Real Estate Glossary

A historical summary of all recorded legal actions, ownership transfers, and encumbrances affecting a property.

A mortgage whose interest rate changes periodically based on a market index. Typically offers a lower initial rate than fixed-rate loans, with rate caps limiting how much it can change.

The process of paying off a loan through regular payments over time. Early payments are mostly interest; later payments shift toward principal.

A professional estimate of a property's market value, required by mortgage lenders to ensure the loan doesn't exceed the home's worth.

When a home appraises for less than the agreed purchase price. The buyer may need to cover the gap with cash or renegotiate.

A sale where the seller makes no repairs and the property is sold in its current condition. Disclosure requirements still apply.

A loan that can be transferred from the seller to the buyer, allowing the buyer to take over the existing rate and terms — valuable when current rates are higher.

A loan with smaller regular payments for a set term, followed by one large "balloon" payment of the remaining balance.

Short-term financing that helps buyers purchase a new home before selling their current one. Higher rates and fees apply.

A real estate agent who represents the buyer's interests in a transaction, typically compensated through a commission paid by the seller or directly by the buyer.

Market conditions where supply exceeds demand, giving buyers more negotiating leverage, more choices, and less pressure to act quickly.

Net operating income divided by property value. Used to compare investment properties — a higher cap rate generally indicates higher return and higher risk.

The complete history of ownership transfers for a property, from its origin to the present.

A title with no liens, disputes, or encumbrances — a requirement for most real estate transactions.

The final step of a real estate transaction where ownership transfers, documents are signed, funds are distributed, and keys change hands.

Fees and expenses paid at closing beyond the purchase price. Typically 2–5% of the loan amount for buyers, covering appraisal, title, lender fees, and prepaid items.

A 5-page document provided to buyers 3 business days before closing, itemizing all final loan terms and closing costs.

An analysis of recently sold comparable properties used to estimate a home's market value. Performed by real estate agents.

Credits or contributions made by the seller to cover buyer closing costs or reduce the purchase price. Subject to loan-type limits.

A condition that must be met for the sale to proceed. Common contingencies: inspection, financing, appraisal, and sale of buyer's current home.

A mortgage not backed by a federal agency. Requires stronger credit and typically a 3–20% down payment, but avoids government-required mortgage insurance at higher down payments.

A seller's response to a purchase offer that modifies the price, terms, or conditions rather than accepting or rejecting outright.

The number of days a listing has been actively on the market. High DOM can indicate overpricing or property issues.

Monthly debt payments divided by gross monthly income. Most lenders require DTI below 43–50% for mortgage approval.

The legal document that transfers ownership of real property from seller to buyer.

Used in some states instead of a mortgage. Involves three parties: borrower, lender, and a trustee who holds title until the loan is repaid.

Failure to meet loan obligations, typically by missing payments. Can lead to foreclosure proceedings.

A reduction in property value over time. Also an accounting tool used by investment property owners to offset rental income on tax returns.

Fees paid upfront to permanently lower the mortgage interest rate. One point equals 1% of the loan amount and typically reduces the rate by 0.25%.

The portion of the purchase price paid in cash at closing. The remainder is financed through a mortgage.

The time after an offer is accepted during which the buyer inspects the property and can exit the contract under contingency protections.

A good-faith deposit made by the buyer when going under contract, held in escrow and typically applied to closing costs or down payment.

The legal right of one party to use a portion of another's property for a specific purpose, such as a utility easement or shared driveway.

Any claim, lien, or restriction on a property that may affect its transfer or value.

The difference between a property's market value and the outstanding mortgage balance.

A neutral third party that holds funds and documents during a real estate transaction until all conditions are met. Also refers to the ongoing account that holds property tax and insurance payments.

The price a property would sell for between a willing buyer and seller, both with reasonable knowledge and no compulsion to act.

A mortgage insured by the Federal Housing Administration. Allows down payments as low as 3.5% with a 580+ credit score.

A mortgage with an interest rate that stays the same for the life of the loan, providing predictable monthly payments.

A temporary pause or reduction in mortgage payments, granted by a lender when a borrower faces financial hardship.

The legal process through which a lender takes possession of a property when the borrower defaults on the mortgage.

A home sold directly by the owner without a listing agent, avoiding the listing commission.

A now-replaced document (superseded by the Loan Estimate) that outlined expected loan costs. Still referenced colloquially.

A deed where the seller guarantees they hold title and haven't previously transferred the property. Common in California.

Short-term, asset-based loan from private lenders, used by investors. Higher rates, faster approval, based on property value rather than borrower credit.

A revolving credit line secured by home equity, with a draw period followed by a repayment period.

A lump-sum loan against home equity, typically with a fixed rate. Separate from a HELOC.

A professional evaluation of a property's condition covering structure, systems, and components. Typically conducted during the due diligence period.

