaults on the loan, the insurer must pay the lender for the lesser of the insured
amount or remaining loan balance.
The fee charged for borrowing money for a specified period of time.
Interest Accrual Rate
The rate, stated as a percentage, at which interest accumulates on a mortgage.
The borrower pays only the interest that accrues on the loan balance each month. Therefore, each payment
goes toward interest and the loan balance does not get reduced.
The rate of interest in effect for the monthly payment due.
Interest Rate Buydown Plan
An arrangement wherein the property seller (or other party) deposits money to an account so that it can
be released each month to reduce the mortgagor's monthly payments during the early years of a mortgage.
During the specified period, the mortgagor's effective interest rate has been "bought down"
below the actual interest rate.
Interest Rate Ceiling
For an adjustable-rate mortgage (ARM), the maximum rate of interest that a financial institution can charge
for an adjustable rate mortgage or loan.
Interest Rate Floor
For an adjustable-rate mortgage (ARM), the minimum interest rate that could be charged, as specified in
the mortgage note.
A property that is not occupied by the owner—usually purchased specifically to generate profit through
rental income or capital gains.
A tax credit allowed under federal law usually calculated as a fixed percentage of qualifying investments
in scientific research and experimental development and in certain regions. It is designed to assist growth
in specific business sectors.
(Individual Retirement Account)
A retirement account that allows individuals to make tax-deferred contributions to a personal retirement
fund, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10%
penalty). Individuals can place IRA funds in bank accounts or in other forms of investment such as stocks,
bonds, or mutual funds.
see Institute of Real Estate Management
The definitions of Real Estate
Definitions found on 10Realty.com are for general information only. All information is subject to change
and should be independently verified. 10Realty.com makes no representations or warranties of any nature
with regard to the information found on the pages therein. 10Realty.com assumes no responsibility for
any liabilities or losses claimed or incurred as a result of using this information. (Real Estate Terms,
Investment Terms, Banking Terms explained, definitions, legal definitions, legal terms and definitions)