Glossary of Terms:

Adjustable Rate Mortgage (ARM)
An adjustable rate mortgage is a mortgage that can vary (up or down) over the life of the loan in relationship to changes in the index (ARMs are sometimes called variable rate mortgages). Typically, the initial mortgage interest rate on ARMs are lower than those for fixed rate mortgages; however, over time, since rates on ARMs can vary over the life of the mortgage, a fixed rate loan may eventually have a lower interest rate. Your lender can provide you with details regarding the mortgage programs that are available.

Adjustment Period
ARMs are available with different adjustment periods, typically one, three, five, or seven years; the interest rate on the loan can change at the end of the adjustment period.

Amortization
Mortgage loans are amortized when they are repaid in equal payments consisting of principal and interest. Over time, as the mortgage is repaid, the outstanding portion of the debt is reduced and the equity increases. In the early years of the mortgage, the largest portion of the mortgage payment pays the interest on the loan and the smallest portion pays back the loan principal; in the later years of the loan, the reverse is true. Lenders and borrowers are protected against financial loss which may result from legal defects in the Title, or other claims against the Title by insurance known as Title Insurance.

Ampere
Amperes, or amps, is a measure of the capacity of an electrical system. The typical minimum requirement is 200 amps; if a home is larger, or has central air-conditioning or electric heat, 200 to 300 amps is recommended.

Annual Percentage Rate (APR)
A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.

Appraised Value
An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.

Backfill
Earth installed in the area excavated for the construction of the foundation

Balusters
The vertical spindles of a guard railing

Basement Floor Slab
The reinforced poured concrete slab that forms the basement floor

Beam
A beam is any structural member of a home; a beam can be wood or metal

B.R.L.'s
This stands for Building Restriction Lines. These lines are placed on lots so homes cannot be built too close to each other. These lines form an artificial "box" within the perimeter of the lot and no part of the home can be built over these lines.
Buydown
With a buydown, the seller pays an amount to the lender so that the lender can give you a lower rate and lower payments, usually for an early period of the loan. For example, the interest rate may be 6% in year one, 7% in year two, and then 7.5% each year thereafter. The seller may increase the sales price to cover the cost of the buydown.

Cantilever
A structure which protrudes from a support (such as a wall) and is supported only on one side

Cap
A cap refers to the limit on how much an interest rate can change at an adjustment period, or over the life of the loan.

Certificate of Occupancy
A certificate of occupancy is issued by the local municipality after a home, or alterations to home, have passed all municipal codes and are ready for occupancy.

Change Order
Written authorization to add, delete, or change an item in a contract, with any cost savings or additions specified.

Circuit Breaker
An over current protection device that is designed to automatically cut off the flow of electricity when the flow of current through the circuit breaker exceeds its rated capacity. Unlike most fuses that require replacement when they are overloaded, a circuit breaker can be reset much like a switch.

Closing Costs
Closing costs include all of the fees, such as attorneys fees, appraisal fees, inspections, insurance, title search, points, taxes, bank fees, escrow deposits, etc. that a borrower is required to pay to obtain a mortgage.

Closing Statement
The statement that lists the financial settlement between buyer and seller, as well as the costs each must pay. A separate statement for buyer and seller is sometimes prepared.

Code
Rules and regulations that detail accepted construction practices.

Column
A column is a structural component that is utilized to support a beam; a column can be constructed of steel or wood.

Commitment
A written promise to make or insure a loan for a specified amount and on specified items.

Comps (Comparable Sales)
When a real estate agent performs a comparative market analysis to determine how to price a home to be listed for sale, one of the criteria utilized is a list of comparable homes that have recently sold and those that are presently listed for sale.
Construction Loan
This is short-term financing of real estate construction. It is usually followed by long-term financing called a “take-out loan,” issued upon completion of improvements.

Contingency
The dependence upon a stated event that must occur before a contract is binding.

Contract of Sale
Depending on area of country it may also be called a Land Contract of a Purchase Agreement.

Contract Sales Price
The full purchase price as stated in the contract.

Conventional Mortgage
A loan neither insured by the FHA nor guaranteed by the VA.

Corner Bracing
Diagonal members installed at corners for strength.

Corner Post
The vertical member located at the corner of the house frame.

Covenant
Also called a deed of restriction, this agreement between seller and buyer of property restricts the use of the property as to height, setback, or other restrictions on a new home or other structures on the subject property.

Crawl Space
A space located in a house that does not have sufficient height for a person to stand erect; a crawl space can be in a basement or in an attic.

C.U.P.
This stands for Custom Upgrade Pricing. Completed by our Sales Manager, this computer-generated form provides a detailed pricing analysis of the upgrades you request.

