ARM - Adjustable Rate Mortgage— A loan that allows the interest rate to be changed periodically.
Agency— A legal relationship in which an owner-principal engages a broker-sales associate in the sale of property or buyer-principal engages a broker-sales associate in the purchase of property.
APR - Annual Percentage Rate— The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.
Amortization— The gradual repayment of a mortgage by periodic installments.
Appraisal— An estimate of the value of property.
Assessed Value— The valuation placed on property by a public tax assessor as the basis of property taxes.
Assumption of Mortgage— Agreement by the buyer to assume responsibility for a mortgage owned by the seller; the seller remains liable to the lender unless the lender agrees to release him or her.
Balloon Loan— A mortgage that has a substantial amount of the principal due at the maturity of the note.
Broker— A person licensed by a state real estate commission to act independently in conducting a real estate brokerage business.
Buydown— A payment to the lender from the seller, buyer or third party, causing the lender to reduce the interest rate during the early years of the loan.
Cap— A maximum amount of interest that can be charged.
Closing— The final step in transferring ownership of a property from seller to buyer.
Closing Costs— Fees and expenses, not including the price of the home, payable by the seller and the buyer at the time of closing.
Contingency— A condition that must be satisfied before a contract is binding.
Conventional Loan— A fixed-rate, fixed term loan that is made without government insurance.
Convertible ARM— Loans that give you the opportunity to convert to a fixed-rate mortgage, usually between the 13th to 60th month of the loan.
Cooperatives (co-ops) - A buyer purchases shares in a co-op corporation, made up of the residents in the co-op property. The buyer owns the shares rather than owning the real property. In exchange, the buyer has the right to occupy a co-op unit.
Deed— A legal document conveying title to a property.
Depreciation— Refers to when a property’s value decreases.
Earnest Money— A payment given to the seller by a potential buyer indicating the buyer’s intent to complete the purchase of the property.
Equity— The owner’s value or interest in a property.
Escrow— The placement of money or documents with a third party for safekeeping pending the fulfillment or performance of a specific act or condition.