Real Estate Glossary
Helpful real estate terms you should know.
- Adjustable Rate Mortgage
- Also called ARM or adjustable, these mortgages typically start off with a lower interest rate than a fixed-rate mortgage. The rate stays fixed for a specialized time, and then “adjusts” periodically, depending on changes in the market interest rate.
- A supported estimate of the value of property as of a given date, made by a certified or licensed appraiser.
- A certified or licensed professional who provides a supported estimate of the value of property following a review of the property and current market conditions.
- An increase over time in the market value of a home.
- Assumable Mortgage
- A type of mortgage that allows the buyer of a house to take over the seller’s payments. This allows the buyer to buy the house without having to obtain a new mortgage.
- Bill of Sale
- A written instrument used to transfer ownership of personal property.
- Closing (Settlement)
- The final step for the seller and buyer in a real estate transaction, at which documents (e.g, deed, note, mortgage, and affidavits) are executed and funds are disbursed in accordance with the terms of the contract or loan commitment.
- Closing Agent (Settlement Agent)
- The person who oversees and conducts the many steps involved in the real estate transaction during the closing or settlement process, including performing title searches, ordering inspections and clearing any issues relating to the inspections and searches.
- Cloud on Title
- An actual or apparent claim on the title to real property that could adversely affect the owner’s ability to transfer the title to someone else.
- Commitment Letter
- A written agreement in which the lender agrees to lend money if the borrower meets certain conditions.
- A written agreement, between competent parties, in which a buyer agrees to purchase and a seller agrees to sell specific real property under stated conditions.
- Comparative Market Analysis (CMA)
- An informal estimate of market value of a home based upon comparable homes in the area that are either on the market or have sold in the last few months.
- Provisions in a real estate contract that can be made by either party. If the specified provision is not fulfilled, the party that made the provision is free to walk away from the deal.
- Curb Appeal
- The visual attractiveness of a house as seen from the street.
- A written document used to convey title of real property from the seller to the buyer. If must contain an accurate, specific legal description of the property and must be delivered from the seller to the buyer to be effective.
- The failure to perform or fulfil an obligation. A homeowner may be in default of their mortgage if they fail to pay the monthly mortgage payment on time.
- The paying out of all monies due to the seller, real estate agent, seller’s mortgage holder and all other parties involved in the transaction at closing.
- Discount Broker
- A licensed real estate broker who offers real estate services for less that the typical rate in a given area. Often, but not always, the services are less expensive than those provided by a conventional broker.
- Earnest Money Deposit
- A deposit made to a seller showing the buyer’s good faith in a transaction. When the transaction is finalized, the funds are put toward the buyer’s down payment. If the deal falls through, the buyer may or may not be able to reclaim the deposit.
- Anything the burdens title to the property. An encumbrance can be a mortgage, a lien, an easement or a restriction that limits the title.
- The difference between the fair market value of a property and what the homeowner still owes on it.
- Money that is set aside and used by the lender to pay for taxes and homeowner’s insurance premiums as they become due.
- Fair Market Value
- The value of a home based on a comparison of that home with comparable homes in the same neighborhood that are either presently on the market or have sold I the last 6 months.
- FHA Loan
- The Federal Housing Administration is a federal agency that enables low and moderate income families to get mortgage loans for as little as 3.5% down.
- Fixed-Rate Mortgage
- A mortgage loan in which the interest rate remains the same throughout the term of the loan.
- A legal process by which a creditor repossesses property because the homeowners have defaulted on the loan.
- Hidden (Latent) Defect
- An encumbrance on a title that is not apparent in the public records, for example, unknown heirs and forged documents.
- Home Equity Line of Credit
- A loan in which the lender agrees to lend a maximum amount within an agreed period and where the collateral is the borrower’s equity in their house.
- Homeowners Insurance
- Covers damages to the house itself, or to possessions in the home. It also provides liability coverage against accidents in the home or on the property.
- Homestead Tax Exemptions
- A credit for Florida residents that reduces the assessed value on their primary residence by up to $50,000 and limits the amount the assessed value can increase each year to the lesser of 3% of the rate of inflation.
- A limited, non-invasive, examination of the condition of a home. An inspection does not guarantee future condition, efficiency, or life expectancy of systems or components.
- A charge paid to the lender for monies borrowed, usually calculated as a percentage of the loan. Homeowners may deduct mortgage interest, within limits, on annual income tax returns.
- A legal claim on a property that acts as a security for the payment of a debt. A mortgage is a specific type of lien.
- Marketable Title
- Title to real property that is free and clear of all encumbrances, liens, the risks of litigation, or other title defects such that a prudent, informed buyer would be willing to accept it.
- Material Defect
- Defects, including any property damage, malfunctions of major systems and environmental hazards affecting the condition of a home, which should be readily disclosed to a buyer.
- A loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The lender holds a lien on the property as collateral for the loan.
- Mortgage Note
- A document signed by a borrower promising to repay a loan under agreed upon terms that is secured by a mortgage.
- Mortgage Policy or Loan Policy
- A title insurance policy issued to the lender. It protects the lender for the amount of the mortgage.
- Multiple Listing Service (MLS)
- A computerized database used by real estate agents that lists the properties for sale in a particular area.
- Owner’s Policy
- A title insurance policy issued to a property’s owner providing protection to the owner. If protects the owner against the ability to sell the property due to title problems, and against any litigator by claims of others regarding your ownership of the property.
- Prepaid interest charged by the lender for granting a loan. Each point equals 1 percent of the loan amount. Points are also referred to as “discount points” because usually point are paid to obtain a lower interest rate.
- Is the amount of money loaned, on which interest is charged.
- A lender’s indication of the maximum amount it would be willing to lend a potential borrower. The pre-approval process involves an evaluation of the borrower’s employment, income and debt, and usually requires a fee.
- A lender’s opinion of the loan amount that a buyer may be eligible to borrow. This process does not require a fee or require a borrower to provide supporting paperwork or credit history. Note, being Pre-Qualified or Pre-Approved does not guarantee a loan will be granted.
- Private Mortgage Insurance (PMI)
- Usually required by lenders if your down payment is less than 20 of the purchase price. When the equity in your home reaches 20 you can request the lender cancel the PMI, or it should cancel automatically when the equity of your home reaches 22 percent.
- Property Taxes
- Taxes paid to local and state governments, based on a home’s appraised value. The tax is assessed as a millage rate, where one mil equals one one-thousandth of the appraised amount.
- A licensed real estate professional who is a member of the National Association of REALTORS, a trade organization with its own educational standards and ethics in addition to those required by the state.
- Real Estate Broker
- A person tested and licensed to negotiate and arrange real estate sales, who usually works as an agent of a Real Estate Broker.
- Real Property
- The Land and all improvements permanently attached to the land.
- The rights of ownership and possession of a particular property, and the document that shows evidence that one has ownership of that property.
- Title Insurance
- Insurance that protects the policyholder against financial losses resulting from problems with the title.
- Transfer Tax (Document Stamp Tax)
- A tax imposed by the state of Florida on the transfer of real property, at the rate of $.70 per $100 of the sales price. The transfer tax is usually paid by the seller.
- Trust Account
- a bank account, set up by an attorney, to hold funds for the benefit of the attorney’s clients. Also called an escrow account.
- Unrecorded matters
- Any claim on a property that does not appear in the official public records; for example an unknown heir or an unrecorded municipality lien.