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Acceptance An offer is accepted once both parties agree to terms of purchase, however it is not a binding contract until it has Bottom Line Signatures.

Adjustable Rate Mortgage (ARM ARM mortgages have rates that can change during the life of a loan.

Agent In real estate that would be someone who acts on behalf of a buyer or seller. Buyer agents represent the buyer and seller agents represent the seller. There can be a dual agent, that is where an agent represents both the buyer and seller and must disclose such to each side.

Amortization The process of repayment over a period of time. With each payment, there is a reduction on principle owed.

Annual Percentage Rate (APR) This rate includes the total finance charges plus the principle amount, it is the true cost of having a loan.

Appraisal An independent, third party market value of your home. Appraiser are licensed by the State.

Appraised Value The value of property determined by the appraiser.

Appreciation The increase of property value over the original purchase price.

As Is Condition Buyer beware! Property is being sold in its current condition and seller will not make repairs or promises of condition of property.

Assessed Value The value given to the property by the local taxing authority for tax purposes. Similar to an appraised value but this is given by the local taxing authority not an appraiser.

Assumable Mortgage A mortgage that allows the owner to transfer their mortgage to another person without the new person having to receive a new loan. The buyer will just assume or pick up where the prior owner left off on the original loan.

Back-Up Contract An accepted offer that will become the primary offer if the first buyer decides to not purchase the property. If the primary buyer purchases the property, the back-up contract becomes void.

Balloon payments A mortgage where there is a point in time where the monthly payments end and the balance is due in a one-time final payment.

Bridge Loan A temporary mortgage that is sometimes used where a buyer can have two mortgages until the first home sells. This allows a buyer to purchase a new home without first selling the one they have.


Bottom Line Signatures This is the final signature needed to make a legally binding contract. It is the last step to having an official contract.

Buyers Agent A real estate agent who represents the buyer and acts on their behalf.

Certificate of Title A document that shows who has ownership in a property.

Clear Title A certificate of title that has no liens, clouds, defects or encumbrances that prohibit transfer of title.

Clear to Close Final loan approval from the lender’s underwriter. The buyer is now formally ready for a closing.

Closing Costs The seller and buyer each have costs associated with the transfer of title between them. Typically, a seller will pay for title insurance, state and county transfer taxes and the real estate commissions. The buyer will have costs associated with obtaining a mortgage.

Common Areas Property that is shared by other property owners.

Conforming Loan A loan type that meets underwriting Guidelines for Freddie Mac and Fannie Mae.

Contingency A clause in the contract that allows either the buyer or seller out of the contract should a certain agreed upon condition of the contract not be met.

Conventional Mortgage A mortgage that is not insured by the federal government. This is a mortgage that has fewer requirements but requires a higher down payment.

Conveyance The transfer of title from one person to another.

Co-op Where residents hold shares of a corporation or trust that allows them to occupy the property. The trust or corporation actually owns the property.

Counter Offer When a seller doesn’t accept the buyer’s original offer but wants to extend, in writing, an offer back to the buyer.

Covenant A written clause, usually in the deed, that requires owners to follow certain rules. Debt-to-Income Ratio A calculation that references the amount of monthly debit to the amount of monthly income. Each lender has a ratio that must be met to qualify for a mortgage.

Deed Document that legally transfers property from one owner to another. This document is then recorded with the County records.


Deposit A shorter term used to reference the earnest money deposit.

Depreciation When property goes down in value.

Discount Points Buyers can purchase discount points to lower their interest rate upfront. Each point is equal to 1% of the loan amount borrowed. Down Payment The money the buyer is required to bring to closing in order to purchase a property. This amount is determined by the lender and is usually a percentage of the loan amount.

Dual Agent When a real estate agent represents both the seller and the buyer.

Due on Sale Clause A clause that allows the lender to demand the balance paid in full. Usually this is based on a condition that is spelled out in the mortgage. Earnest Money/Good Faith Check A check written by the buyer that is held in a trust account that shows the seller how serious the buyer is in purchasing the property. The higher the amount of deposit, the more serious the buyer looks to the seller. However, the buyer may risk losing this money to the seller if the buyer doesn’t fulfil their contract to purchase. Most of the time there are contingencies put in place in the contract that allows for the money to be returned to the buyer. Easements Easements are the legal right of access to a property by another person or entity. Many times utility companies have easements to allow them free access to work on their equipment without having to ask for a landowners permission.

Eminent Domain The right of the government to purchase private property for public use.

Equity The current market value of the property, less any mortgages or liens on the property.

Escrow There are 3 common types of escrow. One is used by lenders to hold funds they collect from each house payment so they can make scheduled payments on your behalf for homeowner’s insurance and local property taxes. Another type is a third party account that holds the earnest money/good faith check. A 3rd type is money held in a third party account to pay for repairs or services once they have been completed. Once money is deposited in the third party account, the funds can’t be released until both parties sign off on the release.

Exclusive Agency Listing A written contract between a seller and Broker that is exclusive to that Broker only.

Fair Market Value The amount a buyer would be willing to pay and a seller would be willing to sell for in a competitive open market.


Fannie Mae The Federal National Mortgage Association.

FHA An agency of the US Department of Housing and Urban Development (HUD).

FHA Financing A type of financing offered by FHA. Typically a borrower can use as low as 3% down payment and have a lower interest rate, but will be required to pay mortgage insurance. This is a very popular program for first time home buyers due to the low down payment. Fixed-Rate Mortgage A type of mortgage loan where the interest rate does not change.

Forbearance When no legal action is taken despite the fact a mortgage is in arrears or behind. Normally a borrower has to make some sort of arrangement to pay the amount in arrears at a future date.

