Adjustable-Rate Mortgage (ARM) 

Interest rates on this type of mortgage are periodically adjusted up or down monthly, semi-annually, annually, or can remain fixed for a period of time before it adjusts.

Amortization 
A method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, the principal repayment is very low, while the interest payment is very high. At the end of the loan, the relationship is reversed.

Annual Percentage Rate (APR) 
An APR is an actual finance charge for a loan, including points and fees, in addition to the stated interest rate.

Appraisal 
A real estate appraisal helps to establish a property's market value – the likely sales price it would bring if offered in an open and competitive real estate market.

Assessed Value 
The value placed on a property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value.

Balloon Payment 
A large principal payment due all at once at the end of some loan terms.

Cap 
A limit on how much the interest rate can change in an adjustable-rate mortgage.

Certificate Of Title 
A document, signed by a title examiner, stating that a seller has an insurable title to the property.

Closing 
The deed to a property is legally transferred from seller to buyer, and documents are recorded.

Closing Costs 
Costs associated with the closing of a home sale transaction, above and beyond the price of the property itself.

Commission 
A fee (usually a percentage of the total transaction) paid to an agent or broker for services performed.

Comparative Market Analysis (CMA) 
A survey of the attributes and selling process of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller’s property.

Contingency 
A condition in a contract that must be met for the contract to be binding.

Contract 
A binding legal agreement between two or more parties that outlines the conditions for the exchange of value (for example: money exchanged for title to property).

Deed 
A legal document that formally conveys ownership of a property from seller to buyer.

Down Payment 
A percentage of the purchase price that the buyer must pay in cash and may not borrow from the lender.

Earnest Money 
An earnest payment (sometimes called earnest money or simply earnest) is a good-faith deposit towards the purchase of real estate.

Equity 
The value of the property actually owned by the homeowner: purchase price, plus appreciation, plus improvements, less mortgages and liens.

Escrow 
A fund or account held by a third-party custodian until conditions of a contract are met.

Fixed-Rate Mortgage 
Interest rates on this type of mortgage remain the same over the life of the loan.

Fixture 
A recognizable entity (such as a kitchen cabinet, drape, or light fixture) that is permanently attached to a property and belongs to the property when it is sold.

Hazard Insurance 
Compensates for property damage from specified hazards such as fire and wind.

Interest 
The cost of borrowing money, usually expressed as a percentage rate.

Lien 
A security claim on a property until a debt is satisfied.

Listing Contract 
An agreement whereby an owner engages a real estate company for a specified period of time to sell a property, for which, upon the sale, the agent receives a commission.

Market Price 
The actual price at which a property sold.

Market Value 
The price that is established by present economic conditions, location, and general market trends.

Mortgage 
Defined as a temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.

Multiple Listing Service (MLS) 
A system that provides detailed information about properties for sale to its members.

Origination Fee 
An application fee(s) for processing a proposed mortgage loan.

PITI 
Principal, interest, taxes, and insurance, forming the basis for monthly payments.

Point 
One percent of the loan principal. It’s charged in addition to interest and fees.

Prepayment Penalty 
Loans containing prepayment penalty clauses allow a lender to collect extra money from the home owner if the loan is prepaid above a certain percentage.

Principal 
One of the parties to a contract; or the amount of money borrowed, for which interest is charged.

Prorate 
To divide, distribute, or calculate proportionately.

Purchase And Sale Agreement 
A contract between buyer and seller that outlines the details of the property purchase and transfer.

Settlement 
All financial transactions required to make the contract final.

Title 
A formal document that serves as evidence of ownership.

Title Search 
Detailed examination of the entire document history of a property title to make sure there are no legal encumbrances.