Real Estate Glossary

The process of paying off a debt over time through regular payments of principal and interest.

An unbiased professional opinion of a home's value, typically required by lenders before approving a mortgage.

A mortgage that can be transferred from the seller to the buyer, allowing the buyer to take over the existing loan terms.

A large, lump-sum payment due at the end of a balloon loan term.

The capitalization rate used to estimate the potential return on an investment property, calculated by dividing net operating income by property value.

Fees associated with finalizing a real estate transaction, including loan origination fees, title insurance, appraisal fees, and taxes.

A five-page form that provides final details about the mortgage loan, including loan terms, projected monthly payments, and closing costs.

An estimate of a home's value based on recently sold, similar properties in the immediate area.

A condition that must be met for the contract to be binding, such as financing approval, satisfactory inspection, or appraisal.

A mortgage not insured or guaranteed by the federal government, typically requiring a higher credit score and down payment than government-backed loans.

The percentage of your gross monthly income that goes toward paying monthly debt payments, used by lenders to assess borrowing capacity.

The portion of the purchase price paid upfront by the buyer, typically expressed as a percentage of the total price.

When one real estate agent or broker represents both the buyer and seller in the same transaction.

The process of thoroughly investigating a property before purchase, including inspections, surveys, and title searches.

A deposit made to a seller that represents a buyer's good faith to buy a home, typically 1-3% of the purchase price.

The difference between the market value of your home and the amount you owe on your mortgage.

A neutral third party that holds funds and documents until all conditions of the transaction are met and the sale is closed.

A mortgage insured by the Federal Housing Administration, allowing lower down payments and credit scores than conventional loans.

A mortgage with an interest rate that remains constant throughout the life of the loan.

A property being sold directly by the owner without a real estate agent.

An organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and their residents.

A limited, non-invasive examination of the condition of a home, typically performed during the option period.

The percentage charged by a lender for borrowing money, affecting your monthly mortgage payment.

A legal claim against a property as security for a debt or obligation.

The ratio of the loan amount to the appraised value or purchase price of the property, whichever is lower.

A database established by cooperating real estate brokers to provide comprehensive data about properties for sale.

A specific period of time (typically 5-10 days in Texas) during which the buyer can terminate the contract for any reason, usually in exchange for a small fee.

Principal, Interest, Taxes, and Insurance - the four components of a monthly mortgage payment.

Insurance that protects the lender if you stop making payments, typically required if down payment is less than 20%.

Fees paid to a lender at closing to reduce the interest rate on a mortgage. One point equals 1% of the loan amount.

A document from a lender stating that the lender is tentatively willing to lend to you, up to a certain loan amount, based on a preliminary review of your credit and finances.

The amount of money borrowed or the amount still owed on a loan, separate from interest.

A licensed real estate professional who is a member of the National Association of REALTORS® and adheres to its strict Code of Ethics.

The process of filing documents with the county to make them part of the public record.

Replacing an existing mortgage with a new one, typically to get a better interest rate, change loan terms, or access home equity.

A document provided by the seller that lists known issues or defects with the property.

A drawing that shows the precise legal boundaries of a property, the location of improvements, easements, rights of way, and encroachments.

Insurance that protects the buyer and lender against losses due to defects in the title (ownership) of the property.

The process by which a lender evaluates the risk of lending to a particular borrower and decides whether to approve the loan.

A mortgage guaranteed by the Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses, typically requiring no down payment.

A deed that guarantees the seller holds clear title to the property and has the right to sell it.

Local laws that regulate how property in specific areas can be used (residential, commercial, industrial, etc.).