Real Estate Glossary: O

May 13, 2008

One-year Adjustable
A mortgage where the annual rate changes from year to year. The rate is based on movements of a published index plus a specified margin, selected by the lender.

Open-end Lease
A type of lease that offers lowers payments, but more risk to the lessee because he or she must pay the difference between the residual value of the automobile as stated in the lease and the fair market value, if lower, at the end of the lease. The lessor pays for the appraisal that determines the automobile’s the value. If the lessee does not agree with the value, he or she can pay for an independent appraisal by an impartial third party. All parties must agree to the selected appraiser. Also know as a finance lease.

Open House
A low-pressure sales approach used by realtors to advertise a property that is for sale. The realtor invites potential buyers to drop by and see the property without making a formal appointment.

Open Listing
A property that multiple brokers can market and compete to sell for a commission.

Open Mortgage
A type of loan that can be paid off prior to maturity without penalty.

Operating Loan
A loan that is intended for short-term financing. This type of loan is often used for cash flow support or to cover operating expenses from day to day.

Option
A legal contract that permits the owner, depending on the type of option, to purchase, sell, or lease an asset at a set price for a specific time period.

Owner Financing
A real estate transaction where the person selling the property lends the buyer all or a portion of the money for the purchase.

Owner Occupant
A borrower who occupies or lives in the property used as security or collateral for the loan.