Real Estate Glossary (100 Terms)
- Appraisal - An estimate of a property's market value by a licensed appraiser.
- Assessment - The process of determining a property's value for taxation.
- Buyer's Agent - A real estate agent who represents the buyer's interests in a transaction.
- Closing Costs - Fees paid at the closing of a real estate transaction, such as attorney fees and title insurance.
- Closing Date - The day the sale is finalized, and the property ownership is transferred.
- Commission - The fee paid to real estate agents for their services, usually a percentage of the sale price.
- Comparative Market Analysis (CMA) - An evaluation of similar, recently sold homes in the area to determine a property's value.
- Contingency - A condition that must be met for a real estate contract to be binding.
- Deed - A legal document that transfers ownership of property.
- Down Payment - An upfront payment made by the buyer, typically a percentage of the purchase price.
- Earnest Money - A deposit made by a buyer to show they are serious about purchasing a property.
- Equity - The difference between the market value of a property and the amount owed on the mortgage.
- Escrow - A financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction.
- FHA Loan - A mortgage insured by the Federal Housing Administration, often with lower down payments and easier credit requirements.
- Fixed-Rate Mortgage - A mortgage with a fixed interest rate for the entire term of the loan.
- Foreclosure - The process by which a lender takes control of a property due to the borrower's failure to make mortgage payments.
- Home Inspection - An examination of a property's condition by a professional before completing the purchase.
- Homeowner's Association (HOA) - An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties.
- Interest Rate - The proportion of a loan charged as interest to the borrower.
- Listing Agent - A real estate agent who represents the seller's interests in a transaction.
- Loan-to-Value Ratio (LTV) - A ratio used by lenders to assess risk, calculated by dividing the loan amount by the property's appraised value.
- Market Value - The price at which a property would sell under normal market conditions.
- Mortgage - A loan used to purchase a property, with the property itself serving as collateral.
- Multiple Listing Service (MLS) - A database used by real estate agents to list and find properties for sale.
- Offer - A proposal to buy a property at a specified price and terms.
- Open House - A scheduled period when a property for sale is available for public viewing.
- Pending Sale - A property that has an accepted offer but has not yet closed.
- Pre-Approval - A preliminary evaluation by a lender indicating that a borrower qualifies for a mortgage of a certain amount.
- Principal - The amount of money borrowed on a mortgage, excluding interest and fees.
- Private Mortgage Insurance (PMI) - Insurance that lenders require from borrowers who make a down payment of less than 20%.
- Property Tax - A tax assessed on real estate by the local government, based on the property's value.
- Real Estate Broker - A licensed professional who oversees real estate transactions and manages real estate agents.
- Refinancing - The process of obtaining a new mortgage to replace the original one, often to get a better interest rate.
- Short Sale - The sale of a property for less than the balance owed on the mortgage, with the lender's approval.
- Title - A legal document establishing the right to ownership of a property.
- Title Insurance - Insurance that protects the lender or buyer against any claims or disputes over the property ownership.
- Underwriting - The process by which a lender evaluates the risk of issuing a mortgage to a borrower.
- VA Loan - A mortgage loan available to veterans, service members, and their families, guaranteed by the Department of Veterans Affairs.
- Walk-Through - A final inspection of the property by the buyer before closing to ensure the condition is as agreed.
- Zoning - Regulations governing the use of land and buildings within specific areas.
- Adjustable-Rate Mortgage (ARM) - A mortgage with an interest rate that can change periodically based on the performance of a specific benchmark.
- Balloon Mortgage - A mortgage with a large payment due at the end of the loan term.
- Bridge Loan - A short-term loan used to bridge the gap between buying a new home and selling the old one.
- Cash-Out Refinance - Refinancing a mortgage for more than the amount owed to convert home equity into cash.
- Caveat Emptor - "Let the buyer beware," a principle that buyers are responsible for checking the quality of goods before purchase.
- Debt-to-Income Ratio (DTI) - A measure of a borrower's monthly debt payments compared to their monthly gross income.
- Dual Agency - When a real estate agent represents both the buyer and the seller in the same transaction.
- Easement - A legal right to use another's land for a specific limited purpose.
- Encumbrance - A claim or lien on a property that affects its transferability or use.
- Fixtures - Items that are attached to the property and are included in the sale unless otherwise specified.
- Home Equity Line of Credit (HELOC) - A loan in which the lender agrees to lend a maximum amount within an agreed period, where the collateral is the borrower’s equity in their house.
- Amortization - The process of gradually repaying a loan through regular payments that cover both principal and interest.
