Glossary of Real Estate Terms
        Erica Willingham

Listing Agent:

Someone who represents the seller.

Selling Agent:

Someone who represents the buyer.

Appraisal:

An estimate of the home’s value, done by a third party, usually paid for by the buyer.

APR:

(Annual Percentage Rate) The interest rate of your mortgage which includes your
up-front costs to get the loan. It will not be the same as the interest rate quoted to
you on your loan.

ARM:

(Adjustable Rate Mortgage) A mortgage which may or may not have a “fixed” rate (only for a limited time), which can change thereafter, depending upon the current market rates.

Assessment:

The estimated value of your property, which affects the amount of your property taxes.

Closing:

When the papers are all signed to transfer the ownership of the property from the seller to the buyer. It is also finalizes the details of the buyer’s loan.

Closing Costs:

Any expenses which have to be paid for by the buyer or the seller at the time of the closing. They can be 3% - 5% of the price of the home.

Comparative Market Analysis:

A listing of similar properties in the area and their sales prices, used to estimate the value of the property being sold.

Contingencies:

Conditions written into the contract to protect the buyer from being forced into purchasing the home before it is inspected and found to be in acceptable condition and before financing is acquired.

Debt-to-Income Ratio:

The amount of debt the borrower has as a ratio with their gross income. Used to determine approval of a loan.

Deed:

A legal document, when recorded after the closing, transfers ownership of the property to its new owners.

Earnest Money:

Money paid by the buyer at the time of accepting a contract to show his or her seriousness in buying the property. It is usually kept in escrow until the closing, and then it is used as a part of the down payment.

Escrow:

The closing process, from the time of accepting the contract until the papers are signed and the “deal” is closed. It also can refer to the money held before and after the closing, which the new lender will keep in reserves to pay future taxes and insurances.

Equity:

The amount a property is worth minus the amount of money still owed in the mortgage.

Fixed Rate Mortgage:

A mortgage which has the same interest rate for the entire length of repayment.

Foreclosure:

When someone fails to make the mortgage payments, a property is taken back by the bank and is resold to someone else.

FSBO:

(For Sale By Owner) When the seller of the property elects not to be represented by an agent.

Good Faith Estimates:

When lenders estimate as close to accurate as possible how much a buyer would pay in their mortgage per month, how much all of the fees would be, what the interest would be, and what the out-of-pocket expenses would be, should the buyer choose to get a loan with them.

HOA:

(Homeowners’ Association) A group of individuals living within a community who helps to determine (by voting) how the neighborhood should be “managed.”

Inspection:

A third party will determine whether or not there are any defects within the home by doing an inspection before the closing. It protects the buyers.

Interest Rates:

The percentage of interest that will be paid to the lender for getting the loan.

Lender:

The mortgage company who is lending the money to the buyer.

Lien:

When a debt is owed, such as a mortgage or other debts, the party owed the money can make a legal claim against the property from being sold without first paying off the debt.

Listing:

A property being sold. It is done so through a Real Estate Brokerage and Agent.

Loan Origination Fee:

The fees charged by the lender to the buyer for processing the loan.

LTV:

(Loan to Value) The percentage that the mortgage amount is to the actual value of the property.

MLS:

(Multiple Listing Service) A list off of a computer of the properties (and their descriptions) in the area which are being sold, which the Agents have access to.

PMI:

(Private Mortgage Insurance) If the buyer does not put 20% of the purchase price as a down payment, this insurance will be added to the monthly mortgage payments to protect the lender if the buyer defaults on the loan.

Points:

Each “point” is 1% of the loan value, which are fees paid to the lender at the time of closing by the buyer.

Pre-approval:

The lender checks the buyers’ credit report and debt ratio to determine what type of loan and which interest rate the buyer qualifies for.

Pre-paid:

Expenses due at the time of closing, which are not included in the loan, such as taxes or insurance.

Principal:

The amount owed in a mortgage, not including the interest or the escrow reserves.

Property Taxes:

Based upon the value of the property, these are the taxes paid twice a year to the local governments.

Recording:

When the Deed and Mortgage is made legally known to the public and local jurisdiction.

Title Insurance:

Protects the buyer from outside claims against the property. Any legal owners or liens against the property are identified and resolved before the closing.

Warranty:

May cover the entire house or just select items within the home for a certain amount of time.

Zoning:

Laws which determine how land may be used, for commercial or residential use, and so on.