Real Estate Terms
Real Estate Terms
Click on a word to learn the definition.
An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
This is the process of combining both interest and principal in payments, rather than simply paying off interest at the start. This allows you to build more equity in the home early on.
An appraisal is an unbiased professional opinion of the value of a home and is used whenever a mortgage is involved in the buying, refinancing, or selling of that property.
How much a home is worth according to a public tax assessor who makes that determination in order to figure out how much city or state tax the owner owes.
An agent that represents the buyer in the home purchasing process.
Cash reserves is the money left over for the buyer after the down payment and the closing costs.
The meeting that takes place where the sale of the property is finalized. During the closing, buyers and sellers sign the final documents, and the buyer makes the down payment and pays closing costs.
Examples of closings costs include loan processing costs, title insurance, and excise tax.
Contingencies are conditions that are required to be met in order for the purchase of a home to be finalized.
A report on comparable homes in the area that’s used to derive an accurate value for the home in question.
This is when an agent represents both sides of the party, a buyer and a seller.
Equity refers to how much of your home you actually own—meaning how much of the principal you have paid off.
Escrow is an account that the lender sets up that receives monthly payments from the buyer.
In a fixed-rate mortgage, the interest rate stays the same throughout the life of the loan unlike an adjustable-rate mortgage where the interest rate varies throughout the life of the loan.
This warranty protects from future problems in the home such as plumbing and heating.
Home inspections are required once a potential buyer makes an offer. The purpose is to check that the house’s plumbing, foundation, appliances, and other features are up to code. Issues that may turn up during an inspection may factor into the negotiation on a final price.
Interest is the cost of borrowing money for a home. Interest is combined with principal to determine monthly mortgage payments.
A listing is a home that is for sale.
A Listing Agent is someone represents the seller in the home-selling process.
The broker is an individual or company that is responsible for taking care of all aspects of the deal between borrowers and lenders, whether that be originating the loan or placing it with a funding source such as a bank.
The offer is the initial price offered by a potential buyer to the seller. A seller may accept the offer, reject it, or counter with a different offer.
A pre-approval letter from a bank, which provides an estimate on how much the bank will lend that person. This letter will help determine what the buyer can afford to the seller.
The principal is the amount of money borrowed to purchase a home.
Also referred to as PMI (Private mortgage insurance), is an insurance premium that the buyer pays to the lender in order to protect the lender from default on a mortgage.
A real estate agent is a professional with a real estate license who works under a broker and assists both buyers and sellers in the home-buying process.
A real estate broker is a real estate agent who has passed a state broker’s exam and met a minimum number of transactions. These brokers are able to work on their own or hire their own agents.
A Realtor is a real estate agent who specifically is a member of the National Association of Realtors. NAR has a code of standards and ethics that members must adhere to.
Refinancing is when you revise your current home loan terms, replacing your old loan with an entirely new loan that has different rates and payment structures.
Title insurance is often required as part of the closing costs. It covers research into public records to ensure that the title is free and clear, and ready for sale.