- Lien - A legal claim or hold on a property, either as security for a debt or due to unpaid taxes or bills.
- Lot - A parcel of land owned or meant to be owned.
- Escalation Clause - A clause in a purchase offer that allows the buyer to automatically increase their offer if another higher bid is received.
- Depreciation - A decrease in a property's value due to age, wear and tear, or market conditions.
- Equity Loan - A loan based on the equity homeowners have in their property.
- Seller's Market - A market condition characterized by high demand and low supply of properties, favoring sellers.
- Buyer's Market - A market condition characterized by high supply and low demand of properties, favoring buyers.
- Title Search - A process to ensure the property being sold legally belongs to the seller and is free of any liens or claims.
- Loan Origination Fee - A charge by a lender for processing a new loan application.
- Assumption of Mortgage - An arrangement where the buyer takes over the seller’s existing mortgage.
- Covenants, Conditions, and Restrictions (CC&Rs) - Rules established by a homeowners' association that govern properties in a subdivision or community.
- Pre-Qualification - An informal estimate by a lender of how much a borrower may be able to borrow.
- Real Property - Land and anything permanently affixed to it, such as buildings.
- Transfer Tax - A tax imposed by the state or local government on the transfer of property ownership.
- Yield Spread Premium (YSP) - A rebate paid by a lender to a mortgage broker for selling a loan with a higher interest rate than the borrower qualifies for.
- Assessed Value - The value assigned to a property by a public tax assessor for the purpose of determining property taxes.
- Certificate of Occupancy - A document issued by a local government agency certifying that a building is in compliance with building codes and is safe for occupancy.
- Common Areas - Areas within a property that are shared by all residents, such as lobbies, hallways, and recreational facilities.
- Duplex - A residential building divided into two separate units, each with its own entrance.
- Exclusive Right to Sell Listing - A listing agreement giving a real estate agent exclusive rights to earn a commission by representing the owner and bringing in a buyer.
- For Sale By Owner (FSBO) - A property that is being sold by the owner without the assistance of a real estate agent.
- Lease Option - A lease agreement that gives the tenant an option to purchase the property at the end of the lease term.
- Open Listing - A property listing that gives multiple real estate agents the right to sell the property and earn a commission.
- Planned Unit Development (PUD) - A type of development and zoning designation that allows for a mix of residential, commercial, and industrial uses.
- Principal, Interest, Taxes, and Insurance (PITI) - The components of a monthly mortgage payment, consisting of principal, interest, property taxes, and homeowner's insurance.
- Promissory Note - A written promise to pay a specified amount of money at a certain time.
- Reserve Fund - A savings account for future expenses or repairs for a property, often used in condominium associations.
- Subdivision - A tract of land divided into individual lots for residential development.
- Townhouse - A multi-story home that shares one or more walls with adjacent properties but has its own entrance and often a small yard.
- Underwater Mortgage - A mortgage where the balance owed is higher than the property’s current market value.
- Unsecured Loan - A loan that is not backed by collateral.
- Adjustable-Rate Mortgage (ARM) - A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
- Balloon Payment - A large payment due at the end of a balloon loan's term after a series of smaller, regular payments.
- Conforming Loan - A mortgage that meets the guidelines and limits set by government-sponsored entities like Fannie Mae and Freddie Mac.
- Credit Score - A numerical rating that represents the creditworthiness of a borrower.
- Debt Consolidation - Combining multiple loans into one loan with a lower interest rate.
- Escrow Account - A financial account where a third party holds funds or assets until the transaction is completed.
- Federal Housing Administration (FHA) - A government agency that insures mortgage loans made by approved lenders.
- Interest-Only Loan - A loan in which the borrower pays only the interest for a set period, followed by payments of both principal and interest.
- Lock-In Rate - An agreement between borrower and lender guaranteeing a specific interest rate for a certain period.
- Mortgage Insurance - Insurance that protects a lender against losses due to default by the borrower.
- Origination Fee - A fee charged by a lender for processing a loan application.
- Points - Fees paid directly to the lender at closing in exchange for a reduced interest rate.
- Private Mortgage Insurance (PMI) - Insurance that protects the lender in case the borrower defaults and is typically required when the down payment is less than 20%.
- Refinance - The process of replacing an existing mortgage with a new loan with different terms.
- Reverse Mortgage - A loan available to homeowners aged 62 or older, allowing them to convert part of their home equity into cash.
- Title Insurance - Insurance that protects lenders and homeowners against legal issues that may arise from the property's title.
- Walk-Through Inspection - A final inspection of a property before the closing to ensure that it is in the agreed-upon condition.