AGGREMENT FOR SALE: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under certain stated terms and conditions.

AMORTIZE: To reduce debt by means of regular periodic payments, which include amounts applicable to both principal and interest.

APPRECIATION: An increase in value of real property.

ASSUMPTION OF MORTGAGE: Assumption by the buyer of the primary liability for payment of an existing mortgage or deed of trust, which the seller remaining secondarily liable for the obligation

CLOSING: The conclusion or consummation of a real estate transaction. Closing includes the delivery of deed, financial adjustment, the signing of notes and disbursement of funds necessary to the sale or loan transaction.

DEED: Written instrument duly executed and delivered by which the title to land is transferred from one person to another.

DEED OF TRUST: A conveyance of a land title by a marker or a note (the debtor) to a third party, a trustee, as collateral security for the payment of the note whit the condition that the trustee shall reconvey the title to the debtor upon payment of the note, and with power in the trustee to sell the land and pay the note in the event of default on the part of the debtor.

DISCOUNT POINTS: The amount of money the borrower or seller must pay the lender to get a mortgage at the stated interest rate. This amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender under market conditions. A point equals one percent of the loan.

DOWN PAYMENT: The difference between the sale price of real estate and the mortgage amount.

EQUITY: The difference between fair market value and current indebtedness, usually referring to the owner’s interest.

FEDERAL HOUSING ADMINISTRATION (FHA): A division the Department of Housing and Urban Development, the FHA’s main activity is the insuring of residential mortgage loans made by private lenders.

LEASE: A written document containing the conditions under which the possession and use of real property are given by the owner to another for a stated period and for stated consideration.

LEVERAGE: The use of borrowed money to increase one’s return on each investment.

LIEN: A claim or charge on property held by another for payment of some debt, obligation or duty.

MARKET VALUE: The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

MORTGAGE: Instrument whereby an owner conditionally transfers title of his property to another as security for payment of a debt. The owner retains possession and use of the land and, upon debt payment, the mortgage becomes void. Note: A written promise to pay a certain amount of money at a certain time, in a certain number of installments. It usually provides for payment of interest and its payment is at times secured by a mortgage.

OWNER’S POLICY: A title insurance policy insuring the owner against loss due to any defect of title not excepted to or excluded from the policy.

PRINCIPAL, INTEREST, TAXES, INSURANCE (PITI): The principal and interest payment on most loans is fixed for the term of the loan: the tax and insurance portion may be adjusted to reflect changes in taxes or insurance costs.

REFINANCING: The repayment of a debt for the proceeds of a new loan using the same property as security.

SECOND FINANCING: Financing real estate with a loan or loans that are subordinated to a first mortgage or first trust deed.

SWEAT EQUITY: Equity created in property by the performance of work or labor by the purchaser or borrower. It directly increases the value or the property.

TENANCY BY THE ENTIRETIES: A form of ownership existing in many states where husband and wife together are treated as an entirety.

VETERANS ADMINISTRATION (V.A.): An independent agency of the federal government. The Veterans Administration Home Loan Guaranty Program is designed to encourage lenders to offer long term, low down payment mortgages to eligible veterans by guaranteeing the lender against loss.

WRAPAROUND/ALL INCLUSING TRUST DEED: a mortgage that secures a debt which includes the balance due on an existing senior mortgage and an additional amount advanced by the wraparound mortgagee who then makes the payment on the senior mortgage.