A Glossary Of Real Estate Terms And Terminologies6 min
During the house buying and selling process, a lot of real estate terminology is used, and we are here to help you understand it.
Real estate investments can be difficult if you do not know the fundamentals. To take an informed decision, you need to familiarize yourself with these property-buying basics.
An amortization schedule shows the equalizing of your mortgage payment by adjusting the proportion of interest and principal.
As you pay over a period, the interest contribution will reduce, and the principal contribution will increase.
An appraisal is assessing the market value of a particular property carried out by a qualified and licensed real estate professional.
Assessment is the evaluation of a property to calculate property tax based on the comparable sale prices and level of tax set by the local assessors.
An Assumable mortgage is the mortgage that one can reassign to a new owner. It is then the responsibility of the new owner to be a guarantor for the unpaid mortgage.
Balloon Payment is the final repayment of the outstanding principal loan in full at the end of the loan period and absorbing all other remaining payments.
Blended Mortgage combines the old and new mortgages, thus creating a resultant new mortgage with an interest rate between the two original ranges.
Bridge Financing is a temporary choice of financing which assists the homeowners to bridge the gap between the time they sell the existing house and buy the new property.
A broker is an individual that is licensed to trade in real estate. They have the authority to form an organization and employ sales representatives to offer services to the seller or buyer, or they may provide the services themselves.
The buyer’s agent is the individual that represents the buyer, and his complete loyalty is to the buyer.
The buyer’s market happens when there is an excess in several homes available, thus leading to lower home prices and availability. The buyers control the market dynamics.
Buyer Brokerage Agreement
A buyer’s Brokerage Agreement is an agreement or a contract formed between the buyer and the buyer’s agent. Buyer Brokerage Agreement shows how the agent represents the buyer’s best interest.
Chattel represents the movable personal properties not included in the sale of a home, but one can add as supplementary to make the property more interesting.
Capitalized value is the value of a property factoring in the calculation of net income.
Capitalization rate is the rate of return expected by an investor in the property calculated on the net operating income (NOI) the property generates. Capitalization rate equals the Net Operating Income (NOI) upon the current market value of the house.
In a Closed Mortgage, one cannot renegotiate a mortgage before the term’s end if the investor agrees, and the borrower is ready to pay a penalty if levied by the investor.
Closing costs are the costs that get added to the purchase price of the home. These costs include legal fees, transfer fees, and disbursements payable on closing day (completion day).
The closing date is the last date on which the owner takes possession of the property, and concludes the sale.
The commission is the amount agreed upon by the seller and the real estate broker. Both parties clearly state in the agreement the amount payable to the broker/agent on closing.
A commitment letter is a written notification from the mortgage lender to the receiver that certifies the progression of funds under given conditions.
A conditional offer is the offer to purchase that is subject to specified conditions. In real estate dealings, a buyer’s offer on a home depends on something to be completed for the buyer before the owner/investor accepts the done deal.
Condominiums are homes relate to shared ownership of common elements of the property.
In Condominium, the owner needs to pay monthly fees that vary depending on the structure of the complex.
A Conventional mortgage is a mortgage that does not exceed 75% of the value of the property. It is lesser than the purchase price and market value.
A convertible mortgage is a mortgage that you can change from short-term to long-term, depending on the financial requirements.
If the buyer does not accept the original offer, the vendor may present an alternate offer counteroffer that can mean mending the cost or the closing date than the previous offer or any such changes.
A credit report is a credit bureau-published document to help the lender assess the creditworthiness of the buyer. It includes information about the capacity to handle debt commitments along with the existing unresolved dues.
Conveyance is the transfer of the ownership of the property and is the written proof whereby such transfer is effective.
A construction loan is a temporary loan made to a builder for the construction of structures, usually to be paid out by another loan upon accomplishment.
Construction Loan Agreement
The construction loan agreement is the contract held between an investor and a builder, setting out the terms of the settlement.
Curb appeal is the term that represents that how attractive or eye-catchy the property looks when seen from the road. A home with good curb appeal will have beautiful landscaping and a well-preserved peripheral.
The debt-service ratio is the method used by mortgage lenders to determine creditworthiness.
A Deed is a contract signed by both the seller and the buyer, reassigning the ownership.
Default is a term used in case of failure to abide by the terms of the mortgage loan agreement. If there is a failure to pay the mortgage payments, the mortgage holder may take action to take possession of the mortgaged property.
Delinquency is the failure of the payment of the mortgage on time.
The deposit is the amount paid by the buyer when the offer is accepted. The real estate representative holds it until the sale is closed.
Depreciation is the decrement in the property’s value. As a result, it will have less market value than its worth at the time of purchase.
