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Term Definition
Adjustable-rate Mortgage (ARM) A mortgage that permits the lender to adjust the interest rate periodically on the basis of changes in a specified index.


Any relationship in which one party (agent) acts for or represents another under the authority of the latter.
Agent A party who is authorized to act in the best interests of a principal/client, and is obligated to place the principal’s interests before the interests of any other parties, including the agent’s own interests regardless of whether the agency relationship is with the seller of the property or the buyer.
Appraisal A written analysis of the estimated value of a property prepared by a qualified appraiser.
Buyer’s Agent (or Buyer Broker) Represents the consumer who is purchasing property in a real estate transaction, not the seller. A Buyer’s representative works for, and owes fiduciary responsibilities (see fiduciary duties) to, the real estate buyer and has the buyer’s best interests in mind throughout the entire real estate transaction.
Buyer Broker Agreement An agreement that specifies the duties and the scope of services a buyer’s representative agrees to provide to the buyer as well as specifying the buyer’s responsibilities. 
Closing A meeting at which a sale of property is finalized by the buyer signing the mortgage documents and paying closing costs, and seller’s transfer of the deed to the property. Typically held at the Attorney’s office for the Buyer.
Closing Costs The fees, costs and taxes associated with the purchasing of a home, the borrowing of money and the preparation of necessary paperwork to finalize the sale. The total amount of the closing costs will vary depending on location, property type, price, and the complexity of the transaction. It is extremely important that the buyer work closely with his/her buyer’s representative, lender, and attorney in the early stages of the home buying process to determine what these costs could be, since closing costs can easily represent thousands of dollars. There are four categories of closing costs: (1) discounts points to buying down the mortgage; (2) the costs of originating the mortgage; (3) taxes and other local fees; (4) the cost of documentation.
Commission The fee charged by a broker or agent for providing services related to a real estate transaction such as marketing the property, bringing the parties together, and negotiating a purchase contract or loan.
Comparative Market Analysis (CMA) An analysis provided by a real estate professional that surveys like properties in a given area or of a certain type for the purpose of determining the relative value of a given property.
Confidentiality The fiduciary duty that prohibits the agent from communicating personal information about the client that was given to or acquired by the agent within the scope of employment as an agent to the client. Personal information must be kept confidential unless the client releases the agent from this duty. However, the material facts and defects of a property are not confidential.
Deed The legal document conveying title to a property.
Earnest Money Deposit A deposit made by the potential home buyer to show that he or she is serious about buying the house.
Equity A homeowner’s financial interest in a property.
Escrow A deposit of value, money, or documents with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow, held by the broker, bank or other party, until delivered to the seller when the transaction is closed. Typically held by the Listing Agency acting as Escrow Agent.
Fair Housing Laws Local, state, and federal fair housing laws that prevent discrimination against any individual or group of individuals based upon race, color, religion, sex, handicap, national origin or familial status, as well as other groups protected by various local and state fair housing laws.
For Sale By Owner (FSBO) A property for sale that is not listed by a real estate professional.
Fiduciary Duties The term fiduciary is defined as relating to or involving a confidence of trust. Fiduciary duties are determined by state law and generally include: confidentially, undivided loyalty, obedience, reasonable care and diligence, full disclosure, and accounting. Regardless of whether the duties owed in a particular state are traditional, common law fiduciary duties, or are statutorily defined, they are owed to any principal/client.
Full Disclosure The fiduciary duty that requires the agent to disclose affirmatively and honestly all information the agent knows concerning the transaction (and property) which might affect the decisions a a client or customer makes.
Good-faith Estimate An estimate of closing costs associated with the purchase of your home provided by a Lender.
Home Inspection A thorough inspection that evaluates the structural and mechanical condition of a property. Could be environmental, energy-efficient, etc.
Home Warranty A guarantee for mechanical systems and appliances, but not the structure, against repairs not covered by homeowner’s insurance; coverage is for a specific period of time.
HUD - Settlement Statement

The official document itemizing all fees and credits incurred in getting a mortgage loan. The document is credited by the settlement agent – in Vermont that would be the buyer’s attorney. The form will include both credits and deductions take from each party and will tally them up to include a grand total to be brought to closing by the buyer or disbursed to the seller at closing.

LTV (loan to value) The ratio of the amount of a mortgage loan to the appraised value or sales price of the property mortgaged, whichever is lower.
Lock-in A written agreement in which the lender guarantees a specified interest rate if a mortgage goes to closing within a set period of time.
Mortgage A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. Generally, the mortgage document pledges the mortgaged property to the lender as security for the loan.
Mortgage Insurance A policy that insures the lender against loss caused by a mortgagor’s default on a mortgage.
Multiple Listing Services (MLS) A database of all properties for sale listed by members of a specified MLS.
PMI Private Mortgage Insurance is coverage provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Coverage is usually required for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.
Points A point is one percent of the amount of the mortgage. At closing, Lenders sometimes charge borrowers a percentage of the loan amount equal to the number of points to cover the lender’s cost. Sometimes borrowers pay higher points in exchange for a lower interest rate.
Pre-Approval A written commitment issued by a lender after a comprehensive analysis of the creditworthiness of the applicant including verification of income, resources, and credit score. A pre-approval makes you a more attractive candidate to the seller when making an offer.
Pre-Qualification Is an estimation of what a purchaser can afford.
Purchase Contract The purchase contract is the legally binding document that sets forth the terms of the sale, establishes the rights and obligations of the parties involved, specifies the actions to be taken in order to close the sale, and establishes the time frames for those steps to be completed.
Real Estate Agent A person licensed by a state to negotiate and transact the sale of real estate on behalf of a property owner/seller or buyer.
REALTOR® Identifies a real estate Agent who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
Seller Property Information Report (SPIR) A report completed by the Seller, based on the Seller’s knowledge of the property condition. This report does not replace the need for a property inspection by a professional.
Settlement Statement A document prepared by a broker, Attorney, or lender detailing the complete breakdown of the costs and disbursements in a real estate transaction.
Taxes and Other Local Fees

A closing cost that will vary according to the requirements of local governments. Commonly the property taxes will be pro-rated according to when the buyer will officially become the owner of the property. There can also be homeowner’s association dues, and property transfer taxes.

Title Search A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.
Underwriting The process for evaluating a loan’s application to determine the risk involved for the lender.