A

• Appraisal: An evaluation of a property's value conducted by a licensed appraiser, often required by lenders before approving a mortgage.

• Adjustable-Rate Mortgage (ARM): A mortgage where the interest rate changes periodically based on market conditions.

• Amortization: The process of gradually repaying a loan over time through scheduled payments, which include both principal and interest.

• Agreement of Sale: A contract between the buyer and seller outlining the terms of a property sale.

B

• Buyer’s Agent: A real estate agent who represents the buyer’s interests during the purchase process.

• Broker: A licensed professional who helps clients buy, sell, or rent properties. Brokers can operate their own real estate businesses and may hire agents.

• Balance Sheet: A financial statement that summarizes a person’s assets, liabilities, and equity at a particular point in time.

C

• Closing: The final step in a real estate transaction, where the sale is completed and ownership is transferred from the seller to the buyer.

• Closing Costs: Fees associated with the completion of a real estate transaction, including loan origination fees, title insurance, and inspection costs.

• Contingency: A condition that must be met before a real estate contract becomes legally binding, such as a home inspection or financing approval.

D

• Down Payment: The portion of the purchase price of a property that the buyer pays upfront, typically ranging from 3% to 20% of the sale price.

• Debt-to-Income Ratio (DTI): A percentage that compares a borrower’s monthly debt payments to their gross monthly income, used by lenders to assess borrowing risk.

• Deed: A legal document that transfers property ownership from one party to another.

E

• Escrow: A neutral third party that holds funds and documents during a real estate transaction until all conditions are met.

• Equity: The difference between the current market value of a property and the remaining balance on the mortgage.

• Earnest Money: A deposit made by the buyer to show their serious intent to purchase a property, typically held in escrow.

F

• Fixed-Rate Mortgage: A mortgage where the interest rate remains the same throughout the life of the loan.

• Foreclosure: The legal process by which a lender takes ownership of a property due to the borrower’s failure to make mortgage payments.

• FHA Loan: A government-backed mortgage loan insured by the Federal Housing Administration, typically for first-time homebuyers with lower credit scores.

G

• Good Faith Estimate (GFE): An estimate of the costs and fees associated with a mortgage loan, provided to the borrower by the lender.

• Ground Rent: The rent paid by a property owner to the landowner for the use of the land, common in leasehold properties.

H

• Home Inspection: A thorough examination of a property’s condition, typically conducted before the buyer finalizes the purchase.

• Homeowners Association (HOA): An organization that manages a community or neighborhood and enforces rules, often related to common areas and property aesthetics.

• HUD: The U.S. Department of Housing and Urban Development, a federal agency that oversees national policies and programs related to housing.

I

• Interest Rate: The percentage charged by a lender for borrowing money, typically expressed as an annual percentage rate (APR).

• Investment Property: Real estate purchased with the intent of earning income, either through rental income or resale.

J

• Joint Tenancy: A form of property ownership where two or more individuals hold equal shares, and if one passes away, the property automatically transfers to the surviving tenant(s).

K

• K-1 Tax Form: A tax document issued to partners or shareholders of a company, reporting income, deductions, and credits, often used in real estate partnerships.

L

• Listing: A property that is available for sale or rent, typically listed on multiple listing services (MLS).

• Listing Agent: The real estate agent who represents the seller in a property sale.

• Loan-to-Value Ratio (LTV): A ratio used by lenders to assess the risk of a mortgage loan, calculated by dividing the loan amount by the appraised value of the property.

M

• Mortgage: A loan used to purchase a property, with the property itself serving as collateral.

• Market Value: The estimated price at which a property would sell in the open market, based on recent comparable sales and market conditions.

• Mortgage Insurance: Insurance required by lenders when a borrower makes a down payment of less than 20% of the home’s purchase price, protecting the lender if the borrower defaults.

N

• Net Worth: The total value of a person’s assets minus their liabilities.

• Notary Public: A state-authorized individual who can witness the signing of legal documents, such as deeds or contracts.

O

• Open House: An event where a property is shown to potential buyers without requiring an appointment.

• Offer: A proposal made by a buyer to purchase a property at a specific price, subject to certain terms and conditions.

P

• Pre-Approval: A process in which a lender evaluates a buyer’s financial status and determines how much they are willing to lend.

• Principal: The original loan amount borrowed from a lender, not including interest or fees.

• Pre-Qualified: An informal assessment of a buyer’s financial situation by a lender, typically based on verbal information.

Q

• Qualification: The process of determining whether a buyer meets the criteria to obtain a mortgage loan.

• Quitclaim Deed: A legal document used to transfer property ownership without guaranteeing the title’s validity.

R

• Refinance: The process of replacing an existing mortgage with a new one, often to obtain a lower interest rate or better terms.

• Realtor®: A licensed real estate professional who is a member of the National Association of Realtors (NAR) and adheres to their code of ethics.

• Reverse Mortgage: A loan available to homeowners aged 62 or older, allowing them to convert home equity into cash, typically without monthly mortgage payments.

S

• Seller’s Market: A real estate market in which there are more buyers than available properties, typically driving up prices.

• Short Sale: A sale of a property in which the seller owes more on the mortgage than the property is worth, and the lender agrees to accept less than the owed amount.

• Subprime Mortgage: A loan offered to borrowers with poor credit histories, often with higher interest rates due to the increased risk.

T

• Title: Legal ownership of a property, as well as the documentation proving that ownership.

• Title Insurance: Insurance that protects the buyer and lender against defects or issues with the property’s title, such as unpaid liens or fraudulent claims.

• Trustee: An individual or institution that holds legal title to a property on behalf of a beneficiary, often in the case of a trust.

U

• Underwriting: The process by which a lender assesses a borrower’s financial information to determine if they qualify for a loan.

• Upsizing: The process of moving into a larger home, typically due to a growing family or increased income.

V

• VA Loan: A mortgage loan backed by the U.S. Department of Veterans Affairs, available to military veterans and active-duty service members with favorable terms.

• Valuation: The process of determining a property’s market value, typically conducted by an appraiser.

W

• Warranty Deed: A deed that guarantees the property title is clear of any liens or encumbrances and transfers full ownership to the buyer.

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

X

• X-Factor: Unique or special features of a property that make it stand out from others in the market.

Y

• Yard Maintenance: Services for keeping the lawn and landscaping of a property in good condition.

Z

• Zoning: Local government laws that define how a property can be used (e.g., residential, commercial, mixed-use).