The Discharge is the removal of all mortgages and financial inconveniencies on the property.
Discount is the reduction in the price of a service.
The face price of the loan minus the interest or discount charged by the investor is the sum advanced to a borrower.
Down Payment is the amount of money one pays towards the purchase of a property. The minimum amount of down payment depends on the purchase price of the property. Bank/Lender expresses it as a percentage of the total property cost.
A dual agent is a real estate agent who acts as an agent for the vendor and the buyer within the same business deal.
A drawee is the person on whom a bill is drawn.
The drawer is the person who calls the bill.
An easement is the right to access another person’s property for a specific purpose, such as a driveway or public utilities.
An encroachment is a wall or kind of fixture that illegally intrudes on property not owned by the encroacher, thus altering the size of the property.
Equity is the difference between the cost of the property and the sum owed on the mortgage.
An end loan is a real estate loan given to the final buyer.
Expropriation means taking private property forcefully for public utilization.
The first mortgage is the first security registered on the property.
First Mortgage Bond
The first mortgage Bonds are issued by a corporation and are secured against the property and incomes of the issuing organization.
A fixed-rate mortgage is a usual form of mortgage in which the interest rate remains unchanged during the entire term of the loan.
A fixture is a permanent enhancement in the property that may not be removed on the termination of the term.
Foreclosure is the lawful procedure where the investor takes ownership of one’s property and sells it to cover the amount of the outstanding that one has failed to repay. When one defaults, and the owner notices repeated failure to make payments, the buyer may lose their home to foreclosure.
Freehold is the possession of the land on which the building(s) are situated.
A grantee is the party to whom the interest in real property is transferred (the buyer).
A grantor is the person who transfers the interest in real estate by deed (the seller).
A guarantor is a third party with no interest in the property, who agrees to undertake accountability for a debt on the occasion of default by the borrower.
A high-ratio mortgage is a mortgage loan that exceeds 75% of the lending amount of the property. Since the risk is high, the lender must insure it against the default of payment.
Interest is the benefits of a loan as articulated on a percentage basis.
An instrument is a type of written document that is legal.
An indenture is a deed document, usually in duplicate, to convey particular objects between the parties.
An injunction is a legal procedure. It requires the person to whom it is directed to perform or not perform a specific task.
Irrevocable means incompetent of being recalled or unchangeable.
A joint tenancy is the possession of land by two or more people. Whereby on the death of one, the survivor or survivors take ownership of the entire property.
Junior financing is a secondary mortgage or loan often given by a seller of the estate, second in priority to the current loan. Junior mortgages used to avoid paying for expensive private mortgage insurance for borrowers with less than a 20% down payment.
A kicker is a bonus or additional fee over and above the fixed interest already paid to an investor.
Land Acquisition Loan
Land acquisition loan is provided to buy land as opposed to enhancing land or buildings.
A land contract is the agreement that is drawn between the seller and the buyer.
Land Development Loan
Land Development Loan is the loan that is provided to develop the land for residential use.
Loan to Value Ratio
The loan to value ratio is the ratio of the loan amount to the value of the property expressed in percentage.
A leasehold is a property tenure where one party buys the right to occupy the property or a building for a specified period subject to certain conditions.
Leasehold appraisal is a technique to calculate the value of leasehold property.
A Leasehold mortgage is provided on the security of the leasehold of the property.
A legal description is an on-paper description by which a property can be positioned and is acceptable for registration in a land registry system.
A lessee is a tenant under a lease.
A lessor is a person who grants utilization of the land under a contract to an occupant.
Loan Fee Reserve
A loan Free Reserve is presented on a balance sheet of a real estate organization as an endowment for any future losses in properties.
The market value represents the value at which the real estate would sell in the competitive market. The value depends on the property features, supply-demand situations in the property market, and the cost of similar properties.
The maturity date is the last day of the mortgage, on which the full loan must either be paid or the agreement must be renewed.
A maintenance fee is a monthly payment by condominium owners for maintaining the common areas of their property.
A mortgage is a loan sanctioned against an immovable asset, like a house or a commercial property. The lender keeps the asset as collateral until the borrower repays the total loan amount, including the interest.
A mortgage broker is a middleman who brings mortgage debtors and mortgage lenders together but does not use his capital to create mortgages.
Mortgage Life Insurance
Mortgage life insurance offers coverage for the family, should one die before the mortgage is paid off.
Mortgage Loan Insurance
Mortgage loan insurance is an insurance policy that pays investors for losses because of the default of a loan.
A recurrently scheduled payment that is frequently merged to contain both principal and interest.
A mortgagee is a person or a company that lends money secured by a mortgage.
A mortgagor is an individual that owns the property and is borrowing the money secured by the mortgage.
