Every business, including real estate, has its own lingo. For those who are new to the industry, here is a Glossary of Real Estate Terms, everything from adjustable rate mortgages to title insurance to amortization might seem like a complicated word salad.
But don’t worry—we’ve created a list of the 26 most commonly seen words. The real estate vocabulary below is a great resource for aspiring real estate agents, anxious house buyers (or sellers), and anybody else interested in the sector.
Glossary of Real Estate Terms
1. Adjustable-rate mortgage
There are two forms of conventional loans: fixed-rate mortgages and adjustable-rate mortgages. The interest rate on an adjustable-rate mortgage might fluctuate at five, seven, or 10 year intervals.
This is a hazardous loan for homeowners who want to stay in their house for more than a few years, as interest rates might suddenly rise depending on market conditions. See Also, The Top 10 Best Mortgage Banks in Nigeria
This is the practice of mixing interest and principal in payments rather than merely paying off interest from the outset. This helps you to accumulate greater equity in the home early on.
To receive a bank loan to buy a house, you must first have the house assessed so the bank knows how much money to provide. The appraiser will evaluate the worth of the home based on a study of the property as well as the selling prices of comparable properties in the neighborhood.
4. Value Evaluation
This is the value of a residence determined by a public tax assessor in order to determine how much city or state tax the owner owes.
5. Buyer’s Agent
This is the agent who serves the buyer during the home-buying process. On the opposite side is the listing agent, who represents the seller.
6. Cash Reserves
The cash reserves are the funds left over for the buyer after the down payment and closing fees.
The closing refers to the meeting at which the sale of the property is concluded. Buyers and sellers sign the final paperwork during the closing, and the buyer pays the down payment and closing expenses.
8. Closing Costs
In addition to the final price of a home, there are also closing costs, which will typically make up about two to five percent of the purchase price, not including the down payment. Examples of closings costs include loan processing costs, title insurance, and excise tax.
9. Market Comparative Analysis
A comparative market analysis (CMA) is a study on comparable properties in the region that is used to calculate an appropriate valuation for the home under
This phrase refers to the criteria that must be satisfied before the purchase of a house may be completed. For example, there might be a requirement that the loan be authorized or that the assessed value be close to the final sale price.
More Glossary of Real Estate Terms
11. Dual Agency
Instead of having a buyer’s agent and a listing agent, dual agency is when one agent represents both parties.
Ownership is defined as equity. In the context of homeownership, equity refers to how much of your home you truly own—that is, how much of the principal you have paid off.
The more equity you have, the more financial freedom you have since you can refinance against your equity. In other words, equity is the difference between the home’s fair market value and the outstanding balance of the mortgage. If you own a $200,000 property but owe $150,000 on it, your equity is $50,000.
Escrow is an account established by the lender to collect periodic payments from the buyer.
14. Fixed-rate Mortgage
There are two kinds of conventional loans: fixed-rate mortgages and adjustable-rate mortgages. The interest rate on a fixed-rate mortgage remains constant throughout the loan’s term. Can A Mortgaged House Be Inherited? Heirs Options?
15. Home Warranty
This guarantee protects you from potential issues with things like plumbing and heating, which can be quite expensive to repair.
Once a potential buyer makes an offer, a home inspection is necessary. They usually cost a few hundred dollars.
The goal is to ensure that the plumbing, foundation, appliances, and other aspects of the house are up to code. Issues discovered during an inspection may be factored into the final price negotiation.
Failure to conduct an inspection may result in unexpected and costly repairs for the property buyer down the line.
This is the price of borrowing money to buy a house. Monthly mortgage payments are calculated by combining interest and principle. The longer you hold a mortgage, the more interest you will pay when you ultimately pay it off.
A listing is simply a for-sale property. The word comes from the fact that these houses are frequently “listed” on a website or in a newspaper.
19. Listing Agent
The agent that represents the seller in the home-buying process is known as the listing agent. The buyer’s agent, on the other hand, represents the buyer.
20. Mortgage Broker
The broker is an individual or organization that is in charge of handling all elements of the transaction between borrowers and lenders, such as originating the loan or placing it with a funding source such as a bank.
21. Make an Offer
This is the first price a prospective buyer offers the seller. The seller may accept, reject, or counter with a different offer.
22. Pre-approval Letter
Before purchasing a house, a buyer might receive a pre-approval letter from a bank, which offers an estimate of how much the bank will lend that individual. This letter will assist the buyer in determining what he or she can afford.
The principle is the amount of money borrowed to acquire a home. A buyer can create equity in a house by paying off the principal. The monthly mortgage payment is calculated by combining principal and interest.
24. Private Mortgage Insurance
Private mortgage insurance (PMI) is a premium paid by the buyer to the lender to safeguard the lender in the event of a mortgage failure. These insurance payments are generally terminated once the buyer has accumulated 20% equity in a house.
25. Real Estate Agent
A real estate agent is a licensed professional who works under a broker and aids both buyers and sellers in the home-buying process. See Also, 10 Qualities Of A Real Estate Agent You Must Have
26. Real Estate Broker
A real estate broker is a real estate agent who has passed a state broker’s test and completed a certain number of deals. These brokers might work independently or with their own agents.
There is still more to this Glossary of Real Estate Terms than we can cover, however, these terms above we get you started and give you a clearer understanding of the real estate industry.