Glossary of Real Estate Terms

Term/Phrase   Definition Help
accrued interest   The interest earned for the period of time that has elapsed since the interest was last paid.
adjustable rate mortgage (ARM)   Mortgage in which the interest rate is periodically adjusted based on the movement of a preselected index.
Agreement for sale   Document in which the purchaser agrees to buy and the seller agrees to sell certain real estate under stated terms and conditions. Also called sales contract, binder or earnest money contract.
Amortization   Loan payment by equal periodic payments to retire principal at the end of a fixed period and to pay accrued interest on the outstanding balance.
Appraisal   Report that sets forth an estimate or opinion of value based on a factual analysis.
Balloon Mortgage   Mortgage with periodic installments of principal and interest which don't fully amortize the loan. The loan balance is usually due at the end of the term.
Bridge Loan   Interim financing secured by the borrower's present residence to allow the proceeds to be used to close on a new home before the present home is sold.
Buydown   Money advanced by seller or builder to reduce buyer's monthly payments on a mortgage either during the entire term of the mortgage or for the first few years.
Closing   Conclusion of a transaction. Real estate closing includes delivery of deed, financial adjustments, signing of notes and disbursement of funds necessary to the sale.
Closing Costs   Money borrower pays to effect the closing of a mortgage loan. Includes origination fee, title insurance, survey, attorney's fees, taxes, insurance escrow payments.
Closing Statement   Financial disclosure of all funds received and expected at closing, including escrow deposits for taxes, hazard and mortgage insurance.
Contract of Sale   Contract to convey a title from seller to purchaser after certain conditions/payments have been met
Conventional Mortgage   Mortgage not insured by FHA, guaranteed by the VA or Farmers Home Administration.
Conversion   Conversion by a borrower of an adjustable rate mortgage to a fixed rate mortgage.
Debt to Income Ratio   Ratios used to qualify a borrower by comparing the borrower's total monthly housing expense and total monthly debt to gross income.
Earnest Money   A sum of money given to bind a sale of real estate; a deposit.
Escrow Holdback   Funds held in escrow for completion of postponed improvements/repairs
FHMA (Fannie Mae)   The Federal National Mortgage Association
FHA Mortgage   A mortgage which is insured by the FHA; may be referred to as a "government" mortgage.
FHLMC (Freddie Mac)   The Federal Home Loan Mortgage Corporation, a corporation that buys conventional mortgages in the secondary mortgage market.
Fixed Rate Mortgage   Mortgage for which the interest rate is set for the entire term of the loan.
Interest Rate   Note rate/rate of interest paid by borrower
Land to Value   Ratio of the value of the land to the lower of the purchase price or current appraised value
Liquid Assets   Demand deposits, savings accounts, IRAs, Keoghs, 401 (k) plans, CDs, publicly traded stocks and bonds.
Loan to Value Ratio (LTV)   Ratio of the principal balance of a mortgage loan to the appraised value or purchase price of the mortgaged property, whichever is lower.
Mortgage   Document, including security instrument, note, title and necessary documents, executed by a property owner pledging the property as security for payment of debt.
Note   Applicable form of instrument that evidences the loan as required, including any addenda.
Point   Dollar amount paid to a lender for making a loan. 1 point is 1% of the loan amount. Also called discount points.
PITI   Principal, interest, taxes and insurance, which compromise the borrower's housing expense.
Plat Map   Map showing a piece of land subdivided into lots with streets, boundaries, easements and dimensions shown.
Survey   Measurement of land showing location, dimension, and improvements.
Title   Evidence of the right to or ownership in property. In real estate, the evidence of ownership is the title deed.
Title Insurance   Insurance to cover loss caused by defects in the title to real estate.
Zoning   City or county laws specifying how property may be used in specific areas.

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