An organization in planned communities that enforces rules, maintains common areas, and collects dues from homeowners.

Insurance covering the structure, personal property, and liability. Required by mortgage lenders.

Companies (Opendoor, Offerpad) that use algorithms to make instant cash offers on homes, then resell them. Typically offer below market value in exchange for speed and certainty.

A contract clause giving the buyer the right to inspect the property and exit the deal or negotiate repairs if unsatisfactory conditions are found.

The percentage charged on the principal loan amount, expressed annually.

A form of co-ownership where all parties hold equal shares and the right of survivorship — if one owner dies, their share passes automatically to the others.

A mortgage exceeding the conforming loan limit ($806,500 in 2025 for most areas). Typically requires stronger credit, larger down payment, and more documentation.

A legal claim against a property, typically for unpaid debt. Must be resolved before the property can be sold with clear title.

The contract between a seller and their real estate agent, specifying commission, listing price, and duration.

A 3-page document provided within 3 business days of a mortgage application, outlining projected loan terms, monthly payment, and closing costs.

The loan amount divided by the property value. Higher LTV = more risk for lenders = potentially higher rates or PMI requirements.

The most probable price a property would bring in a competitive, open market.

A lien filed by contractors or subcontractors for unpaid work on a property. Can cloud title and block sale.

Insurance required on FHA loans, paid upfront and annually, regardless of down payment.

A database used by real estate agents to list and share property information. The primary distribution mechanism for home listings.

The contractual interest rate on a mortgage, as stated in the promissory note.

A contract structure where an existing obligation is replaced with a new one, often used in real estate to substitute a new buyer in a transaction without a traditional sale.

A formal proposal to purchase a property at a specified price and terms. Becomes a binding contract when accepted by the seller.

A scheduled time when a listed property is open for prospective buyers to tour without an appointment.

A lender fee for processing a mortgage application, typically 0.5–1% of the loan amount.

Principal, Interest, Taxes, Insurance — the four components of a monthly mortgage payment.

A lender's conditional commitment to provide a loan up to a specified amount, based on verified income, assets, and credit.

An estimate of loan eligibility based on self-reported information, without verification. Less meaningful to sellers than pre-approval.

The original loan amount, before interest. Monthly principal payments reduce the outstanding balance.

Insurance required on conventional loans with less than 20% down payment, protecting the lender if the borrower defaults. Can be removed at 20% equity.

Sale of property owned by a deceased person, going through the court probate process. Often takes longer and involves additional legal steps.

The legally binding contract between buyer and seller specifying all terms of the sale.

A court proceeding to establish clear ownership of a property when title is disputed.

Transfers whatever ownership interest the grantor has, with no guarantees. Often used in divorces, estate transfers, or correcting title defects.

A lender's guarantee to hold a specific interest rate for a defined period (typically 30–60 days) while the loan is processed.

Property owned by a lender after an unsuccessful foreclosure auction. Often sold below market but sold as-is with limited disclosure.

The process of filing deed and mortgage documents with the county, creating public record of ownership transfer.

Replacing an existing mortgage with a new one, typically to secure a lower rate, change loan terms, or access equity.

The ratio of final sale price to original list price. Above 100% indicates offers above asking; below indicates negotiation.

Credits from seller to buyer, typically used to offset closing costs. Subject to limits based on loan type and down payment.

Market conditions where demand exceeds supply, giving sellers more negotiating power and often resulting in multiple offers and above-ask prices.

A sale where the proceeds are less than the outstanding mortgage balance, requiring lender approval to proceed.

A professional measurement and mapping of a property's boundaries, easements, and encroachments.

Co-ownership where each owner holds a defined share that can be sold or inherited independently.

Legal ownership of a property. A clear title is required for most sales.

Protects against loss from defects in title discovered after purchase. Two policies: lender's (required) and owner's (strongly recommended).

A review of public records to verify ownership and identify any liens, encumbrances, or defects in title.

A tax imposed by state or local governments when property ownership changes hands. Rates vary widely by location.

A property with an accepted offer but that has not yet closed. Also called "pending" in some markets.

The process a lender uses to evaluate risk and approve a mortgage, verifying income, assets, credit, and property value.

A government-backed mortgage for eligible rural and suburban buyers. Zero down payment required; income limits apply.

A mortgage guaranteed by the Department of Veterans Affairs for eligible veterans, service members, and surviving spouses. Zero down payment, no PMI.

An interest rate that can change over time, usually tied to a benchmark index.

The strongest form of deed, where the seller guarantees clear title and will defend against any future title claims.

A strategy where an investor contracts to buy a property and assigns that contract to another buyer for a fee, without ever purchasing the home.

Local government regulations governing how land and buildings can be used. Affects what you can build, operate, or change about a property.