REAL ESTATE GLOSSARY BY NIKHIL PATTANI | K TO O | REALTY DISCOVERED

There is a lot of real estate terminology used during the home buying and selling process. With the motive to help you understand those terms, we are enlightening you all about the most commonly used real estate terms and their definitions..... 

K for

Khata

It is a legal document that records property tax payment done by a resident to the municipality. Khatas are prominently used in Bangalore.

Kick-Out Clause

A clause in a sales contract that allows the seller to accept one buyer's offer and then back out without penalty if a second buyer makes a better offer to him.

Knee Wall

A wall-like structure that supports roof rafters in timber roof constructions.

L for

Lease option

A lease option is like rent-to-own for real estate. It gives the lessee the ability to lease property with the option to buy. It includes a legal agreement with a monthly rental amount due, while also including an option to buy the property for a predetermined price at any time during the length of the agreement.

Land Tax

It is the state tax based on the value of a property (not the place of residence) paid by the owner.

Landlord

The person who owns a land or house or real estate, which is rented or leased to an individual or a business organisation.

Lender

In real estate, the lender refers to the individual, financial institution, or private group lending money to a buyer to purchase property with the expectation the loan will be repaid with interest, in agreed upon increments, by a certain date.

Load Bearing

An element in a building structure (usually a wall) with the capacity to support the weight resting on it in addition to its own.

Life cap

A life cap refers to the maximum amount an interest rate on an adjustable rate loan can increase over the lifetime of the loan. A life cap is also known as an absolute interest rate or interest rate ceiling and keeps interest rates from ballooning too high over the term of the loan.

Loan officer

Residential loan officers, or mortgage loan officers, assist the homebuyer with purchasing or refinancing a home. Loan officers are often employed by larger financial institutions and help borrowers choose the right type of loan, compile their loan application, and communicate with appraisers.

Loan servicing

Loan servicing is a term for the administrative aspects of maintaining your loan, from the dispersal of the loan to the time it’s paid in full.

Loan-to-value

The loan-to-value (LTV) ratio is the mortgage loan balance divided by the home’s value. It shows how much you’re borrowing from a lender as a percentage of your home’s appraised value.

Lock-in period

The period of time in which a borrower cannot repay their loan in full without incurring a penalty fine by the lender.

M for 

Maintenance Charges

Charges payable by the owners or occupants of a development complex  (residential/commercial/plotted) towards upkeep of all common areas and facilities. It is generally a monthly charge.

Market Value

The price at which a seller is happy to sell and a buyer is willing to buy.

Mortgage

A loan taken from a bank to finance a property.

Mortgage banker

A mortgage banker works directly with a lending institution to provide mortgage funds to a borrower. They can only obtain funds from a specific institution and are responsible for each part of the mortgage process, including property evaluation, financial due diligence, and overseeing the application process.

Mixed-Use Development

A project providing for more than one purpose. In housing it blends a combination of residential, commercial, cultural, institutional and industrial usage.

Mutation

Transfer or change of name in the records of the Corporation for the concerned property.

Mortgage broker

A mortgage broker shops several lenders, acting as a middle man between lending institutions and the borrower. A broker can compare mortgages from several different institutions, giving the borrower a better deal.

Mortgage insurance

If a homebuyer makes a down payment of less than 20% of the purchase price of a home or is the recipient of an FHA or USDA loan, they’ll usually be required to pay mortgage insurance. It lowers the risk of a lender giving you a loan, but it also increases the cost of the loan.

Multiple Listing Service (MLS)

An MLS is a suite of around 700 regional databases containing their own listings. Each database has its own listings, requires agents to pay dues for access, and allows agents to share listings across regions -- without paying dues to each one. It is widely considered the most comprehensive listing service available.

N for 

Negotiation

Dialogue between two or more people/parties intended to reach a common agreement.

Net Present Value Method

The method used for the evaluation of investment proposals.

Net Worth

The value of a persons assets minus liabilities.

Negative amortization

Amortization refers to the process of paying off a loan with regular payments so the amount you owe on the loan gradually decreases.

No cash-out refinance

A no cash-out refinance is a type of loan used to improve the rate the borrower pays on the loan. It might also shorten the lifetime of a loan to benefit the borrower.

No-cost mortgage

A no-cost mortgage is a type of refinancing in which the lender pays the borrower’s loan settlement costs and extends a new loan -- usually in exchange for the borrower paying higher interest rates. The mortgage lender then sells the mortgage to a secondary mortgage market for a higher price because of the high interest rate.

Note rate

The note rate is the interest rate stated on a mortgage note. It is also commonly referred to as the nominal rate or face interest rate.

No Objection Certificate Or NOC

Certificate issued by the concerned local authority that the building plans submitted by the developer are in order and conform to the guidelines. Simply put, the authority has NO OBJECTION to the commencement of construction.

Nominee

A person who acts for or represents another person.

O for 

Origination fee

The fee a borrower pays a lender to cover the costs of processing their loan application.

Owner financing

Owner financing (also known as seller financing) takes place when a borrower finances the purchase of a home through the seller, bypassing conventional mortgage lenders and financial institutions.

Occupancy Certificate(OC)

Certificate issued by the local development authority certifying that all necessary works have been completed as per the sanctioned plans for the said property and it is fit for occupation. OC is issued after obtaining clearance from the water, electricity, sewerage, fire fighting authorities etc.

Open Space

Land which has not had improvements such as buildings and other structures added to it. Such land is often left in a subdivision by a developer or stipulated by a local authority for recreational use or for personal use by the owner.

Operating Cost Escalation

Clause intended to adjust rents by reference to external standards such as published indexes, negotiated wages or expenses related to buildings.

To be continued .. . .