Below you will find some common real estate related terms and definitions. These are very basic and brief definitions. You may find more detailed descriptions on our FAQs page or by using any of the links in the definitions.
Adjustable-Rate Mortgage
A loan with an interest rate that changes based on a financial index causing monthly payments to rise and fall. ARM
Amortization
Paying off your debt in incremental payments, instead of one full payment.
Appraisal
A professional report from a 3rd party that estimates the value of a property for you.
Closing
The final meeting where both parties sign the required paperwork and ownership of the property is transferred to you.
Closing Costs
Additional fees associated with the transaction, not including the cost of the home.
Contingencies
Required conditions that must be met before the closing. The contract can be canceled if these conditions are not met.
Debt Ratio
The ratio between your income and debt. A loaner will use this ratio to determine the amount of money they are willing to loan you.
Deed
The written document that is used to transfer ownership of a property to you.
Down Payment
The upfront cash payment for a property, the rest is paid through a mortgage.
Earnest Money
The deposit you pay when you sign the contract to show you’re a serious buyer.
Escalation Clause
A clause in a contract that increases your offer when a new offer is made.
Escrow
Money, deed, and other documents kept in the custody of a 3rd party – closes once all contingencies are met.
Equity
The value of the property minus the amount left on your mortgage.
Federal Housing Administration (FHA) Loan
A mortgage insured by the Federal Housing Association – usually requires a good credit score and a down payment to qualify.
Final Walkthrough
The last inspection of the property before signing the closing documents.
Fixed-Rate Mortgage
The opposite of an ARM – a loan with an interest rate that stays consistent.
Foreclosure
When the lender takes ownership of a property due to failed payments by the buyer.
Home Inspection
A report by a professional that examines the health of a property, structure, etc.
Homeowners Association (HOA)
A private organization often formed by a real estate developer to manage homes and lots in a residential subdivision.
Lender
An entity that issues mortgage loans.
Mortgage
The loan from a lender or bank used to purchase your home.
Multiple Listing Service (MLS)
The list of properties that are for sale – the most reliable and up-to-date source for listing information.
Pending
When an offer was accepted, the contract is signed, and all contingencies are met.
Pre-Approval
The lender’s process of accessing your financial capabilities – based on your income, debts, credit score, assets, etc.
Pre-Qualification
A lender has pre-determined that you qualify for a mortgage loan.
Property Tax
The local taxes you’re required to pay to the city your home is in.
Real Estate Agent
A licensed professional that represents a buyer or seller.
Real Estate Broker
A licensed professional that represents a buyer or seller – they can own and operate a brokerage with subordinate agents.
REALTOR®
A designation the agent is a member of the National Association of REALTORS®.
Settlement Statement (aka HUD-1)
Documents with your sales transaction and closing costs.
Title (aka Title Deed)
The legal document that shows the history of ownership and transfers of property – proves you are the current and rightful owner of the property.
Under Contract
The seller and buyer have agreed to a contract, but contingencies haven’t cleared
