Real Estate Terms Glossary

Adjustable-Rate Mortgage (ARM): A type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.

Amortization: The process of gradually paying off a debt over a period of time through regular payments.

Appraisal: A professional assessment of a property's market value, often required by lenders to determine loan amounts.

Assessed Value: The value placed on a property by a public tax assessor for purposes of taxation.

Closing Costs: Fees and expenses, over and above the price of the property, incurred by buyers and sellers when transferring ownership of a property.

Contingency: A condition or action that must be met for a real estate contract to become binding.

Deed: A legal document that transfers ownership of a property from one person to another.

Down Payment: The initial upfront portion of the total amount due on a purchase, typically a percentage of the purchase price.

Earnest Money: A deposit made to a seller showing the buyer's good faith in a transaction.

Equity: The difference between the market value of a property and the amount owed on it.

Escrow: A financial arrangement where a third party holds funds or property until certain conditions are met.

Fixed-Rate Mortgage: A mortgage with a fixed interest rate for the entire term of the loan.

Foreclosure: The legal process by which a lender takes control of a property after the borrower fails to make mortgage payments.

Homeowners Association (HOA): An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties within its jurisdiction.

Inspection: An examination of a property's condition, typically conducted by a professional inspector.

Lien: A legal claim against a property that must be paid off when the property is sold.

Loan-to-Value Ratio (LTV): The ratio of the loan amount to the appraised value of the property.

Mortgage: A loan used to purchase or maintain a home, land, or other types of real estate.

Multiple Listing Service (MLS): A database used by real estate brokers to share information about properties for sale.

Offer: A proposal to buy a property at a specified price.

Pre-Approval: A preliminary evaluation by a lender that determines if a borrower qualifies for a loan and estimates the loan amount.

Principal: The amount of money borrowed to buy a property or the amount of the loan that has not yet been repaid.

Private Mortgage Insurance (PMI): Insurance that protects the lender in case the borrower defaults on the loan, typically required if the down payment is less than 20% of the purchase price.

Refinance: The process of replacing an existing mortgage with a new one, usually with different terms.

Title: A legal document proving a person's right to or ownership of a property.

Underwriting: The process by which a lender evaluates the risk of lending money to a borrower based on their credit history, employment, and other factors.

Walk-Through: A final inspection of a property by the buyer before closing to ensure that the property is in the agreed-upon condition.