Common Appraisal-related Terms
The determination of property value based on recent sales
information of similar properties.
Someone who is professionally licensed to determine the
value of a property.
Determining a property's value for the purpose of
Increases in property value due to fluctuations in the
market, inflation, etc.
Valuable items, encumbered or not, owned by a
person, corporation, or entity.
An individual in the business of assisting in
arranging funding or negotiating contracts for a client but
who does not loan the money himself. Brokers usually charge
a fee or receive a commission for their services.
Certificate of Reasonable Value (CRV) -
An appraisal that has been performed on a property that is
being paid for with a VA loan. After the property has been
appraised, the Veterans Administration issues a CRV.
A legal document which affects the transfer of
ownership of real estate from the seller to the buyer.
In real estate and mortgage terms, the decline in the
The difference between the current market value of a
property and the principal balance of all outstanding loans.
Home Inspection -
A thorough assessment by a professional regarding the
structural and mechanical condition of a property.
The bank, mortgage company, or mortgage broker offering the
loan. Many institutions only "originate" loans and then
resell the obligation to third parties.
The principal, or amount of total borrowed money, that is
repaid with interest.
Loan-To-Value Ratio -
The relationship between the amount of the mortgage
loan and the appraised value of the property expressed as a
percentage. A LTV ratio of 90 means that a borrower is
borrowing 90% of the value of the property and paying 10% as
a down payment. For purchases, the value of the property is
assumed to be the purchase price, for refinances the value
is determined by an appraisal.
A legal document that pledges property to a
creditor for the repayment of the loan, and is the term used
to describe the loan itself. Some states use the term First
Trust Deeds to refer to mortgage loans.
The lender in a mortgage agreement.
Mortgage Banker -
A financial intermediary that originates or funds loans,
collects payments, inspects the property, and forecloses if
Mortgage Insurance -
Insurance that covers the lender against losses incurred as
a result of a default on a home loan. This is usually
required on all loans that have a loan-to-value higher than
80%. Mortgages that have an 80% LTV that do not require
mortgage insurance have higher interest rates. The lenders
then pay the mortgage insurance themselves. In addition, FHA
loans and some first-time homebuyer programs require
mortgage insurance regardless of the loan-to-value.
Owner's Title Policy -
A policy protecting the buyer for the amount of the purchase
price in the event of a future title dispute.
Private Mortgage Insurance (PMI) -
Paid by a borrower to protect the lender in case of default.
PMI is typically charged to the borrower when the
Loan-to-Value Ratio is greater than 80%.
Purchase Agreement -
A written contract signed by the buyer and seller
stating the terms and conditions under which a property will
A real estate agent, broker, or associate that
holds an active membership in a local real estate board that
is affiliated with the National Association of Realtors.
The process of paying off one loan with the
proceeds from a new loan, using the same property as
Second Mortgage -
A mortgage that has a lien position subordinate to the first
A drawing or map that shows the precise legal boundaries of
a property, the location of improvements, easements, rights
of way, encroachments, and other physical features.
The right of a community, under its police power,
to dictate the use of property within its boundaries.