Real Estate Glossary
Understanding real estate terminology can make the buying or selling process feel less overwhelming.
A
Adjustable-Rate Mortgage (ARM)
A mortgage in which the interest rate is adjusted periodically based on a pre-selected index.
Amortization
The process of paying off a debt over time through regular payments that cover both principal and interest.
Appraisal
A professional assessment of a property's market value, usually required by the lender before approving a mortgage.
Assessed Value
The valuation placed on a property by a public tax assessor for purposes of taxation.
B
Buyer's Agent
A real estate professional who represents the buyer's interests in a real estate transaction.
C
Clear Title
A title to a property that is free of liens or legal questions as to ownership of the property.
Closing Costs
Fees and expenses, beyond the property price, that buyers and sellers pay to finalize a real estate transaction. These may include title insurance, attorney fees, and recording fees.
Comparative Market Analysis (CMA)
An evaluation of similar, recently sold homes (comparables) to determine a property's current market value.
Contingency
A condition in a purchase contract that must be met before the sale can proceed, such as a satisfactory home inspection or loan approval.
D
Deed
A legal document that transfers ownership of a property from one party to another.
Down Payment
The portion of a home's purchase price that is paid upfront and not financed with a mortgage.
Due Diligence
The period during which a buyer investigates the property, reviews disclosures, and confirms the condition and value of the home.
E
Earnest Money
A deposit made by a buyer to show they are serious about purchasing. It is typically held in escrow and applied to the purchase price at closing.
Equity
The difference between the current market value of a property and the amount still owed on its mortgage.
Escrow
A neutral third-party account where funds and documents are held during a real estate transaction until all conditions are met.
F
Fair Housing
Laws that prohibit discrimination in the buying, selling, renting, or financing of housing based on race, color, religion, sex, national origin, familial status, or disability.
FHA Loan
A mortgage insured by the Federal Housing Administration, designed for low-to-moderate-income borrowers, often requiring a lower down payment.
Fixed-Rate Mortgage
A mortgage in which the interest rate remains the same throughout the entire life of the loan.
Foreclosure
The legal process by which a lender takes control of a property, evicts the homeowner, and sells the home after the homeowner is unable to make full principal and interest payments.
H
HOA (Homeowners Association)
An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and its residents.
Home Inspection
A limited, non-invasive examination of the condition of a home, often in connection with the sale of that home.
I
Interest Rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.
L
Lien
A legal claim or a right against a property by a creditor as security for a debt.
Listing Agent
A real estate professional who represents the seller in a real estate transaction and markets the property.
Loan-to-Value Ratio (LTV)
A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.
M
MLS (Multiple Listing Service)
A suite of services that real estate brokers use to establish contractual offers of compensation and accumulate and disseminate information to enable appraisals.
Mortgage Pre-Approval
A commitment from a lender to provide a mortgage for a specific amount, based on a review of the borrower's credit, income, and assets.
P
PITI
An acronym for Principal, Interest, Taxes, and Insurance, which are the components of a monthly mortgage payment.
PMI (Private Mortgage Insurance)
Insurance required by lenders when a buyer puts down less than 20% of the home's purchase price, protecting the lender in case of default.
Pre-Qualification
An initial evaluation of a potential borrower's creditworthiness to determine the estimated amount they can borrow.
Principal
The outstanding balance of a loan, excluding interest and fees.
R
REALTOR®
A real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics.
Refinance
The process of replacing an existing mortgage with a new one, typically to get a lower interest rate, change the loan term, or cash out equity.
S
Seller's Disclosure
A document completed by the seller disclosing the property's history and any known defects or issues.
Short Sale
A sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property.
T
Title Insurance
Insurance that protects the lender and/or the buyer against loss resulting from defects in the title to the property.
Title Search
An examination of public records to determine and confirm a property's legal ownership, and find out what claims or liens are on the property.
U
Under Contract
A status indicating that a buyer and seller have agreed to terms and signed a purchase agreement, but the sale has not yet closed.
USDA Loan
A zero-down-payment mortgage for eligible rural and suburban homebuyers, issued or guaranteed by the United States Department of Agriculture.
V
VA Loan
A mortgage loan available through a program established by the United States Department of Veterans Affairs, designed to help veterans, active-duty service members, and their families buy homes.
W
Walk-Through
A final inspection of a property by the buyer before closing to ensure it is in the agreed-upon condition.
Z
Zoning
Local government regulations that dictate how property in specific geographic zones can be used (e.g., residential, commercial, industrial).