Real Estate Terminology
Feeling confused on what the terms you see online or hear from your real estate agent mean? Don’t sweat it, below is a list of the most common term and acronyms that you’re likely to encounter while involved with the real estate market.
- Adjustable Rate Mortgage (ARM) — The interest rate is tied to a financial index making the monthly mortgage payment go up or down over time.
- Annual Percentage Rate (APR) — The percent of interest that will be charged on a home loan.
- Appraisal — A report highlighting the estimated value of the property completed by a quali-fied 3rd party. This is typically done for the benefit of the buyer to ensure the property is worth what they are paying.
- Arbitration — A process where disputes are settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
- Assessed Value — Typically the value placed on property for the purpose of taxation.
- Association Fee/HOA Fee — In addition to a mortgage, certain housing communities such as townhomes have a monthly fee associated with maintaining the common areas and amenities.
- Balloon Mortgage — A long-term mortgage loan that starts small but has a large payment due at maturity.
- Certificate of Eligibility — A document is-sued by the U.S. Department of Veterans Affairs (VA) certifying a veteran’s eligibility for a VA-guaranteed mortgage loan.
- Closing — This is the final meeting where the buyer and seller sign the necessary paper-work, complete the transaction, and release/take possession of the property. Usually the representing agents and attorneys attend.
- Closing Agent — The person or entity that coordinates the various closing activities, including the preparation and recordation of closing documents and the disbursement of funds. (May be referred to as an escrow agent or settlement agent in some jurisdictions. Typically, the closing is con-ducted by title companies, escrow companies or attorneys.
- Closing Costs — The buyer and seller have expenses associated with the transaction other than that of the actual cost of the home. For example, the buyer has a variety of fees due for obtaining a new loan and the seller must pay commission to both agents.
- Closing Disclosure — A form that provides the final details about the mortgage loan. It in-cludes loan terms, projected monthly payments, and how much the extra fees will be.