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Abstract of Title — Summary of completepublic record of a particular property fromthe time of the first transfer to the present.Acceptance — Seller's written approval of abuyer's offer.Add-on Interest — Interest a borrower payson the principal for the length of the loan.Adjustable-Rate Mortgage (ARM) — After aninitial fixed rate period, ARM loans can adjustbased on the interest rate index. These loansare less predictable than traditional fixed-rate mortgages, but they can yield lowerinterest rates during specific time frames.Agreement of Sale — Contract in which aseller and a buyer agree to transact undercertain terms. This is written our and signedby both parties. Synonyms include: contractof purchase, purchase agreement, or salesagreement.Amortization — Process of reducing theprincipal debt though a fixed paymentschedule.Appraisal — Written estimate of a property'scurrent value. During the home sale, themortgage lender sends an appraiser to theproperty to get a professional opinion of theproperty's value.Appraisal Contingency — Clause that allowsa buyer to dissolve a purchase agreement ifa home's appraised value is less than thesale price.Appreciation — When a property's valueincreases due to market conditions & othercauses. Opposite of depreciation.As-Is — A property marked "as-is" oftenindicates that a seller is unwilling to performmost repairs.Asking Price — Listing process that a seller isasking for a property.Assessed Value — Value of a property as assessedby the municipal for determining property taxes.Backup Offer — If a buyer is interested inpurchasing a property already under contract withsomeone else, a buyer can submit a backup offerin case the first transaction falls apart. A backupoffer also needs to be negotiated with earnestmoney submitted, to ensure it is the next offer inline. Legally, there can only be a single backupoffer.Blind Offer — When a buyer makes an offer on aproperty they have not seen when they couldhave.Brokerage — A brokerage is a business, firm, orcompany that acts as a broker.Buyer's Agent — Real estate professional whorepresents home buyers and walks them througheach step of the home-buying process.Cash Reserves — Money leftover after the buyersubmits a down payment and the closing costs.Certificate of Occupancy — Document stating aproperty can be lived in and has met buildingcodes.Closing (Settlement) — When the home sale isconsidered final. This includes all parties'signatures on all required documents, all fundstransferred, and when a lender is involved, withfull lender's approval. After closing, the buyer isconsidered the new homeowner.Closing Costs — When buying house, these arethe associated fees charged by lender, the titlecompany, attorneys, insurance companies, taxingauthorities, homeowners associations, real estateagents, and/or various third parties.Real Estate Terminology

Closing Statement — Final statement of costs incurredto close on a loan or purchase a property. Also known asHUD-1.Collateral — Something of value in exchange for a loan.When the loan is a mortgage, the property is thecollateral.Commission — Percent of sale that is paid to the realestate professional, generally paid by the seller of theproperty.Commitment Letter — A loan commitment, or a formaloffer by a lender with specific terms lending money to ahome buyer.Common Areas — Sections of a development orcommunity that are owned or managed by a plannedunit development or condos homeowners' association.These can include swimming pools, tennis courts, parks,playgrounds, etc.Comparative Market Analysis — Through evaluatingsimilar properties that have sold recently, real agents canestimate the value of a specific property.Condominium — A condominium or condo is aresidential complex where the interior of each unit isowned separately but there building and commonareas are jointly owned. Typically condos havehomeowners association (HOA) fees.Contingency — If a property is contingent, then an offerhas been accepted, but additional criteria must be metbefore the deal is complete.Contingent — Status with accepted offer on house, butrelies on meeting specific criteria like passing a homeinspection or appraisal.Conventional Mortgage — Mortgage loan not insuredby the government or guaranteed by the Veterans'Administration. Conventional mortgages are subject tothe conditions established by the lending institution andState statutes.Conventional Sale — When a property is ownedoutright (no remaining mortgage) or the ownerowes less on their mortgage than what the marketindicates the owner could sell their property for.Counter-Offer — A return offer given by the sellerin response to an original offer made by the buyer.A buyer can choose to accept, reject, or counter,then the seller has the same options.Credit Rating — A credit rating is a lender'sestimate of an entity's ability to honor financialcommitments. This helps determine whether aborrower is eligible for credit as well as whatinterest rate will be paid.Days on market (DOM) — DOM is the number ofdays from the date on which the property waslisted for sale on the local real estate broker'smultiple listing service to the date when the sellerhas signed a contract for the sale of the propertywith the buyer.Debt-to-Income Ratio (DTI) — The DTI ratio is anumber used by mortgage lenders to determineyour total debt expenses plus your monthlyhousing payment, divided by your gross monthlyincome, and multiplied by 100. DTI helps lendersdetermine affordability based off of their availableloan programs, and allows them to estimate howmuch you can afford to pay monthly for amortgage. Typically, lenders look for borrowerswho pay 28% or less of their total monthly incomeon housing, and less than 36% of their income ondebt payments.Depreciation — When a property's value decreasesdue to market conditions & other causes. Oppositeof appreciation.Down Payment — Amount of your home'spurchase you pay upfront.Real Estate Terminology

