Real Estate Glossary

Adjustable Rate Mortgage (ARM) A mortgage loan where interest rate adjusts according to a market index. This means as the interest rate goes up or down, so does your mortgage payment.

Appraisal The amount a professional appraiser determines your home and its property to be worth.

Condominium One unit in a complex of many. When you purchase a condominium, you solely own what is inside your walls and you jointly own the hallways, exterior and common areas. You also pay a monthly fee for the maintenance of these areas.

Closing Also called settlement. The signing of documents and payments of funds to legally transfer house and its property from the buyer to the seller.

Closing Costs The cost required to officially change the ownership of the property. Buyers and sellers have different costs they are responsible for at closing.

Credit Rating The score that tells a borrower how much of a credit risk you'll be.

Credit Report A report detailing a borrowers credit history. A few items shown are the amount of the borrowers debt, their timeliness of making payments and their credit rating.

Deed The document that legally transfers the title of a property to the purchaser.

Default Violation of a mortgage contract.

Density The number of homes that a local jurisdiction allows to be built on a certain acre of land.

Down Payment The amount of money the purchaser pays in cash toward the price of their home.

Elevation The outside of a specific model. A single floor plan may have multiple elevations for you to choose from, each with varying architectural styles, building materials, and exterior treatments.

Escrow When a third party handles funds or documents for the buyer, seller, or both.

Equity What your home is valued at after the balance of what you owe is subtracted.

Fixed Rate Mortgage A mortgage that has an interest rate that stays the same for the life of the loan. This means your monthly payment will remain constant.

Good Faith Estimate An estimate, given to the borrower by their lender, to show what settlement costs they will be responsible for and how much they will be.

Hazard Insurance Insurance against damage to your home from vandalism, fire and other hazards. You are required to carry insurance equal to the value of your home.

Homeowner's Association An association that manages the care of the common areas of a community. The home owner pays a monthly or quarterly fee to this association for maintenance costs.

Homeowner's Insurance Insurance that covers personal liability and hazards for a home and the contents inside of it.

Interest The amount you pay to the lender for borrowing money. A portion of this becomes part of your monthly mortgage payment.

Late Charge The amount of money added to your mortgage payment if it is paid late.

Lien The claim against a property that has to be paid off when you sell a property.

Lifetime Payment Cap The highest of lowest a payment on an Adjustable Rate Mortgage can reach for the life of the loan.

Lifetime Rate Cap The highest or lowest a rate on an Adjustable Rate Mortgage can reach for the life of the loan.

Lock-In Period The amount of time the lender agrees to lock in an interest rate for the purchaser.

Note A document that states a debt exists and the repayment terms.

Options Items you can choose to add on to your new home. Options add to the price of the house, but allow you to personalize your home (e.g., title floors, fireplace, etc.)

PITI Principle, Interest, Taxes, and Insurance. The four main parts of your monthly mortgage payment.

Planned Community A community where several builders offer a variety of home styles in many price ranges. There are usually amenities in the community such as recreational facilities and shopping.

Point A charge by the lender to increase the interest yield on a loan. Each point is 1% of the loan amount.

Prepayment When you pay part of all of your loan before it's matured.

Principal The amount you borrow for your loan. This amount does not include interest.

Punch List A builder's list of changes or corrections to be made on a buyer's home.

Real Estate Agent A Realtor who works on behalf of buyers or sellers to negotiate the sale of their home. Real estate agents are licensed.

Real Estate Broker A Realtor who has earned a brokers license can employ real estate agents, as well as represent buyers and sellers.

Title The certificate or deed that proves a person legally owns the property.

Title Insurance Insurance that protects the lender or the buyer against any loss that comes out of disputes over who owns a property.

Title Search When title records are searched to make sure the seller is the legal owner of the property. It also checks whether there are any outstanding claims or liens.

Walk-Through A buyer's final inspection of the home before settlement to look for any problems that need to be fixed by the seller.

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