Ames Team Utah

Real Estate Terms

Real Estate Terms

Click on a word to learn the definition.

Adjustable-rate mortgage

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.

 

Amortization

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.

Appraisal

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.

Assessed value

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.

Buyer’s agent

An agent that represents the buyer in the home purchasing process.

Cash Reserves

Cash reserves is the money left over for the buyer after the down payment and the closing costs.

Closing

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.

Closing costs

Examples of closings costs include loan processing costs, title insurance, and excise tax.

Contingencies

Contingencies are conditions that are required to be met in order for the purchase of a home to be finalized. 

Comparative market analysis

A report on comparable homes in the area that’s used to derive an accurate value for the home in question.

Dual agency

This is when an agent represents both sides of the party, a buyer and a seller.

Equity

Equity refers to how much of your home you actually own—meaning how much of the principal you have paid off. 

Escrow

Escrow is an account that the lender sets up that receives monthly payments from the buyer.

Fixed-rate mortgage

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.

Home warranty

This warranty protects from future problems in the home such as plumbing and heating.

Inspection

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

Interest is the cost of borrowing money for a home. Interest is combined with principal to determine monthly mortgage payments.

Listing

A listing is a home that is for sale.

Listing agent

A Listing Agent is someone represents the seller in the home-selling process. 

Mortgage broker

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.

Offer

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.

Pre-approval letter

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.

Principal

The principal is the amount of money borrowed to purchase a home. 

Private mortgage insurance

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.

Real estate agent

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.

Real estate broker

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.

Realtor

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

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

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.