Glossary of Terms

Following are mortgage and real estate related terms and definitions you may find helpful.

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Radon: A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

Rate Cap: The limit on the amount an interest rate on an ARM can increase or decrease during an adjustment period.

Rate lock: A commitment issued by a lender to a borrower or other mortgage originator guaranteeing a specified interest rate for a specified period of time.

Ratified Sales Contract: A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspection, making repairs, closing by a certain date, etc.

Real Estate Broker: A middleman or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.

Real Estate Owned: (REO). A term frequently used by lending institution as applied to ownership of real property acquired for investment or as a result of foreclosure.

Real Estate Professional: An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you've specifically contracted with a buyer's agent, the real estate professional represents the interest of the seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.

RESPA: (Real Estate Settlement Procedures Act). A Federal law that requires lenders to provide home mortgage borrowers with information about known or estimated settlement costs.

REALTOR: A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

Real property: Land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof.

Recission: The cancellation or annulment of a transaction or contract by the operation of a law or by mutual consent.

Recorder: The public official who keeps records of transactions that affects real property in the area.

Recording: The noting in the registrar’s office of the details of a properly executed legal document, such as a deed, a mortgage note, a satisfaction of mortgage, or an extension of mortgage, thereby making it a part of the public record.

The process of the same mortgagor paying off one loan with the proceeds from another loan.

Refinance: Getting a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

Rehabilitation mortgage: A mortgage created to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Remaining balance: The amount of principal that has not yet been repaid.

Remaining term: The original amortization term minus the number of payments that have been applied.

Repayment plan: An arrangement made to repay delinquent installments or advances. Lenders' formal repayment plans are called "relief provisions".

Replacement reserve fund: A fund set aside for replacement of common property in a condominium, PUD, or cooperative project -- particularly that which has a short life expectancy, such as carpeting, furniture, etc.

Replacement cost: The cost to replace damaged personal property without a deduction for depreciation.

Restrictive Covenants: Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer. The determination whether a covenant runs with the land or is personal is governed by the language of the covenant, the intent of the parties, and the law in the State where the land is situated. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title. Restrictive covenants may limit the density of buildings per acre, regulate size, style or price range of buildings to be erected, or prevent particular businesses from operating or minority groups from owning or occupying homes in a given area. (This latter discriminatory covenant is unconstitutional and has been declared unenforceable by the U.S. Supreme Court).

Revolving liability: A credit arrangement, such as a credit card, that allows a customer to borrow against a pre-approved line of credit when purchasing goods and services. The borrower is billed for the amount that is actually borrowed plus any interest due.

Right of first refusal: A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

Right of ingress or egress: The right to enter or leave designated premises.

Right of survivorship: In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

RTC: (Resolution Trust Corporation). Formed to resolve thrift failures over the next three years and dispose of their assets and liabilities.

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