Dictionary

• Addendum
  A document that is added to a real estate contract or purchase agreement.

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• Amortization
  Repaying a debt over a set period of time.

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• Annual percentage rate (APR)
  The interest rate along with other fees that you can expect to pay when securing a mortgage loan.

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• Appraisal
  An approximation of a home's current value based on a range of factors such as the price of similar properties in the area.

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• Appreciation
  The increase in a property's value over time.

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• Assessed Value
  When a county, village, city, or town hires an assessor to determine the value of a property for tax purposes.

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• Broker
  A real estate broker is qualified to represent a seller or buyer. He or she can choose to work independently of a firm, real estate agents must work with licensed brokers.

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• Closing
  The final step of a real estate transaction when a property is finally transferred from the seller to the buyer.

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• Closing Costs
  The costs and fees that come along with the purchase of a property.

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• Commission
  This refers to 5 - 6% that a real estate agent makes at closing.

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• Construction loan
  This is a short-term loan that covers the cost of building a property.

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• Conventional mortgage
  Ideal for borrowers with strong credit, this type of loan is not backed by a government agency like the Federal Housing Administration (FHA).

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• Deed
  The deed refers to the legal document that transfers ownership of a property from a seller to a buyer.

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• Default
  Default refers to when a homeowner fails to make several mortgage payments on time, according to the terms of the loan contract.

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• Delinquency
  Delinquency means a homeowner has failed to make a mortgage payment on time.

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• Down payment
  The down payment is the amount of money a buyer has saved in order to purchase a property. This can typically range from 5 - 20% of the home's cost.

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• Equity
  This is calculated by taking the difference between the amount owed to a lender and the market value of a property.

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• Escrow
  During the home buying process, your money will be placed "in escrow" and is protected by a third party until the real estate transaction is closed.

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• Exclusive listing
  An exclusive listing is when a seller commits to working with one specific broker and a designated agent on the sale of a property.

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• Fair Credit Reporting Act
  This federal law determines how a consumer's credit information can be used.

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• Fair market value
  The amount a property would sell for in a competitive market, or when a seller and buyer can agree on the price of a property.

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• FHA mortgage
  A Federal Housing Administration mortgage loan is backed by the government and is typically reserved for buyers with a low credit score or significant amount of debt.

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• Fixed-rate mortgage
  This mortgage has the same interest rate for the term of the loan.

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• For sale by owner
  This refers to a homeowner putting their property up for sale without assistance from a real estate agent or broker.

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• Foreclosure
  A property goes into foreclosure when the homeowner misses mortgage payments and the lender tries to recover the balance of a loan.

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• Home equity line of credit
  Also referred to as a HELOC, this is a second mortgage that allows a homeowner to borrow money against their home's value.

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• Home inspection
  A home inspection involves the evaluation of a property's condition, including electrical work, sewage, and plumbing before the closing.

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• Homeowner's association
  When a group of homeowners in a community, such as a condo, join in paying fees that cover the maintenance of the entire property.

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• Homeowner's insurance
  Financial protection that helps with covering costs associated with repairs of a property or even replacement if necessary.

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• Lender
  A lender is a financial institution or person that loans money to another party for the purpose of purchasing real estate.

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• Lien
  A mortgage lender can place a lien on a property if the homeowner is not up-to-date on payments.

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• Mortgage
  A mortgage is a loan that is used to purchase a home or other form of real estate.

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• Mortgage banker
  A mortgage banker provides mortgage loans.

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• Mortgage broker
  A mortgage broker acts as the middleman between mortgage borrowers and potential lenders.

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• Mortgage insurance
  This form of insurance can protect a lender in the event that a homeowner defaults on their mortgage.

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• Negative amortization
  When interest on a mortgage loan has not been paid to the lender, it's added to the loan balance.

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• Original principal balance
  This is the balance of the mortgage loan before interest is taken into account.

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• Pre-approval
  The pre-approval process involves a potential lender or bank reviewing an individual's finances, including their income, assets, and credit history, to determine how much money can likely be borrowed.

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• Prime interest rate
  Banks offer customers who have proven to be creditworthy their best, or prime, interest rate.

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• Principal
  The principal is the amount of money you borrowed from a lender, excluding the interest.

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• Real estate agent
  A licensed professional who helps sellers or buyers complete real estate transactions.

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• Right of Refusal
  A lease or contract might include "right of first refusal" to note that an individual has the right to put an offer on a property before it is listed on the market by a seller.

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• Second mortgage
  Also known as a junior lien, a second mortgage is an additional loan taken on the same property. It typically has a higher interest rate than the primary mortgage and can be used for repairs, among other reasons.

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• Servicer
  A servicer is a company that monitors and manages mortgage loans.

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• Title
  This legal document states who has owned a property in the past and notes any liens associated with it.

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• Transfer of ownership
  This means that a property has a new owner who purchased it and assumed its mortgage debt.

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• Transfer tax
  A tax that is charged by a state, county, or city when ownership of a property is transferred.

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• Under contract
  This refers to a prospective buyer and seller reaching an agreement on a property. At this early stage, both parties are in alignment with the terms of the deal, including the property's price and closing date.

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List brought to you by Good Housekeeping: https://www.goodhousekeeping.com/life/money/a35794780/real-estate-terms-glossary/