Real Estate Terms

Dictionary

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

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

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

  • 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.

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

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

  • 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.

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

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

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

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

  • 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).

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

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

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

  • 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.

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

  • 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.

  • 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.

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

  • 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.

  • 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.

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

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

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

  • 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.

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

  • 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.

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

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

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

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

  • Mortgage banker
    A mortgage banker provides mortgage loans.

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

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

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

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

  • 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.

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

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

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

  • 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.

  • 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.

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

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

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

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

  • 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.

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