Real Estate Glossary
Master essential real estate terminology. Search, filter, and learn the definitions that power property transactions.
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Showing 44 terms
Amortization
The process of paying off a loan through regular installments over a set period. Each payment includes principal and interest, with the principal portion increasing over time.
Appraisal
A professional assessment of a property’s market value, typically required by lenders before approving a mortgage. The appraiser evaluates comparable properties and condition.
Appreciation
An increase in property value over time due to market conditions, improvements, or neighborhood development.
Assessed Value
The value of a property as determined by local government assessors for property tax purposes, which may differ from market value.
Buyer’s Agent
A real estate professional who represents the buyer in a transaction and helps negotiate the best terms and price.
Closing Costs
Fees and expenses paid at the time of closing a real estate transaction, including appraisal, title insurance, and loan origination fees.
Closing Disclosure
A three-page document provided to borrowers before closing that outlines final loan terms, monthly payments, and closing costs.
Commission
The compensation earned by real estate agents, typically a percentage of the sale price, split between buyer and seller agents.
Comparable Properties
Recently sold properties similar in size, condition, and location used to determine the fair market value of a subject property.
Contingency
A condition that must be met for a purchase agreement to be binding, such as passing inspection or securing financing.
Deed
A legal document that transfers property ownership from the seller to the buyer, recorded in public property records.
Depreciation
A decrease in property value over time due to wear, obsolescence, or unfavorable market conditions.
Down Payment
The initial amount of money a buyer pays toward the purchase price, with the remainder financed through a mortgage.
Earnest Money
A deposit made by the buyer to demonstrate serious intent to purchase, typically held in escrow until closing.
Easement
A legal right granted to someone other than the property owner to use the property for a specific purpose, such as utility lines.
Equity
The difference between a property’s market value and the outstanding mortgage balance, representing the owner’s stake.
Escrow
A neutral third party holding funds and documents during a transaction until all conditions are met and closing occurs.
Fair Market Value
The price at which a property would sell between an informed buyer and seller, neither under pressure to buy or sell.
FHA Loan
A Federal Housing Administration-insured mortgage with flexible credit and down payment requirements, popular for first-time buyers.
Fixed-Rate Mortgage
A loan where the interest rate remains constant throughout the entire loan term, providing predictable monthly payments.
Flood Plain
An area of land designated by FEMA as having a high risk of flooding, often requiring special insurance and construction standards.
Foreclosure
A legal process where a lender takes possession of a property when the borrower defaults on mortgage payments.
Homeowners Association
An HOA is an organization in a subdivision governing rules, collecting fees, and maintaining common areas and property values.
Home Inspection
A professional evaluation of a property’s structural and mechanical condition, typically ordered by the buyer during the contingency period.
Home Warranty
A service contract covering repairs or replacement of major home systems and appliances, typically covering one year from purchase.
Interest Rate
The percentage of the loan amount charged annually by the lender as the cost of borrowing money.
Inspection Period
The timeframe in a purchase agreement during which the buyer may conduct inspections and negotiate repairs or credits.
Lien
A legal claim against a property as security for unpaid debts, such as tax liens or mechanic’s liens.
Listing Agreement
A contract between a homeowner and real estate agent outlining terms, commission, and marketing responsibilities.
Loan-to-Value Ratio
The LTV compares the mortgage amount to the property value, with lower ratios indicating less risk and better loan terms.
MLS
The Multiple Listing Service is a database where real estate agents list properties for sale, widely used to market homes.
Mortgage
A loan used to purchase real estate, secured by the property itself, typically repaid over 15 to 30 years.
Offer
A formal proposal from a buyer to purchase a property at a specific price and terms, subject to acceptance by the seller.
PMI
Private Mortgage Insurance protects lenders when a buyer makes a down payment of less than 20 percent.
Pre-Approval
A lender’s conditional commitment to loan a specific amount based on a credit check, income verification, and assets.
Pre-Qualification
An informal estimate of how much a buyer can borrow, based on self-reported financial information, not verified.
Principal
The original amount borrowed in a loan, separate from interest, that decreases with each mortgage payment.
Property Tax
An annual tax paid by property owners to local government, based on assessed property value, used for schools and services.
REIT
A Real Estate Investment Trust is a company owning and managing income-producing properties, allowing investors to buy shares.
Title
Legal ownership of a property, confirmed through a deed and title search, transferred to the buyer at closing.
Title Insurance
Insurance protecting the buyer or lender against financial loss from defects in the property title or ownership.
Title Search
A review of public property records to verify clear ownership and identify any liens, easements, or other encumbrances.
Underwriting
The process where a lender evaluates a borrower’s creditworthiness, income, and assets to decide whether to approve a loan.
VA Loan
A U.S. Department of Veterans Affairs mortgage available to eligible veterans with favorable terms and no down payment required.
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This glossary provides general real estate terminology. For property-specific advice or legal guidance, consult with a licensed real estate professional or attorney. Definitions are simplified for educational purposes.