Dual Agency — This is when an agentrepresents both the buyer and the seller,rather than having a buyer's agent and alisting agent.Due diligence — A due diligence period is atime frame provided to a buyer to fullyexamine a property, this length is typicallydocumented in the purchase agreement.Earnest Money or Hand Money — Depositmade by potential home buyer to show thatthey are serious about buying. Funds putdown once a seller accepts the buyer's offer.Also known as an Earnest Money Deposit(EMD).Easements — Legal rights of access to use aproperty by individuals or groups for a specificpurpose. These can be part of the deed andmay affect property value. For example, adriveway can be over an easement, or therecould be an easement for a trail on the edgeof your property.Equity — The investment a homeowner has intheir home. This can be calculated by takingthe market value of a home and subtractingany mortgages or liens against the property.Escrow — This ia a legal arrangement where athird party temporarily holds money orproperty until the fulfillment of a purchaseagreement.Exclusive Agency Listing — Similar to an openlisting except the broker represents theowner, and the seller pays a commission tothe listing broker if the property is soldthrough the broker.Exclusive Right-to-Sell Listing — This givesthe broker the exclusive right to earn acommission by representing the owner andbringing in a buyer, either directly, or throughanother brokerage.Fair Market Value — The middle groundbetween the highest a buyer would pay, andthe lowest a seller would accept.FHA Mortgage — This is a mortgage insuredby the Federal Housing Administration (FHA),and are designed to make housing moreaffordable. In this case, the FHA insures banksand private lenders that they will cover lossesthey might incur if the borrower does notrepay the loan in full and on time.Fixed Installment — Regular monthlypayments on a home loan.Fixed Mortgage — With fixed mortgage rates,the interest stays the same for the duration ofthe loan.Fixture — Personal property that becomesreal estate property when permanentlyattached to the real estate property.Foreclosure — When a property is seized bythe mortgage lender due to the homeownerfailing to make full payments on theirmortgage. To help recover the balance of thehome loan, the lender sells the property.Good Faith Estimate — Estimate from alender to a borrower that shows the cost tothe borrower including loan processing feesand inspection fees.Hard Money Loan — An alternative totraditional lenders, where a borrower typicallyhas a large down payment and a shortrepayment schedule.Home Inspection — Professional inspection ofa home to evaluate the quality and safety ofthe home and its systems includingplumbing, structural, heating, electrical,appliances, roof, foundation, etc.Real Estate Terminology

Home sale contingency — This is for a buyerto indicate to a seller that part of theircondition to purchase the seller's propertyrelies on the buyer's ability to finalize a closeon their current property.Home Warranty — Protects from futureproblems through providing a servicecontract over a set period of time whichcovers the expenses of maintaining householdsystems or appliances.Homeowner's Association (HOA) — An HOA isa private association that manages a plannedcommunity or complex. In an HOA, you abideby specific rules and often pay monthly orannual HOA dues.If you do not comply, theHOA can file a lien against the property and/orforeclose it. Also: Common Area Assessment.Homeowner's Insurance — Policy thatprotects the buyer and lender from majorliability like fire, flood, or injury.Inspection — Evaluation of property by aprofessional to assess current condition of thehouse. The inspector compiles a report on itscondition and any needed repairs.Inspection contingency — Also called a "duediligence contingency" that is sometimesoffered in a purchase agreement which grantsbuyers a set amount of time during escrow toperform any inspections.Interest Rate — Percent of amount borrowedfrom funds paid to a lender in exchange for aloan.Land Lease — Typically, when you buy ahome, you buy the land around it. In thespecial circumstance that is a land lease, youwould own the home and pay rent to thelandowner for the use of the land.Lender — Institution or representativeindividual (loan officer) making loan for thebuyer.Lien — A claim or charge on the property forpayment of debt.Listing — List of information about a propertythat is currently on the market.Listing Agent — Real estate professional whorepresents the home seller, and works withthem to price the home, recommend homeimprovements or staging, marketing,negotiating with buyers, and overseeing theinspection and closing procedures.Loan Application — First step in submittingan application for a home loan. A borrower willitemize their financial state for the lendinginstitution to assess.Loan Officer — The representative individualfrom the lending institution making loan forthe borrower.Market Value — Amount a buyer would pay aseller for a home. The appraised value is anestimate of the current fair market value.MLS or Multiple Listing Service — MLS is adatabase that has all available properties forsale in a region.Mortgage — Legal documentation thatspecifies the amount of money paid for ahome with the specified interest rate.Mortgage Banker — A bank employee whoserves as a day-to-day contact with amortgage lender. This person can help youbuy discount points, sort out what you canafford, and complete your mortgageapplication.Mortgage Broker — The mortgage broker isan individual or company that is responsiblefor taking care of all aspects of the dealbetween borrowers and lenders. This includesoriginating the loan, or placing it with afunding source like a bank.Real Estate Terminology