Deflection
Deflection (sagging) occurs to structure when the structure is subject to imposed loads such as the weight of the structure itself, furnishings, people, etc. It is normal for structure to deflect, there are codes that detail accepted deflection.

Disclosure
Some states require home sellers to provide home buyers with a disclosure of known defects.

Downspout
The downspout leader is vertical component that is connected to the gutter to provide a method of diverting water that runs off the roof.

Draw
Scheduled payment on a construction loan. Typically issued at selected construction milestones throughout the building process.

Easement
A right given by a landowner for a specific and limited use of the land.

Elevation
A scale drawing on a vertical plane of the exterior of a building.

Equity
Equity is the net value of a residence minus the unpaid portion of the mortgage and less any other outstanding amounts (such as a second mortgage, a lien, etc). The difference between the market value of the property and the homeowner’s mortgage debt.

Escrow
Delivery of a deed by a grantor to the grantee, via a third party, upon the completion of a contingent event.

Escrow Deposit
If your lender is scheduled to pay property taxes, insurance, etc. on your behalf, the borrower must place funds in an escrow account to pay the required amounts. Typically, the borrower places funds in this account as part of the monthly mortgage payment.

Escrow Reimbursement
An assumption or “wrap loan” transaction in which the buyer reimburses the seller for the current balance of his escrow (or impounded) funds.

Fascia Board (FNMA)
The trim board located under the edge of the roof.

Federal National Mortgage Association (Fannie Mae)
Fannie Mae, as it is better known, is privately owned corporation created by Congress to operate in the secondary mortgage market. Fannie Mae buys and sells residential conventional mortgages and mortgages insured by the FHA or guaranteed by the VA. See also Freddie Mac below.

Federal Housing Administration (FHA)
A federal agency that insures first mortgages, enabling lenders to loan a very high percentage of the sale price.

Finish Flooring
Hardwood, carpet, tile or resilient flooring.

Finished Grade Line
The level of the ground at the foundation.

Fixed Rate Mortgage
A fixed rate mortgage is a mortgage that has a fixed interest rate for a specified period of time, usually 15, 25 or 30 years (typically, the life of the loan). Fixed mortgages with shorter terms typically have lower interest rates than loans with longer terms. In addition, fixed rate mortgages with shorter terms accumulate equity faster than those with longer terms.

Floor Plan
An architectural drawing, drawn to scale, illustrating each floor and featuring the location and size of rooms, windows, doors, walls, stairs, and fixtures.

Footings
The concrete support for the foundation walls.

Footing Drain Tile
A perforated drainage pipe installed at the base of the footing that functions to drain water away the house and reduce the possibility of basement water intrusion.

Forest Retention
Designated no cut, no clear areas of wooded open space.

Foundation Wall
A wall of poured concrete (or concrete block, etc.) that rests on the footings; the foundation wall supports the house.

Framing
The framing of a home is the structural skeleton of the home much the same as bones in a human body.

Freddie Mac (FHLMC)
Federal Home Loan Mortgage Corporation. A federal agency purchasing first mortgages, both conventional and federally insured, from members of the Federal Reserve System and the Federal Home Loan Bank System. See also Fannie Mae above.

Furring
Thin strips of wood used to level a surface.

Fuse
An over-current protection safety device that is designed to automatically cut off the flow of electricity when the flow of current through the fuse exceeds its rated capacity.

Gable
The triangular end wall of a house that has sloping roofs.

Ginnie Mae (GNMA)
Government National Mortgage Association. A federal association working with the
FHA which offers special assistance in obtaining mortgages and pruchases mortgages in a secondary capacity.

Grading
Preparing the site for a building as well as creating a slope around the completed structure for runoff.

Gravel Fill
The gravel bed installed beneath the basement floor slab, which helps to reduce the possibility of basement water seepage.

Gutter
A trough that collects and diverts water that runs off the roof.

Header
A header is a beam that is installed over an opening in a structure such as a door or a window.

Homeowners Association
A community based organization of homeowners. An annual fee is usually charged for maintenance of open spaces and any community amenities such as parks and entrance features.

Homeowners Insurance
Losses or damage to the home or personal property and from damages to other people or property are risks typically covered by homeowners insurance and is typically required by the mortgage lender and is often included in the borrowers monthly mortgage payment.

Insured Mortgage
A mortgage insured against loss to the mortgagee in the event of default and failure of the mortgaged property to satisfy the balance owed plus costs of foreclosure.

Interest Rate
The percentage of an amount of money that is paid for the privilege of the money’s use for a specified time.

Joist
A joist is a beam that typically supports a floor or wall.

