Real Estate Glossary

Adjustable Rate Mortgage: An adjustable rate mortgage has an interest rate that does not stay the same, but changes over the course of the loan at a rate that is determined by the lender before the loan is made to the borrower.
Agreement of Sale: An Agreement of Sale is a contract or purchase agreement that is made between a seller of a piece of real estate and a buyer who agrees to buy that piece of real estate at the terms that are set forth in the contract.

Amortization: When regular payments are made on a loan that covers both principal and interest, the loan gradually decreases in amount until it is completely paid in full. This process is called amortization.

Annual Percentage Rate: This is the rate of yearly interest that is paid on a loan, or the cost of the loan when it is referred to on the balance of the loan as a yearly rate.

Appreciation: Because real property increases in value over time, appreciation is the cost of the property originally, and the present value of the property.

Balloon Mortgage: A Balloon Mortgage is when the final payment of a loan, known as a balloon payment, is significantly larger than all the other payments of the loan.

Bank Owned Homes: A bank owned home is a home that was in a foreclosure, was not resold at auction, and therefore reverts back to being the property of the lender.

Bridge Loan: A bridge loan is made to a purchaser for financing a new home before the buyer's old home has sold to fund the purchase price of the new home.

Buyer's Market: A buyer's market occurs when the selling prices of real estate are lower, and the buyer has more leeway to gain benefits that are to the buyer's advantage in the contract.

Condo: A condo, or condominium, is a living space where the owner has a separate interest in a unit, and a common interest in a portion of the property.

Default: Default is when a purchaser of real property does not make the payments on the mortgage loan as agreed upon in the sales contract.

Depreciation: Depreciation occurs when there is loss in the value of a building due to physical or economic forces.

Duplex: A duplex is a single building which is divided into two seperate units that can house two separate families.

Escrow Account: A escrow account is the account that a broker must maintain to deposit all funds related to a sales contract of real property until all terms of the agreement have been met.

Federal Home Loan Bank Act: The Federal Home Loan Bank Act was created in 1932 to lower the cost of home ownership. It established the Institution that supervises federal savings and loans.

Federal Housing Administration: The FHA insures private first mortgages on both new and existing homes, but does not allow second mortgages on the loans it insures.

Federal Housing Finance Agency: The FHFA regulates and conserves the twelve Federal Home Loan Banks, and oversees Fannie Mae and Freddy Mac.

FHA Mortgage: A FHA loan is a mortgage loan that has been insured by the Federal Housing Administration, which allows more buyers to be able to buy homes.

Foreclosure: Foreclosure occurs when a mortgage holder does not pay the monthly payments on a mortgage, and the lender has to terminate the mortgage and take possession of the property.

Foreclosure Prevention Act of 2008: The Foreclosure Prevention Act of 2008 was enacted to help prevent families from losing their homes due to foreclosure with measures such as tax credits for households with low income and first time buyers.

Good Faith Estimate: A good faith estimate is an estimate of closing costs given by the lender to the loan applicant within three days of the submission of the loan application.

Home Insurance: An insurance policy that protects the homeowner from risks such as fire, theft, and personal liability for property damage.

Home Mortgage Disclosure Act: The Home Mortgage Disclosure Act was enacted in 1975, and amended in 1989, and required lenders to collect and disclose the information related to their lending practices.

Homeowner's Association: A homeowner's association is an organization associated with a particular group of homes in a neighborhood that oversee the maintenance of the common areas of the neighborhood and enforce any restrictions within the neighborhood.

Homeowner's Protection Act: The Homeowner's Protection Act is designed to protect homeowner's from paying private mortgage insurance after they have created enough equity in their homes and no longer need it.

Mortgage: A mortgage is the temporary pledge of real estate to a lender as the security for a debt owed to the lender by the creditor.

National Housing Act: The National Housing Act, passed in 1934, set up the Federal Housing Authority, and encouraged banks and buildings and loans to make credit available for housing and home repairs for middle and low income families.

Property Tax: Property tax is a levy on the value of a property that is paid to a government where the property is located.

Realtor: A Realtor is a real estate professional who is a member of the National Association of Realtors, a professional real estate organization.

REO Listings: Real Estate Owned listings are homes that went into foreclosure and not immediately sold, and are owned by a financial lender.

Seller's Market: A Seller's Market is a market in which the selling prices of real estate are higher, and the demand is high, thus allowing the seller the advantage when determining a purchase agreement with a buyer.

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