Common Real Estate Terms
Appraisal–An official justification for the price of a property, based primarily on the average price for comparable properties within the same area.
Appreciation–The increase in the value of a property over time due to external factors.
Assessed value–The value of property determined by a public tax assessor for tax purposes.
Bill of sale–A written document that transfers title to personal property from one person or entity to another.
Bi-weekly mortgage–A mortgage where payments are due every two weeks instead of once a month. Borrowers make 13 payments per year instead of 12, reducing the principal and time it takes to pay off the loan.
Closing–The completion of a real estate deal. In some states, it is when the documents record at the local recorders office. In other states, it is when all documents are signed and money has changed hands.
Condominium–A type of property ownership where all of the owners own the property and buildings in common, except for the interior of the unit to which they have individual title.
Deposit–A monetary sum given in advance as part of a larger amount expected in the future.
Depreciation–A decline in the value of property over time.
Down payment–A portion of the purchase price of a property paid in cash and not mortgaged.
Easement–Permission for persons other than the owner to have access to a property.
Escrow–Money, documents, or other items of value deposited with a third party to be delivered upon the fulfillment of a condition. E.g. a deposit is escrowed until it is delivered to the seller at closing.
Fixed-rate mortgage–A mortgage for which the interest rate remains the same through the entire term of the loan.
Foreclosure–The legal process by which a lender deprives a defaulted borrower of his or her interest in the mortgaged property.
Grantee–The person or entity receiving title to a piece of real estate–in short, the buyer.
Grantor–The person or entity conveying title to a piece of real estate to a grantee–in short, the seller.
Home inspection–A thorough inspection of a property by a professional to assess its condition.
Joint tenancy–A form of ownership where two parties each own the whole property.
Lien–A legal claim against a property that must be paid off when the property is sold (e.g. a mortgage).
Lock-in–Where a lender guarantees a fixed interest rate for a certain period of time.
Modification–Where the terms of a mortgage change without refinancing.
Multidwelling units–Properties with more than one housing unit but only one mortgage.
Negative amortization–Occurs when the monthly payment on a mortgage is less than full interest and does not pay any principal, causing the unpaid interest to accrue and the owed principal balance to increase.
Notice of default–A formal written notice from a lender notifying a borrower that a default has occurred and legal action may be taken.
Original principal balance–The original amount of principal the borrower owes before he or she begins to make payments.
Principal–The amount borrowed or that remains unpaid.
Promissory note–A contract wherein the borrower promises to repay a specified amount within a specified period of time.
Real property–Property that is permanent including structures, trees, and minerals.
Refinancing–Where a borrower pays off one loan with the proceeds from a new loan using the same property as security.
Short sale–Where a property is sold and the lender agrees to accept a discounted payoff, releasing the lien upon receipt of less money than is actually owed.
Subdivision–A tract of land that has been divided into individual lots for sale or lease.
Title–A legal document showing one's ownership of or right to a property.
Two-step mortgage–An adjustable-rate mortgage (ARM) that has one interest rate for the first five or seven years of its term and a different rate for the remainder of the term.
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