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REAL ESTATE GLOSSARY August Maier Real Estate Professional

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Real Estate Terminology Review the terms on the following pages Real Estate terminology can be confusing, here are some terms that you may hear during your real estate transaction.

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Real Estate

Terminology

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Amortization Amortization is an accounting technique used to periodically lower the book value of a loan or an intangible asset over a set period of time. Concerning a loan, amortization focuses on spreading out loan payments over time. When applied to an asset, amortization is similar to depreciation.

Closing Costs Closing costs are the fees and charges in excess of the purchase price of the property due at the closing of a real estate transaction.

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Down-Payment A down payment is a sum of money that a buyer pays in the early stages of purchasing an expensive good or service. The down payment represents a portion of the total purchase price, and the buyer will often take out a loan to finance the remainder.

Escrow Escrow is a legal arrangement in which a third party temporarily holds large sums of money or property until a particular condition has been met (such as the fulfillment of a purchase agreement). It is used in real estate transactions to protect both the buyer and the seller throughout the home buying process.

Real Estate

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Pre-Approval Letter

Pre-approval letters typically include the purchase price, loan program, interest rate, loan amount, down payment amount.

Clear to Close Clear to close means that you've met the requirements and conditions to close on your mortgage and can head to the closing table.

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Credit Score A credit score is a number between 300–850 that depicts a consumer's creditworthiness. The higher the score, the better a borrower looks to potential lenders. A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors.

MLS A multiple listing service (MLS) is a database established by cooperating real estate brokers to provide data about properties for sale. An MLS allows brokers to see one another's listings of properties for sale with the goal of connecting homebuyers to sellers.

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Contingency A Contingency Is a demand that must be met particular In the contract such as loan approval, Inspection period, attorney review, etc.

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Closing Statement A closing statement is a document

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that records the details of a financial transaction. A homebuyer who finances the purchase will receive a closing statement from the bank, while the home seller will receive one from the real estate agent who handled the sale.

All definitions are credited to Investopedia and dictionary.com

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Homeowner's association (HOA) Many residential communities have a homeowner's association (HOA) structure to help maintain a clean and cohesive atmosphere in the neighborhood. Also, when you buy a condominium, townhouse, or singlefamily home within "a planned development" you may also encounter the HOA structure.

Earnest Money Earnest money is a deposit made to a seller that represents a buyer's good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal, and inspections before closing. In many ways, earnest money can be considered a deposit on a home, an escrow deposit, or good faith money.

Real Estate

Terminology

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Clear title

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Clear title is a title free of claims, doubts, or disputes about ownership. Clear title is free from material defects and is necessary before property can be sold.

Deed

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A housing deed is the legal document transferring a title from the seller to the buyer. It must be a written document and is sometimes referred to as the vehicle of the property interest transfer.

All definitions are credited to Investopedia and dictionary.com

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Closing Closing is the final stage of the real estate transaction. The date is agreed upon when both the buyer and seller go under contract on the home. On the closing date, the property is legally transferred from seller to buyer.

Home Equity Home equity is the part of your property you actually own. While you do “own” your home, your mortgage lender has interest in the property until it’s paid off.

To calculate your home’s equity, subtract your outstanding loan balance from the current market value of your property. Home equity will increase as you pay down your loan or the market value of your home increases.

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