For those who aren’t real estate professionals, understanding real estate terms can be very confusing and overwhelming. The terminology can make someone unfamiliar with the real estate industry have a very difficult time dealing with the process of selling, buying or renting a house. In order to help deal with this, check out this list of some of the most commonly used real estate terms and their definitions.
Adjustable-rate mortgage (ARM): A mortgage where the interest periodically changes based on corresponding fluctuations in an index.
Appraiser: An experienced person who has been educated and trained to estimate the value of property.
Assessor: A public official who established the value of a property for taxation purposes.
Contingency: A condition that must be met before a contract can be legally binding. A typical contingency on a contract is when homeowners specify that that contract isn’t binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.
Credit: An agreement where a borrower receives something of value in exchange for the promise that they will repay the lender at a later date.
Default: The failure to make the mortgage payment within a specified period of time.
Equity: A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other possessions.
Escrow: An item of value, money, or documents deposited with a third party that is to be delivered upon the fulfillment of a condition.
Lease: A written contract between the property owner and a tenant. This stipulates the payment and conditions under which the tenant may possess the real estate for a specified period of time.
Lock-in: An agreement where the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
Mortgage: A legal document that pledges a property to the lender as security for payment of a debt.
Realtor: A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.
Security: The property that will be pledged as collateral for a loan.
Title: A legal document evidencing a person’s right to or ownership of a property.