Preferred Real Estate Investment,

CONSIDERATION
An act or forbearance, or the promise thereof, which is offered by one party to induce another to enter into a contract; that which is given in exchange for something from another.

NOTE
A document signed by the borrower of a loan, stating the loan amount, the interest rate, the time and method of repayment and the obligation to repay. The note is the evidence of the debt. When secured by a mortgage, it is called a mortgage note.

TRUTH-IN-LENDING ACT
Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by a lender to a borrower after application. Also requires the right to rescission period.

BOUNDARIES
The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description.

CO-TENANCY
A form of concurrent property ownership in which two or more persons own an undivided interest in the same property.

FORECLOSURE (OR REPOSSESSION)
Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default.

NEGATIVE CASH FLOW
The investment situation where cash expenditures to maintain an investment (taxes, mortgage payments, maintenance, etc.) exceed the cash income received from the investment.

FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC, OR FREDDIE MAC)
This agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

LISTING
A written employment agreement between a property owner and a broker authorizing the broker to find a buyer or a tenant for a certain real property.

FRAUD
Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another.

LEASE
A lease is both a contract between lessor (landlord)and lessee (tenant) and a conveyance or demise of the premises by the lessor to the lessee. A lease is a contract in that item bodies the agreement between the parties.

JUDICIAL FORECLOSURE
A method of foreclosing upon real property by means of a court supervised sale. After an appraisal, the court determines an upset price below which no bids to purchase will be accepted.

MECHANIC'S LIEN
A statutory lien created in favor of materialmen and mechanics to secure payment for materials supplied and services rendered in the improvement, repair or maintenance of real property.

ADJUSTABLE RATE MORTGAGE LOANS (ARM)
Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as (but not always) Treasury bill rates. If interest rates rise, your monthly payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an ARM loan.

VARIANCE
Permission obtained from governmental zoning authorities to build a structure or conduct a use which is expressly prohibited by the current zoning laws; an exception from the zoning laws.

NOMINAL CONSIDERATION
A consideration bearing no relation to the real value of the contract. A deed often recites a nominal consideration, such as "ten dollars and other valuable consideration."

CEILING
The maximum allowable interest rate of an adjustable rate mortgage.

PREPAID INTEREST
The paying of interest before it is due.

AGREEMENT OF SALE
Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

FDIC
See Federal Deposit Insurance Corporation.

CONTINGENCY
A provision placed in contract which requires the completion of a certain act or the happening of a particular event before a contract is binding.

DEPRECIATION (TAX)
For tax purposes, depreciation is an expense deduction taken for an investment in depreciable property.

BOOT
Money or other property given to make up any difference in value or equity between two exchanged properties.