Freddie Mac A publicly held corporation that buys mortgages. Free Market Evaluation Similar to an appraisal but performed by a licensed Real Estate Agent. This is an opinion of value using sales records from similar homes.

Good Faith Estimate (GFE) A list of costs a lender will charge for providing you a mortgage. Some of the costs are from the lender and some of the costs might be from third parties the lenders use.

Grantee The person to whom property is conveyed too.

Grantor The person conveying the property. Home Inspection After finalizing a purchase contract, every buyer should have a home inspection. This is when the buyer pays for a professional home inspector or sometimes has a friend inspect the home for any potential defects. A home inspection is mainly used by a buyer but sometimes homeowners will have a home inspection prior to marketing the home for sale so they can repair any defects in advance. Homeowner’s Insurance An insurance policy that protects you and the lender.

HUD The US Department of Housing and Urban Development.

Interest Money the lender charges to borrow money.

Joint Tenancy Co-ownership of property with equal rights.


Lease Purchase A type of lease where part of the monthly rent payment may go towards the down payment on the property for future purchase.

Lessee Commonly called the tenant.

Lessor Commonly called the landlord. Lien A claim against the property that has to be paid or removed before the property can change title.

Listing Agent A real estate agent who represents the seller only.

Listing Contract The listing agreement between the seller and the real estate agent.

Listing Agreement A written agreement between the seller and real estate agent where the seller is authorizing the real estate agent to market the property for sale and find a buyer for the property.

Listing Presentation A presentation from a Realtor where they present their marketing strategy on how they planning on selling your home. This is usually a discussion between the agent and the homeowner, so they both understand what to expect from each other.

Loan to Value The ration of the loan amount divided by the sales price of the home. Market Value The amount a buyer is willing to pay a seller for a home.

Maturity Date The date the last payment is due.

Mechanics Lien A lien to enforce payment for materials or work performed.

MLS Multiple Listing Service. Where real estate agents place properties they list for sale so others can find them.

Mortgage A legal document signed by the borrower that promises payment in exchange for property.

Mortgage Insurance Otherwise known as PMI. This is insurance the Government financing agencies charge clients for using their services. The money goes into a pool and used to offset the cost of those who end up in foreclosure. It is an added cost on your monthly mortgage payment.

Mortgagee The lender giving the loan.


Mortgagor The borrower signing for the mortgage.

Origination Fee The fee charged by the lender for obtaining a loan.

PITI Principal, interest, taxes and insurance.

PMI Private Mortgage Insurance. Insurance lenders charge to insure against default. Usually applies to loans with down payments of less than 20%.

Points One point is one percent of the loan amount. Possession Date The date the seller moves out of the property and turns the keys over to the buyer. Usually this the same day as the closing but sometimes the seller will request 2 weeks or even 30 days occupancy past day of closing. Pre-Approval Letter A letter from a mortgage company stating that a buyer qualifies for a mortgage up to a certain amount. Principal The amount of money still owed to the lender of bank. This is not the same as a payoff amount. The principal amount will not include interest owed between last payment and day of payoff. Payoff amount would be the principal plus the interest.

PUD Planned Unit Development.

Purchase Agreement The executed contract between the buyer and seller that details the terms of sale. Purchase Offer A written document that specifies all of the details regarding the contract to purchase a property. An offer is just that, an offer. A purchase agreement is a legal document that has been executed by both parties and is binding unless both parties agree to terminate it.

Quit Claim Deed A legal document were a property owner releases their claim or interest in the property.

Radon A natural gas found in the environment that has been known to cause cancer.

Real Estate Agent A licensed person who acts on behalf of a seller or buyer for the sale or purchase of real estate.

Realtor A real estate agent or broker that is a member of the National Association of Realtors.


REIT Real Estate Investment Trust. A corporation that pools money from many investors for the purpose of investing in real estate. Each investor owns a share of the corporation.

REO Real estate owned. Real estate that is owned by a bank.

Right of First Refusal The right to the first opportunity to purchase or lease real property.

Rural Development Loan A government loan that allows buyers to purchase property with no money down. Only available in certain rural areas.

Selling Agent A real estate agent who represents the seller.

Settlement Statement The legal document that shows all the fees and charges for both the seller and buyer when transferring title.

Tax Deed Deed from the County for rights to a property after paying for the back taxes that were unpaid by the property owner.

Tax Lien A lien on the property for unpaid taxes.

Tenancy by the Entirety Type of ownership that is for married couples. Both spouses have an equal interest in the property and if one of the spouses die, the remaining spouse gets full ownership.

Tenancy in Common A type of ownership where owners have undivided interest in a property. If one of the owners die, their interest in the property is transferred to whomever they have chosen as their heir. Title Legal document that proves legal ownership of a property. When a property changes hands, a Title company will search for any recorded documents that might show ownership by unknown parties. Title Insurance Insurance policy provided by the Title company that guarantees clear title and provides insurance should an issue arise later.

Transfer Tax Tax paid at time of closing for transferring the ownership of the property. Truth-In-Lending Act (TILA) Federal law that requires lenders to provide a statement that includes a summary of the total cost of credit. Title Search A process that Title companies complete to make sure there are no other claims of ownership to a property prior to the transfer of ownership from seller to buyer.


Underwriter Individual who makes final determination if the loan is approved for the lender.

Underwriting Final process by the lender to approve or reject the loan.

VA Mortgage Special loan type for veterans. Typically a no money down loan type.

Warranty Deed A deed showing the grantor has clear title and showing the right to convey the property to the buyer.

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