Real Estate Glossary

Explore commonly used terms in residential real estate to enhance your understanding whether you're buying, selling, or investing.

A

Appraisal

An estimation of a property's market value by a licensed professional, based on market trends, recent sales of similar properties, and the property’s condition.

Amortization

The process of spreading out a loan into a series of fixed payments over time. Each payment is allocated between interest and principal repayment.

Agent

A licensed professional who represents buyers or sellers in real estate transactions.

B

Broker

A person or company licensed to buy, sell, exchange, or lease real property for others and to charge a fee for these services.

Bridge Loan

A short-term loan used until a person or company secures permanent financing or removes an existing obligation. This provides immediate cash flow.

C

Closing Costs

Expenses over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction.

Contingency

A condition that must be met before a real estate contract is legally binding. For example, a buyer's sale might be contingent upon receiving a mortgage.

Condominium

A private residence within a group of housing units where owners share ownership of common use areas.

D

Deed

A legal document that grants ownership of a property to a new owner.

Down Payment

The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

E

Equity

The difference between the market value of a property and the amount still owed on its mortgage.

Escrow

A contractual arrangement in which a third party receives and disburses money or documents for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting parties.

F

Foreclosure

A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Fixed-Rate Mortgage

A mortgage that has a fixed interest rate for the entire term of the loan.

H

Home Inspection

An examination of a property's condition, typically performed by a qualified inspector who provides a report to the buyer.

Homeowner's Association (HOA)

An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and their residents.

L

Lien

A legal right or interest that a lender has in the borrower's property, employed as a security for the repayment of a debt.

Loan-to-Value Ratio (LTV)

A risk assessment ratio that financial institutions and other lenders examine before approving a mortgage, calculated by dividing the amount borrowed by the property’s appraised value or selling price.

M

Mortgage

A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.

MLS (Multiple Listing Service)

A service used by a group of real estate brokers that allows them to see one another's listings of properties for sale.

P

Pre-approval

A lender’s conditional agreement to lend a specific amount based on the information provided by the borrower, which is useful when shopping for a home.

Principal

The amount of debt, not including interest, left on a loan.

T

Title

A legal document evidencing a person's legal right to possession of a property.

Title Insurance

An insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership.

U

Underwriting

The process by which lenders verify and assess the risks involved in lending to a real estate buyer and establish appropriate terms and conditions for the loan.

Z

Zoning

Regulations established by local governments regarding the type of activities that may take place on a piece of property.