Know Your Real Estate ABC's

You've found that perfect home for your business after months of searching real estate options, and the time has come for you to complete the paperwork that will signal your new status as the owner. But are the acronyms of real estate ownership getting you down? Before laying pen to paper, be sure you understand the ABC's of real estate. Knowing your terminology, what it all means, will help you to make the important decisions that will have a lasting impact on your future as a real estate and business owner.

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  • ARM — adjustable rate mortgage.
  • C of O — certificate of occupancy. Legal certificate ensuring that the real estate is approved and ready for occupancy.
  • DBA — doing business as. If you are buying real estate as a business, this is the name that will be used when purchasing the real estate.
  • FAR — floor area ratio. Ratio of floor area of a particular building to the area of the lot.
  • FDIC — Federal Deposit Insurance Corporation. This organization helps the American financial community to maintain standards and stability.
  • GNMA — Government National Mortgage Association. Participates in buying loans and selling securities backed by mortgages, improving mortgage credit availability for others.
  • GRM — gross rent multiplier. Used to estimate a real estate property's value.
  • HVAC — heating, ventilation, and air conditioning.
  • HUD — Department of Housing and Urban Development. Develops and institutes housing development plans through the establishment of low-cost real estate.
  • LTV — loan-to-value ratio. A percentage indicating the ratio of a real estate loan amount to the actual value of the real estate.
  • MLS — multiple listing service. This is a service whereby multiple brokers help each other in the listing, and hence sale, of real estate.
  • NOI — net operating income. This figure is calculated by subtracting any operating expenses from any income in regards to a real estate investment.
  • PITI — principal, interest, taxes, and insurance.
  • PM — When purchasing real estate, this note describes loan repayment schedules and applicable interest rates.
  • POA — Power of Attorney.
  • REIT — Real Estate Investment Trust. Group real estate ownership in which each participant owns a certain share of the real estate investment.
  • REO — real estate owned. An institution's real estate holdings as obtained through foreclosure.
  • RESPA — Real Estate Settlement Procedures Act. A law governing the procedures used when closing a real estate deal.
  • TOE — "time is of the essence."
  • UB — unsafe building.
  • UCC — Uniform Commercial Code. A statement connecting a property lien to a real estate purchase.
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