Negative cash flow occurs when the business has more outbound than inbound money. The operating costs are far more than the rental income.
Nominal Interest Rate
The interest rate showed on the face of a loan document is known as the nominal interest rate.
Net worth is one’s financial value, calculated by subtracting the total liabilities from a person’s entire belongings.
An owner is the rightful and legal possessor of the real estate or the property is the owner.
Offer To Purchase
A written agreement with certain terms and conditions based on which the buyer agrees to buy the home.
An open mortgage is a mortgage that can be paid off or negotiated upon without penalty or a fine.
Operating costs are the amount of money spent or expenses by the homeowner every month to operate the home.
The origination fee is bought for the calculation, preparation, and submission of the expected mortgage loan.
It is the combination of two types of loans, and the borrower only has to negotiate with a single lender and pay only a single set of closing costs.
Power Of Sale
In case the default occurs, the mortgagee has the entitlement to force the sale of the property without jurisdictional proceedings.
A principal is the original balance of loaned money on an unpaid loan and fees, without interest.
Property insurance is the insurance one buys for the building or construction on the land owned, and it must be enough to cover for the building to be rebuilt if destroyed by any hazards, as mentioned in the policy.
Property Taxes are the taxes by the municipality where the property is situated based on the worth of property.
Personal properties are all and any property except the land and the developments thereon.
A prepayment clause introduced in a mortgage provides the mortgagor the opportunity to pay off all or part of the mortgage debt in early payment of the maturity date.
Property is the state of the entitlement which an individual enjoys as the feature of ownership.
Projected income is the estimated revenue that is the yield from the property.
A Quitclaim deed releases the interest of an individual in a property without stating the interest or rights.
Rate (Interest) is the return that the owner receives for lending the money for the mortgage.
Real estate includes the property, leasehold, and business, with or without enhancements and possessions in connection with the procedure of the business.
An individual who is a real estate broker forming the active membership in a local real estate board.
The purchasing back of an estate by payment of the sum unpaid on the mortgage.
The redemption period is the time permitted by the law during which the mortgager can gain the property by paying off debt.
Refinance is paying off a mortgage or other registered inconvenience and get a mortgage from a different lender.
Real Estate Board
The real estate board is the local non-profit organization representing the local real estate brokers that offer services to the society and operate an MLS system.
Reserve fund is the amount of money kept aside from the beginning regularly by the homeowner, used in an emergency repair.
A renewal agreement is where the moneylender may approve to lengthen the loan, but perhaps on reviewed terms of the principal payments and interest rate.
Rental value is the reasonable market value of a property when rented out in a lease.
A rent contract is the rent received by the real estate owner under any agreement.
A Rollover mortgage is a mortgage loan where the interest rate is formed for a particular term. At the end of the period, the mortgage is rolled over, the mortgagor and the mortgagee may prolong the loan.
Sale and Leaseback
The sale and leaseback method allows an individual to lease a property to himself after he has sold it.
A second mortgage is a second loan taken out on an estate already mortgaged.
A seller’s market is a condition that takes place when there is more demand than the supply. It occurs when there are interested buyers, but the real estate inventory is comparatively low.
Statement Of Adjustment
It is a document that permits both the Buyer and the Seller to see how property taxes, condo fees, deposits, and other items are utilized to know the actual amount that the Buyer owes the Seller to finish the purchase.
The status certificate provides an outline of the condominium corporation’s financial and legal state on the date that the certificate is handed out.
A survey is a process in which the location and measurement of a property’s boundary are done to calculate the exact amount of land that belongs to the owner.
A statute is a rule established by an act of the government.
It is the period for which the mortgage conditions, including the interest rate, are supported.
A property title gives the owner complete ownership of the property for unlimited time.
Title Insurance assures the owner against damage because of a fault in the property’s title held as cover for a mortgage.
Transfer means to transport from one person to another.
Transfer Of Charge
Transfer Of Charge is the transfer of a mortgage under the Land Titles System. A transfer of charge takes place when a borrower or lender transfers the existing mortgage from its present holder to a person or business.
Umbrella mortgage is a distinct procedure in which one document comprises previously existing mortgages listed on the same estate.
Valid in real estate means binding force, lawfully appropriate and approved by law.
A mortgage in which payments are static, but the interest rate changes following developments in the market.
A person who is the seller of real property.
A waiver is a renunciation, abandonment, or surrender of some claim or interest in a property.
A witness contributes his name to sales deed or agreement or contract to verify its validity and avoid its implementation by attesting if needed.
Yield is the return on an investment expressed in a ratio per annum of the amount invested.
Zoning Laws are the Community laws that restrict the usage of land for specific purposes.