Mortgage Insurance — Purchased by thebuyer to protect the lender in the event of adefault. This is typically purchased when thereis less than 20% down. Available through agovernment agency like the Federal HousingAdministration or a private mortgageinsurance (PMI).Offer — The initial price offered by aprospective buyer to the seller. A seller maychoose to accept the offer, reject the offer, orcounter with a different offer.Open Listing — A property that uses multiplereal estate agents in a nonexclusive manner tofind potential buyers.PMI or Private Mortgage Insurance —Monthly insurance a lender pays if the downpayment is less than 20% of the sale price.Points (Discount Points) — A portion of yourinterest that you pay to the lender upfront inexchange for a lower interest rate. Onediscount point typically equals 1% of the loan,this is paid at closing. In general, the longeryou plan to stay at the residence, the moreadvantageous it is to pay points.Possession Date — Date specified by the salesagreement that the buyer an move into theproperty.Pre-Approval — Evaluation by mortgagelender that determines if a potential buyerqualifies for a loan, and if so, what themaximum amount the lender is willing tolend.Pre-Approval Letter — Letter from mortgagelender saying a buyer qualifies for a mortgageof a specific amount.Pre-Qualification — This refers to an estimatefor credit given by a lender for informationprovided by a borrower.Principal — The principal balance of themortgage is the amount of money owed tothe lender, not including interest.Private Mortgage Insurance (PMI) — PMI is atype of mortgage insurance that may berequired on a conventional loan on top ofregular mortgage payments. This oftenhappens when the down payment is less than20% of the home's purchase price.Probate Sale — This happens when ahomeowner passes away without writing awill or leaving a property to someone. In thissituation, probate court will authorize anestate attorney or another representative tohire a real estate agent to sell the home.Purchase Agreement / Sales Contract — Acontract signed by the buyer and sellerstating the terms and conditions under whicha property will be sold.Purchase Offer — Detailed written documentthat makes an offer to purchase a property.This can be amended through the negotiationprocess. When signed by all parties involved inthe sale, the purchase offer becomes thelegally binding sales agreement.Rate — Annual rate of interest on a loan, apercent of 100.Rate Lock — Guarantee of a specific interestrate for a set amount of time.Real Estate Agent — Individuals licensed tohelp people buy, sell, and rent real estate. Theyearn money through commissions which aretypically a percentage of the property's saleprice. They must work through a Real EstateBroker or a Brokerage.Real Estate Broker — Real estate agents whocontinued their education and receive a statereal estate broker license. These folks canwork independently and start their ownbrokerage and hire other real estate agents.Real Estate Professional — Someone who istrained and licensed in real estate and earns aliving buying, selling, or managing real estate.Real Estate Terminology

Realtor — A realtor is a real estate professionalwho is a member of the National Associationof Realtors (NAR).Refinancing — This is when you restructureyour home loan and replace your old loan. Thenew loan can have different rates andpayment structures.Rent-back — This is an arrangement where abuyer becomes the new homeowner butallows the seller to be a tenant to stay in thehouse beyond the close of escrow. This oftenincludes a daily rental rate, and an allowableamount of time. This is also called a leaseback.Rental Agent — A real estate professional whoworks with consumers to find properties torent.REO aka Real Estate Owned — REOproperties are owned by the bank due to aforeclosure, so can be purchased from thebank. Often sold "as is."Seller Assist — Money given from the seller tothe buyer at settlement to pay for a portion ofthe closing costs. This depends on thesituation and what the mortgage companyallows.Seller Disclosure — A seller's disclosure iswhere a seller discloses information about theproperty, or which could affect the buyer'sdecision to purchase the property.Seller's Agent — A real estate professional thatrepresents the seller. Also known as a listingagent.Short Sale — When a property is sold for lessthan the debt secured by the property. Thisrequires the approval of the seller's lender(s)as the proceeds of the sale will be "short" ofthe amount owed.Title — Legal document that shows a person'sright to or ownership of a property.Title Company — Companies that ensure thata title to a property is legit and providesinsurance.Title Insurance — A policy that guarantees theaccuracy of the title search and protects thelender and homeowners against legalproblems with the title.Title Search — The title search is a historicalreview of all legal documents relating to thetitle to determine if there have been any flawsin prior transfers of ownership or if there areany claims or liens on the title to the property.Transfer Fee — Fee charged by the state orlocal government at the time of the titletransfer.Transfer of Ownership — Any means whichthe ownership of a property transfers hands.Transfer Tax — State or local tax payable whena title passes from one owner to another.Trust Account — Accounts used by escrowagents and brokers to safeguard funds for abuyer or seller.Truth-in-Lending Act (TILA) — Federal lawthat requires disclosure of truth-in-lendingstatement for consumer loans. This includes asummary of the total cost of credit.Zoning — Regulations which control how landis used for a given jurisdiction.Real Estate Terminology