Real Estate Terms

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Amortization
A gradual paying off of a mortgage by periodic installment.

Appraisal
An estimation of a property's value, often made by lenders before deciding the amount of a mortgage.

Assessed valuation
A value placed on a property as a basis for taxation.

Assumable mortgage
A mortgage taken over from the seller of a property by the buyer.

Balloon payment
The final payment on a loan or mortgage, usually larger than the previous payments.

Binder
An agreement by the buyer to cover the down payment on the purchase of real estate before a final contract is drawn up.

Broker
Usually a licensed agent who acts on behalf of the seller of a property, making arrangements for the sale.

Closing
The meeting of a buyer, a seller, a banker, and attorneys for all parties at which a real-estate sale is completed with the writing of checks. It usually takes place 30 to 60 days after the signing of the contract.

Commission
The amount paid to a real-estate broker for services rendered.

Condominium
A multiple-unit dwelling, town house, or detached house; the owner buys a title to a single unit and an undivided interest in common areas (the land, roof, elevator, etc.)

Contract
A binding agreement between parties to transact real estate under agreed-upon terms.

Cooperative apartment
A multiple-unit dwelling; buyers purchase individual shares in a cooperative corporation that owns the building. Each share entitles the holder to a proprietary lease on an apartment in the building.

Deed
A written document that conveys ownership of real property.

Equity
The value of an owner's real property after deducting mortgages and liens.

Escrow
A written agreement or something of value placed in the care of someone else and, once conditions are met, delivered to a designated party. Often used for payment of taxes along with mortgage payments.

Fannie Mae The Federal National Mortgage Association
The largest secondary mortgage agency.

Federal Housing Administration (FHA)
A division of the federal government's Department of Housing and Urban Development that insures mortgages.

Freddie Mac
The Federal Home Loan Mortgage Corporation, which buys mortgages from lenders, allowing the lenders to make new mortgages.

Ginnie Mac
The Government National Mortgage Association (GNMA), which buys FHA-insured loans from lenders.

Indexing
A means of adjusting the interest rate on a loan or mortgage according to an agreed-upon index or indicator.

Interest
Money paid to a lender for use of borrowed principal.

Lien
A claim on the property of another granted as security for the payment of a loan or mortgage.

Mortgage
A written instrument that creates a lien on a given property in return for a loan.

Point
An amount equal to percent of a loan, charged to the borrower by the lender.

Prepayment Penalty
An additional fee charged for paying off a mortgage before it is due.

Principal
The amount of money borrowed from a lender for a mortgage, upon which interest is computed.

Title
A written document that gives evidence of property ownership.