Glossary

 Adjustable Rate Mortgage (ARM): A mortgage in which the interest rate fluctuates based on an associated index.  There is a distinction between true ARMs and fixed ARMs, but all ARMs are tied to an index.

Amortization Schedule: In real estate related terms, amortization is the process of how a mortgage loan is paid off.  The amortization schedule shows what portion of each loan payment goes towards paying off interest and principal.  In the early years, much of each loan payment goes towards interest.  As the years go on more and more of each payment goes towards principal reduction.  Here’s a sample amortization schedule.

Annual Percentage Rate (APR): I’m going to go ahead and refer you to Vince Kingston, my trusted mortgage broker associate.  The APR can be confusing and I’d like you to understand it completely.

Appraisal: The valuation of a property as assessed by a licensed appraiser.  Appraisals generally compare the property in question with other comparable properties (comps) that have sold recently.  The appraisal sets the value that the bank will lend on.

Appraised Value: The price decided from the appraisal.

Appraiser: The licensed professional hired to complete an appraisal and to set the appraised value.

Appreciation: The increase of a property’s value over time.

Assessed Value: The property value as determined by the local tax assessor and used for the purposes of figuring property taxes.

Baluster: A baluster is any one of a series of usually closely-spaced, ornamental supports for a railing. (See: balustrade.)

Balustrade: A balustrade is a low, ornamental railing used on the roofs of Georgian, Federal and some other 18th- and 19th-century houses. In the Georgian period, balustrades were most commonly used to surround a flattened central area of a low-pitched hipped roof, forming what’s often referred to as a “widow’s walk” (from which seacaptains’ wives were supposed to have watched for their husbands’ ships). Balustrades on Federal houses are usually found above the exterior walls.

Bay window: A window placed in a projection of an exterior wall of a building is called a bay window when the wall projection extends all the way down to a corresponding projection of the foundation. In plan view, the wall projection may be rectangular, polygonal or segmental (curved). (Compare: oriel window.)

Bracket: A bracket is a horizontally projecting support, typically ornamental and attached to a wall, for an overhanging structure. The brackets most often seen in residential architecture are those beneath the roof overhang of Italianate houses, of which they are a distinguishing feature.

Broker: The term “broker” can have many meanings in terms of real estate.  The real estate broker, often called the real estate agent or Realtor, represents buyers and sellers in the sale of real property.  Real estate agents work under the supervision of Principal Brokers, who are often to referred to simply as brokers.  Mortgage brokers work with buyers/borrowers to find the right financing for the home purchase.  Mortgage brokers do not actually lend money, but broker the loans to lending institutions such as banks.

Chain of Title: A list showing each transfer of title for a property over the years.

Closing: Closing is another terms that gets used for many things.  In Oregon, though, closing occurs when the new deed showing the new home owner is recorded with the county.  Keys can be released to the buyer only after this recording, closing, happens (unless negotiated otherwise).

Closing Costs: There are costs other than the purchase price associated with closing a sale.  These costs, some paid by buyer, some by seller, are called closing costs.  There are different categories of closing costs, some are considered “non-recurring” and some are “prepaids”.  Non-recurring closing costs include such items loan origination fee, document prep fee, courier services, title insurance, etc.  Prepaids refer to items such as prepaid interest, taxes, etc.

Column: A column is a pillar, usually of round cross-section but sometimes square or octagonal, used to support the roof of a building, porch, or portico. Parts of a column are (bottom to top): base, shaft and capital. Columns are important design elements in Classical Revival and Neoclassical house styles. The most traditional columns follow the “Greek” and “Roman” orders (e.g., Doric, Ionic, Corinthian, Tuscan, etc., varying primarily in details of the capital) as documented by Andrea Palladio and other architects of the Italian Renaissance (14th-17th centuries). Excavations of Pompeii and Herculaneum in the 18th century revealed much more variation in the design of ancient columns than previously suspected.

Cornice: A cornice is an ornamental molding, or composition of two or more moldings, located at the exterior wall-roof junction of a building, beneath the eaves, and/or beneath the sloping ends of a gable roof.

Cornice return: Cornice returns are horizontal moldings extending inward (toward the vertical centerline of the wall) from the lower ends of a gable-roof cornice. Gable-roof Greek Revival houses use prominent cornice returns as a design element.

