Real Estate Lingo Made Easy
Get the low-down on Real Estate Lingo
For a lot of us, Real Estate lingo and terminology sounds like a foreign language. We want you to be as prepared as possible when diving into a new and exciting experience such as home buying. We’ve collected a small glossary for you to quick reference and sourced some very helpful videos for you to become more comfortable during the home buying process. Check them out below:
Real Estate Glossary & Cheat Sheet
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Acceptance: Agreeing to the terms of an offer, thereby creating a contract.
Adjustable rate mortgage (ARM): A mortgage loan with an interest rate that fluctuates in accordance with a designated market indicator.
Annual percentage rate (APR): A yearly interest rate that includes upfront fees and costs paid to acquire the loan.
Appraisal: A determination of the value of something; A professional appraiser makes an estimate by examining the property, looking at the initial purchase price, and comparing it with recent sales of similar property.
Appreciation: An increase in the value or worth of an asset or piece of property that’s caused by external economic factors occurring over time, rather than by the owner having made improvements or additions.
Assumable mortgage: A home mortgage that allows the buyer to take over the seller’s mortgage.
Balloon mortgage: A mortgage that is not fully paid off over the loan term (such as five, seven, or ten years), leaving a balance at the end.
Closing costs: All transaction charges that home buyers need to pay at the close of escrow when the property is transferred.
Contingency: A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event.
Credit reporting agency: A private company that collects and sells information about a person’s credit history: banks and mortgage lenders.
Depreciation: Gradual loss of value of property that occurs through external economic conditions, the property’s age, natural wear & tear, or deterioration.
Disclosure: A home seller must disclose major physical defects in the house within his or her knowledge, such as a leaky roof or potential flooding problem.
Earnest money deposit (EMD): A partial payment (deposit) demonstrating commitment in a contractual relationship.
Escrow: The holding of funds or documents by a neutral third party prior to closing your home sale.
Escrow agent: A person (an attorney or title agent) or a company that handles escrow arrangements for a fee usually paid as part of the closing costs.
Escrow instructions: Written instructions, signed by a buyer and seller, telling an escrow agent what needs to happen before the deal closes.
Fixed rate mortgage: A mortgage loan that has an interest rate that remains constant throughout the life of the loan, usually 15 or 30 years.
Hazard insurance: Protects against physical damage to the property caused by unexpected and sudden events such as fires, storms, and vandalism.
House closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded.
Nonrecurring closing costs: Those costs of closing a home purchase that need to be paid only once: appraisal fee, title insurance, and transfer taxes.
PITI: Major expenses that make up a mortgage payment: principal (the amount borrowed), interest, (property) taxes, and (homeowners’) insurance.
Prepayment penalty: A fee imposed on a borrower who pays off a loan (usually a mortgage) before its due date.
Real estate: Land & things permanently attached to it: buildings, houses, stationary mobile homes, fences, and trees. Anything that isn’t real estate is personal property.
Real estate agent: An agent must have a state license and be supervised, in most U.S. states by someone called a real estate “broker”.
Real estate broker: A Broker is one step up from a real estate agent, having more training and the power to supervise other agents.
Recurring closing costs: Home purchase costs that begin a series of payments that will recur over time: homeowners’ insurance & property taxes.
Title report: The written analysis that includes a property description, names of titleholders and how title is held , tax rate, encumbrances (mortgages, liens, deeds of trust, recorded judgments), & real estate taxes due. A title report is needed before a lender will agree to finance purchase of the property. A title report is prepared by a title company, an abstracter, an attorney, or an escrow company, depending on local practice.
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