Kiln Dried
A method of drying the lumber to remove moisture which reduces shrinkage, twisting, splitting or checking of finished

Knee Wall
A knee wall is a wall whose height is short in comparison with the other walls in the structure.

Lag Bolt
A lag bolt provides a strong connection for certain applications, such as connecting a deck header to the exterior wall of a house.

Latent Defect
A latent defect is one which is not readily apparent at the time of inspection but may become apparent at a later date. An example is concealed termite damage in a wall.

Lender
A general term encompassing all mortgage providers and beneficiaries under deeds of trust.

Licensed Professional Engineer
A Licensed Professional Engineer (P.E.) is State licensed to design residential and commercial structures, inspect and evaluate residential and commercial buildings including structural problems and design structural repairs, etc.

Lien
A lien is a claim placed on property to satisfy an unpaid debt (such as a mechanic’s lien).

Lintel
The structural beam that supports a window or door opening.

Load Bearing
A load bearing wall, or other similar structure, is a structural component that can not be removed without providing an alternate means of support. Advice regarding load bearing walls are best directed to a licensed professional engineer (or registered architect) and thus the advantage of retaining the services of a P.E. to conduct your home inspection rather than a home inspector who is not licensed to practice engineering.

Loan Commitment
A commitment letter is issued by the lender; the lender agrees to make the loan to the borrower and sets forth the terms upon which the loan will be granted.

Loan-To-Value
The ratio of the mortgage divided by the appraised value of the home; lenders use this ratio to help determine the maximum amount of a mortgage loan that will be granted.

L.O.D.'s
Limits of Disturbance. Areas on the lot which cannot be cleared during the excavation process.

Lolly Column
A lolly column is a concrete filled steel pipe column typically used to support a girder or other beam.

Louvers
An open vent cover


Mortgage
A mortgage is a lien on a residence to secure repayment of money borrowed to purchase the residence.

Newel
A post that terminates a railing.

Origination Fee
The origination fee is a fee charged by the lender to initiate a proposal for a mortgage.

Open Space
Areas surrounding lots within a subdivision which cannot be developed.

Partition Wall
A partition wall is a wall that has no structural function and is installed to divide the living space of a home.


Percolation (perc) Tests
A study conducted to determine the suitability of the soil for septic systems

PITI
A terminology commonly used to represent principal, interest, taxes and insurance. The combination of these items is used by lenders to determine the borrowers projected housing costs.

PMI
PMI, or Private Mortgage Insurance, is typically provided by a private company and paid for by the borrower. PMI is intended to protect the lender against loss if the borrower defaults on the loan. PMI is only required for some mortgage loans.

Retaining Wall
A retaining wall supports the earth on a hill. Retaining walls can be constructed of concrete block, poured concrete, fieldstone, brick, railroad ties, etc.

Roof Sheathing
The roof deck is installed over the roof rafters and provides the surface for the application of the roofing shingles. The roof deck (sheathing) can be plywood, plank or hardboard.

Septic Recovery Area
That portion of the lot reserved for future septic system drain fields.

Septic System
This is the sewage disposal system that is used on the vast majority of rural lots. The system consists of a buried concrete tank which first filters the solids from the liquid and then distributes those liquids to underground trenches called "drain fields" where the liquids are absorbed into the earth.

Service Panel
The service panel is the center of the electrical service in the house. The service panel is the location of the electrical circuit breakers or fuses.

Settling
Every home settles to a certain extent after construction; problems occur when the settling is uneven and cracks occur in the foundation walls.


Sheathing
The sheathing on a home is the structural wrapper of a home and is located between the structural skeleton of the home and the exterior siding and roofing.

Sill
The first structural component of the framing that rests on the foundation wall.

Site Plan
Lot and building dimensions are shown on this illustration of the building site.

Stair Rail
A hand railing in a stairwell.

Stair Riser
The vertical portion of a stairway located between two adjacent treads.

Stair Tread
The horizontal step of a stairway

Structural Integrity
Structural integrity is a measure of the quality of construction and the ability of the structure to function as required.

Stud
Vertical wooden members that frame a wall.

Sub Flooring
The plywood, planks or hardboard that is installed over floor joists to accept finished flooring.

Title
When the ownership of a residence is transferred from the seller to the buyer, Title is transferred via a document called a deed.

Title Insurance
Lenders and borrowers are protected against financial loss which may result from legal defects in the Title, or other claims against the Title by insurance known as Title Insurance.

Truss
A truss is a special structural member that has more strength than a typical beam and is typically used for roof rafters and floor joists.

Underground Service
An underground electrical service is a service where the conductors approach a home underground.

Window Casing
The decorative portions surrounding the interior side of a window opening.

Window Sash
The inner frame that contains the window glazing.