Real Estate Investment Seminar,

CONFORMING LOAN
A mortgage loan which meets all requirements to be eligible for purchase by federal agencies such as FNMA and FHLMC. The maximum conforming loan amount is $240,000 for a one-unit property.

IMPLIED WARRANTY OF HABITABILITY
A legal doctrine imposing on the landlord a duty to make the leased premises acceptable to live in and ready for occupancy and to continue to maintain them in a state of repair throughout the entire term of the lease.

ACCELERATED DEPRECIATION
A method of calculating the depreciation of certain property (that property which is used in a trade or business, or which is held for the production of income) at a faster rate than would be achieved from using the straight line method of depreciation.

BENCH MARK
A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.

LANDLOCKED
Real property having no access to a public road or way.

COMMISSION
The compensation paid to a real estate broker(usually by the seller) for services rendered in connection with the sale or exchange of real property.

PENTHOUSE
An apartment located on the roof of a building, or more commonly, an apartment on the top floor of a building.

ALTERNATIVE DOCUMENTATION
A method of documenting a loan file that relies on information the borrower is likely to be able to provide instead of waiting on verification sent to third parties for confirmation of statements made in the application.

AMORTIZATION
The gradual repayment of a debt by means of systematic payments of principal and interest over a set period, where at the end of the period there is a zero balance.

CHATTEL
Personal property which is tangible and moveable.

BANKRUPTCY
A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts.

FINANCIAL STATEMENT
A formal statement of the financial status and net worth of a person or company, setting forth and classifying assets and liabilities as of a specified date.

HOMESTEAD
A home which is used as a personal residence.

DEED
Legal document by which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.

PREPAID INTEREST
Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

LIQUIDITY
The ability to sell an asset and convert it into cash at a price close to its true value.

PRE-QUALIFICATION
The process of determining how much money a prospective homebuyer will be eligible to borrow prior to application for a loan. Information submitted during pre-qualification is subject to verification at application.

FLOOR DUTY
A frequent practice in real estate brokerage offices of assigning one sales agent the responsibility for handling all telephone calls and office visitors for a specified period of time.

DUE ON SALE CLAUSE
A form of acceleration clause found in some mortgages, especially savings and loan mortgages, requiring the mortgagor to pay off the mortgage debt when selling the secured property, thus resulting in automatic maturity of the note at the lender's option.

FUNCTIONAL OBSOLESCENCE
A loss in value of an improvement due to functional inadequacies, often caused by age or poor design.

PURCHASE MONEY MORTGAGE
A mortgage given to the seller as part of the buyer's consideration for the purchase of real property, and delivered at the same time that the real property is transferred as a simultaneous part of the transaction.

APR
See Annual Percentage Rate.

DEED
A written instrument by which a property owner "grantor" transfers to a "grantee" an ownership in real property.

PARTY WALL
A wall which is located on or at a boundary line between two adjoining parcels and is used or is intended to be used by the owners of both properties in the construction or maintenance of improvements on their respective lots.

ALIENATION CLAUSE
A clause in a promissory note or mortgage which provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor.

TAX SHELTER
A phrase often used to describe some of the tax advantages of real estate investment, such as deductions for depreciation, interest, taxes, etc., which may offset the investor's other ordinary income to reduce the investor's overall tax payment.

LOAN APPLICATION
An initial statement of personal and financial information required to apply for a loan.

PREPAYMENT PENALTY
The amount set by the creditor as a penalty to the debtor for paying off the debt prior to its maturity. The prepayment penalty is charged by the lender to recoup a portion of interest that he had planned to earn when he made the loan.

PRINCIPAL
The capital sum; interest is paid on the principal. NOT spelled principle.

COFI
See Cost of Funds Index.