Many people do not understand some of the terms that come up during a real estate transaction. Whether it is contract or financing related, it is important to understand what you read, especially that which you sign. Hopefully, you may find this real estate glossary helpful in learning the "ABC's" of real estate.

Glossary Terms Defined:

0 - B | C - E | F -L | M - P | R - Z

Radon - A radioactive gas found in some homes that in sufficient concentrations can cause health problems. Many home inspections check for radon.

Rate lock - A commitment issued by a lender to a home buyer or to the mortgage broker guaranteeing a specific interest rate for a specified amount of time. See also lock.

Real estate agent - A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.

Real Estate Settlement Procedures Act (RESPA) - A consumer protection law that requires lenders to give home buyers advance notice of closing costs, which are payable at the closing or settlement meeting.

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.

Refinancing - Securing a new loan in order to pay off the existing mortgage or to gain access to the existing equity in the home.

Reliction - An increase in the amount of land that occurs when a river or sea permanently withdraws.

Restrictive covenant - A clause in a deed that restricts the use of property for a period of time.

Roll-in loans - A refinance loan that rolls any closing costs or fees into the loan. These programs best serve people who have a reasonable amount of equity, want to reduce their overall interest expense and plan to stay in their homes. Most refinance programs also cap the allowable LTV at 97 percent, which means some borrowers won't have the option of rolling their costs in no matter what.

Rural Housing Service (RHS) - This agency of the U.S. Department of Agriculture provides financing to farmers and other qualified borrowers buying property in rural areas who are unable to obtain loans elsewhere. It offers low-interest-rate loans with no down payment to borrowers with low-to-moderate incomes who live in rural areas or small towns.

Sale agreement - A written contract signed by the buyer and the seller of a house stating the terms and conditions under which the property will be sold.

Second mortgage - A mortgage on property that has a lien position behind the first mortgage.

Secondary mortgage market - The buying and selling of existing mortgages.

Servicer - An organization that collects monthly mortgage principal and interest payments from home owners and manages escrow accounts for paying taxes and homeowners' insurance premiums. The servicer often services mortgages that have been purchased by an investor in the secondary mortgage market.

Settlement - See closing.

Subprime mortgage - A mortgage granted to a borrower considered subprime, that is, a person with a less-than-perfect credit report. Subprime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default.

Time is of the essence - A phrase inserted in contracts to require punctual performance.

Title - A legal document proving a person's right to claim entitlement to a property, including the history of the property's ownership.

Title binder - Written evidence of temporary title insurance coverage. 

Title company - A company that specializes in examining and insuring titles to real estate.

Title insurance - Insurance that protects against loss from disputes over ownership of a property. A policy may protect the mortgage lender and/or the home buyer.

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 against the property.

Transfer tax - State or local tax levied when title passes from one owner to another.

Treasury index - An index used to determine interest rate changes for certain adjustable rate mortgages (ARMs). It is based on the results of auctions that the U.S. Treasury holds for its Treasury bills and securities or is derived from the U.S. Treasury's daily yield curve, which is based on the closing market bid yields on actively traded Treasury securities in the over-the-counter market.

Truth-in-Lending - A federal law that requires lenders to disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

Two-step mortgage - See alternative mortgage products.

Underwriter - A company or person undertaking the responsibility for issuing a mortgage. Underwriters analyze a borrower's creditworthiness and set the loan amount.

VA mortgage - A loan backed by the Veterans Administration. It requires very low or no down payments and has less stringent requirements for qualification. Members of the U.S. armed forces are eligible for the loans under certain qualifying conditions. Contact the local VA office for information.

Warranty deed - The gold standard in deeds for home buyers: It proclaims that the grantor warranties (guarantees) that the property has clear title and is being conveyed free of liens or encumbrances.

Wraparound mortgage - A new mortgage that includes the remaining balance on an old mortgage, plus a new amount.

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