Buyers Glossary

Addendum: a form that explains a change or an addition to a purchase agreement

Affidavit: a statement that is to be signed by a buyer or seller to indicate the information provided is true

Appraisal: a document that includes an estimateof the fair market value of a property

Appraisal Fee: the cost that an appraiser charges in order to provide an estimate of a property’s market value

Appreciation: an increase in the value of a property

Balloon Loan: a loan with monthly payments and a leftover balance due in a lump sum payment at the end

Blanket Mortgage: one mortgage for more than one real estate property

Closing: the last portions of the process to transfer a property’s ownership; it is also considered a settlement

Closing Date: the date for the property to officially be exchanged

Credit: an agreement that is to ensure the borrower will borrow money from a lender and then repay that money to a lender over time

Creditor: the lender who supplies a buyer with the loan or with credit

Deed: the document that indicates the transfer of a property’s ownership

Default: a lack of ability to pay the mortgage payments that were agreed to

Depreciation: a decrease in the value of a property

Down Payment: the percentage of the total purchase price paid when an agreement of sale has been signed

Escrow: funds that a third party holds until certain parts of a contract are satisfied and funds can be paid

Fixed Expenses: fees that will stay the same from one month to the next month

Fixed-Rate Mortgage: a loan with a set interest rate and payment amount for the time period of the loan

Floor Plan: an architect’s diagram of a property’s rooms and the room sizes

Foreclosure: a process in which a property can be sold to handle the losses when an owner defaulted on a loan

Grace Period: a time period when a mortgage payment can be made without a borrower being considered in default

Holding Period: the time period in which a property is owned

Homeowner’s Insurance: the insurance that will protect a property from different hazards such as fires or storms

HVAC: the acronym for heating, ventilation, and air conditioning, which is a heating and cooling system for a home

Infrastructure: public services, such as highways and schools, that are needed to help residential development

Inquiry: a request for a credit report

Inspections: checking and analyzing a property to see if there are any defects

Interest Rate: the cost to borrow money from a lender

Listing Agent: an agent who is representing a seller

Mortgage: a legal document and term that indicates a loan; the property is officially pledged to a lender and is seen as security for the loan payment

Mortgagee: the person who is the lender in a mortgage agreement

Mortgagor: the person who is the borrower in a mortgage agreement

Open House: the time potential buyers of a property can visit a property that is for sale

Origination Fee: an expense that is paid to lender when he or she processes a loan application

PITI: a house payment including principal, interest, taxes, and insurance and made on a monthly basis

Pre-Qualification: the way to determine if a borrower can qualify for a loan and the amount of money he or she would be allowed to receive

Price-to-Income Ratio: an affordability measure for a property

Property Tax: a local tax applied for municipal services including schools and streets

Purchase Offer: a document that provides an offer to buy a property

Real Estate Agent: a licensed professional who assists in the selling of a property

Real Estate Broker: a licensed professional or company that connects a buyer and a seller in the purchase of real estate

Real Estate Salesperson: a licensed professional who has similar tasks compared to a real estate broker’s tasks, is connected to a broker, and is supervised by a broker

Refinance: receiving a new loan in order to pay off an existing loan

Sales Contract: a contract between the buyer and the seller that explains details such as guarantees and closing costs

Second Deposit: another deposit that is paid when the purchase and sale agreement is being signed

Shared Appreciation Mortgage: a loan that includes partners agreeing to share parts of a down payment, monthly payment, and appreciation

Title: the evidence that a person has the legal right to own a property

Transfer Taxes: Local taxes and state taxes applied when real estate has been transferred

Zoning: the regulations created by local governments regarding a property’s features and use in a certain location

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