Glossary of Real Estate Terms for Buyers



 Glossary of Real Estate Terms for Buyers 

  • Adjustable-Rate Mortgage (ARM): a mortgage that allows the interest rate to be changed periodically.
  • Amortization:  the gradual repayment of mortgage by periodic installments.
  • Annual Percentage Rate (APR):  the total finance charge (interest, loan fees, points) expressed as a percentage of the mortgage amount.
  • Appraisal:  an evaluation of a piece of property to determine the value.
  • Appreciation:  increase in value due to any cause.
  • Assessed Value:  the valuation placed on property by a public tax assessor as the basis of property taxes.
  • Balloon Mortgage:  a mortgage where the amount financed is not fully amortized over the period of the loan.  When the loan becomes due, a large sum or "balloon" payment is required to satisfy the mortgage.
  • Bridge Loan:  a short-term morgage made until a longer-term mortgage can be made; it's sometimes used when a person needs money to build or purchase a home before the present one has been sold.
  • Closing: the final step in the sale and transfer of ownership of a property.  The title is transferred from the seller to the buyer; the buyer signs the mortgage and pays costs of settlement; any money due the seller and purchaser are paid.
  • Closing Costs:  fees and expenses, not including the price of the home, payable by the seller and the buyer at the closing (e.g. brokerage commissions, title insurance premiums, and inspection, appraisal, recording, and attorney's fees.
  • Closing Statement:    a financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received or expanded.
  • Contingency:  a condition that must be satisfied before a contract is binding.
  • Conventional Mortgage:  a fixed rate, fixed-term mortgage not insured by the federal government.
  • Deed: a legal document conveying title to a property.
  • Earnest Money:  a portion of a down payment given to the seller by a potential buyer indicating the buyer's intent to complete the purchase of the property.
  • Easement: a right to use the land of another.
  • Equity:  the value of a real estate over and above the liens against it.  It is obtained by subtracting the total liens from the value.
  • Equity Mortgage:  a mortgage based on the borrowers' equity in their home rather than on their credit worthiness
  • Escrow:  the placement of money or documents with a third party for safekeeping pending the fulfillment or performance of a specified act or condition.
  • Fixed Rate Mortgage:  a loan that fixes the interest rate at a prescribed rate for the duration of the loan.
  • Foreclosure:  procedure whereby property pledged as a security for a debt is sold to pay the debt in the event of default.
  • Lease Purchase Agreement:  buyer makes a deposit for the future purchase of a property with the right to lease the property in the interim
  • Lien:  a legal claim against a property that must be paid when the property is sold.
  • Market Value: the highest price a buyer will pay for a property and the lowest price accepted.
  • Promissory Note:  a written contract containing a promise to pay a definite amount of money at a definite futre time.
  • Radon:  a colorless, odorless gas formed by the breakdown of uranium in subsoils.  It can enter a house through cracks in the foundation or in water and is considered to be a health hazard.
  • Second Equity Morgage/Second Deed of Trust or Junior Mortgage: an additional loan imposed on a property with a first mortgage.  Generally a higher interest rate and shorter term than a "first" mortgage
  • Shared Equity Mortgage:  a home loan in which an investor is granted a share of the equity, thereby allowing the investor to participate in the proceeds from resale.
  • Tenancy in Common:  ownership by two or more persons who hold an undivided interest without right of survivorship.
  • Title:  a document that's evidence of ownership.
  • Title Insurance:  protection for lenders and homeowners against financial loss resulting from legal defects in the title.