In this Real Estate Glossary you’ll find some of the terminology you’ll be hearing throughout your buying process.
“Adjustable Mortgage Loans” Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Also called: Adjustable Rate Loans, Adjustable Rate Mortgages (ARMs), Flexible Rate Loans, Variable Rate Loans.
“Amortization” Repayment of a debt through monthly installments of principal and interest. The monthly payment is based on a schedule that will allow you to own your home at the end of a specific period (e.g., 15 or 30 years)
Annual Percentage Rate (A.P.R.): The A.P.R. shows the cost of the loan expressed as a yearly interest rate. It includes the interest, points, mortgage insurance, and other fees associated with the loan. The A.P.R. is disclosed as a requirement of the federal Truth in Lending statutes.
“Buydown” A payment to the lender from the seller, buyer, or third party, or some combination of these, that causes the lender to reduce the interest rate during the early years of the loan.
“Buyer” means a party in the transaction involved in the purchase or exchange of real estate.
“Buyer agent” means a licensee acting on the behalf of a buyer or tenant in the purchase, exchange, rent, or lease of real estate.
“Cap” In adjustable rate mortgages, the limit on how much the interest rate or monthly payment can change.
“Closing” The final procedure in which documents are executed and/or recorded, and the sale (or loan) is completed.
“Closing Statement” The statement which lists the financial settlement between buyer and seller, and also the costs each must pay Also known as the HUD1 .
“CMA” CMA, or Competitive Market Analysis, is a comparison of homes similar to a seller’s home in terms of size, style, features, and location that have sold recently or are on the market. A CMA is prepared by a real estate agent to help set a home’s listing price; it is not an appraisal.
“Contingency” Commonly, a stated event which must occur before a contract is binding. For example, a home sale may be contingent upon the buyer obtaining financing.
“Deposit” A portion of the down payment given by the buyer to the seller or escrow agent with a written offer to purchase. Shows good faith.
“Designated agent” means a licensee who has been appointed by an appointing agent to represent one party of a real estate transaction and who owes that party fiduciary duties, whether or not the other party to the same transaction is represented by another individual licensee associated with the same brokerage firm.
“Down payment” Cash portion of the purchase price paid by a buyer from his own funds as opposed to that portion which is financed.
“Dual Agent” A licensed real estate salesperson who represents both the buyer and the seller in a transaction at the same time. Also applies to a buyer’s agent (see above) when the seller’s agent works for the same company. In either case, both parties must provide written informed consent to Dual Agency.
“Escrow” A procedure in which a third (neutral) party holds all funds, documents, etc. necessary to the sale, with instructions from both buyer and seller as to their use and disposition.
“Facilitator” means an individual licensee who assists one or more parties during all or a portion of a real estate transaction without being an agent or advocate for the interests of any party to such transaction. (NH)
“FHA Loan” A loan insured by the Federal Housing Administration, a part of the Department of Housing and Urban Development. FHA insurance enables lenders to make loans to borrowers who might not qualify for conventional mortgages.
“Graduated Payment Mortgage” A mortgage initially offering low monthly payments that increase at fixed intervals and at a predetermined rate.
“Seller” means a party in the transaction who owns the real estate intended for the sale, exchange, rent, or lease of real estate.
“Seller agent” means a licensee acting on the behalf of a seller or landlord in the sale, exchange, rent, or lease of real estate.
“VA Loan” A mortgage loan made available to veterans of the United States Armed Forces to facilitate the purchase of a home. A VA loan is issued by a traditional lender and backed, in part, by the US Department of Veterans Affairs. The backing provided by the VA allows veterans who would not normally qualify for a mortgage loan due to credit or other issues to purchase a home.