Credit Report: A record listing all past and present consumer debt including a timeline of payments, late payments, defaults, etc.  The credit report is the documents the complete credit history, but does not provide an actual credit score.

Credit Score:  A credit score numerically rates a borrower’s credit worthiness and risk to the lender of default.  There are actually a number of different credit scores, but FICO (Fair Isaac Corporation) is the most prominent.  Credit scores (FICO) ranges somewhere between 300 and 900 with a higher number being better.  Lenders often use credit scores to gauge a borrower’s worthiness and to determine interest rates.

Debt-to-income Ratio: A measure of a borrower’s total income as compared to total debt.  Lenders apply a debt-to-income ratio to gauge a borrower’s risk of default and to determine how much they qualify for.

Deed: the document that transfers ownership of a property.

Deed-in-lieu:  In certain situations, in order to avoid foreclosure, a bank will allow a borrower to give the bank the deed to the home in return for forgiveness of the debt.  In these cases the borrower needs to vacate the property, but they do avoid many of the negative impacts of foreclosure.

Default:  In mortgage terms, when a borrower fails to make the required monthly payments or adhere to the terms of the mortgage.

Dormer - a structural element of a building that protrudes from the plane of a sloping roof surface. Dormers are used, either in original construction or as later additions, to create usable space in the roof of a building by adding headroom and usually also by enabling addition of windows. (Gabled dormer, Hipped dormer, Shed dormer)

Double-hung window: Double-hung windows have two sashes which, when both are closed, are positioned one immediately above the other. Both sashes can be slid up and down in tracks, but are kept from dropping to the sill by counterweights attached by cords or chains and concealed in the window casing. By the nature of their design, double-hung windows can be opened to a maximum of 50% of the area of the window opening. Double-hung windows have been the most common American residential window design since the 18th century.

Down Payment:  The portion of the total purchase price that the buyer pays in cash.  Very few home buyers, especially after 2007, qualify for 100% financing.  In most cases the buyer/borrower is required to contribute a certain percentage of the purchase price as a down payment.  Down payments can range from 3.5% with many FHA programs to 20% or more.  Talk to your mortgage broker to understand down payment requirements for your specific situation.

Earnest Money:  Sometimes considered “good faith” money.  It’s the money put down by the buyer which is held in escrow as the seller’s safety net against the buyer’s default.  In Oregon, earnest money is held in escrow and becomes part of the down payment if the deal closes.  If the buyer terminates the purchase in adherence to the sales contract the earnest money is returned.  If the buyer fails to perform the sales contract, the earnest money is released to the seller.

Eaves – The overhanging lower edge of a roof.

Equity:  An owner’s financial interest in a property.  Put simply, equity is what remains if one subtracts what is owed on the mortgage from the property’s fair market value. 

Escrow:  Neutral third party.  In terms of a real estate transaction, escrow acts as a neutral and disinterested third party.  Earnest money and other funds, as well as all important documents are held with escrow until the sale is ready to be finalized.

Flush gable – gabled-side with no overhanging eaves.

Gable – The triangle shaped end where a pitched roof comes together

Gable roof – a roof sloping downward in two parts at an angle from a central ridge, so as to leave a gable at each end.

Gambrel roof - a gable roof, each side of which has a shallower slope above a steeper one.

Knob and Tube Wiring – Knob and tube wiring was installed in houses up until about 1950. This system consists or two wires, one black or hot wire and the other white or neutral to create a circuit. These two single wires are held in place with ceramic knobs and tubes. Knobs are used to clamp the wire to the structural member, while tubes are placed in holes in the structural members to prevent the wire from chafing.

MLS – A Multiple Listing Service is an aggregator of real estate agent listed homes for sale.  Member agents, most Realtors, share information on each listing and agree to participate with cooperating brokers.

RMLS - The Portland regional MLS

Rafter – A type of beam, which supports the roof of a building. In home construction, rafters are typically made of wood. Exposed rafters are a feature of traditional roof styles. (Exposed rafter tail)

Transom - the term given to a transverse beam or bar in a frame, or to the crosspiece separating a door or the like from a window or fanlight above it. (Transom light/window)