Real Estate Glossary

Adjustable-Rate Mortgage (ARM)   a mortgage whose rate is adjusted over time based on the current market conditions.

Amortize   "to write off a cost gradually over a period of time."

Appraisal   the estimated value of a property.

Buydown  "a subsidy for a long-term mortgage offered by a third party, as a builder or developer, to lower interest rates for a buyer in the early years of the loan."

Capital Gains Tax   "a tax on the profit made from the sale of an asset."

Closing   the point at which buyer and seller finalize the sale of real estate.

Closing Costs   "any expenses over the purchase price of a house, land, etc., that is paid by the purchaser or seller at the completion of the sale."

Deed of Trust   "a written instrument legally conveying a property to a trustee, such as a bank, often for the purpose of securing a mortgage or promissory note."

Default   to fail to meet financial obligations.

Down Payment   "any initial or partial payment, gift, favor, or recompense, as to reduce one's indebtedness."

Equity   "the monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc."

Escrow   "a contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition."

Fixed-Rate Mortgage   "a home mortgage for which equal monthly payments of interest and principal are paid over the life of the loan, usually for a term of 30 years."

Graduated Payment Mortgage (GPM)   a mortgage with low initial monthly payments which gradually increase over a specified time frame.

Growing Equity Mortgage (GEM)   A fixed rate mortgage on which the monthly payments increase over time according to a set schedule.

Home Equity Line-of-Credit (HELOC)   a loan whereby the lender agrees to lend a maximum amount within an agreed period, where the collateral is the borrower's equity in their house.

Home Inspection   an examination of the condition of a home, prior to selling a home.

Lien   the legal claim of one person upon the property of another person to secure the payment of a debt or the satisfaction of an obligation.

Origination Fee   an upfront fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place.

Preapproval   a loan approval by a lender to a potential borrower.

Prepaids   payments made by a buyer at a closing, made in advance of their official due date.

Prequalification   an evaluation made of a person's qualifications for a loan.

REALTOR®   a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and subscribes to its  Code of Ethics.

Title Insurance   insurance against title defects.

Truth in Lending Act (TILA)   a federal law requiring the disclosure of costs of financing.

Walk-Through Inspection   an inspection performed by the purchaser after a closing to finalize the agreement and ensure that the property is in agreed upon condition.