Real Estate Terms in Plain English – For Home Sellers
A
Annual Percentage Rate (APR)
The total cost of borrowing money, including interest and fees, shown as a yearly percentage.
Annuity
Money you get regularly, like every month or year, usually from an insurance company or investment.
Appraisal
A professional estimate of how much a home or property is worth.
Appraiser
The person who figures out the value of a home or property.
Application Fee
A charge you pay when you apply for a loan or mortgage.
Arbitration
A way to settle a disagreement without going to court, using a neutral person who makes the final decision.
Asbestos
A harmful material that used to be used in homes for insulation; it’s banned now because it can cause serious illnesses like cancer and mesothelioma.
Assessed Value
What the government says your home is worth for property tax purposes.
Assessor
The official who decides how much your property is worth for taxes.
Asset
Anything valuable you own, like money, a house, or a car.
Assignment of Mortgage
When a mortgage is legally transferred from one person or company to another.
Assumable Mortgage
A home loan that someone else (like the buyer) can take over when a house is sold.
Assumption
When a buyer agrees to take over the seller’s home loan payments.
Assumption Fee
A charge you pay if you take over someone else’s mortgage.
Auction
A public sale where people bid (offer money) on a home. The highest bidder usually wins the property.
Automated Underwriting
A computer system that helps decide if you qualify for a loan.
B
Balance Sheet
A list showing what you own (assets) and what you owe (debts).
Balloon Mortgage
A loan where you make small payments for a while, then one or more big payments at the end.
Balloon Payment
A big final payment you make at the end of a balloon mortgage.
Bankruptcy
A legal way to say you can’t pay your debts. It can hurt your credit for a long time.
Before-Tax Income
The money you earn before any taxes are taken out.
Biweekly Payment Mortgage
A loan where you make a payment every two weeks instead of once a month.
Bona fide
Something real or honest—not fake.
Bridge Loan
A short-term loan to help you buy a new home before you sell your old one.
Broker
Someone who helps people buy or sell homes or loans, and gets paid for it.
Building Code
Rules that say how buildings have to be built to be safe and legal.
Buydown
When someone (like a seller or builder) helps lower your mortgage payments for a few years.
Buydown Account
A place where money is kept to help lower your mortgage payments over time.
C
Cap
A limit on how much your loan interest rate or payment can go up.
Capacity
Your ability to pay back a loan, based on your job, income, and savings.
Cash-Out Refinance
Getting a new loan that’s bigger than what you owe, and taking the extra cash.
Cash Purchase
Buying a home without a loan or mortgage. The buyer pays the full amount in cash (or from their bank account) up front.
Certificate of Deposit
A savings account where you agree to leave your money in the bank for a set time to earn interest.
Certificate of Eligibility
A document showing a veteran qualifies for a special VA home loan.
Chain of Title
The history of everyone who has owned a property.
Change Orders
Changes to the original plan when building or remodeling a home.
Clear Title
When a home has no legal problems or debts attached to it.
Closing
The final step when you sign papers, pay money, and the home officially becomes yours.
Closing Agent
The person who handles the paperwork and money during the closing.
Closing Costs
Extra fees you pay when buying a home, like for the loan, paperwork, and taxes.
Closing Date
The day when the home sale is officially completed.
Closing Statement
A list of all the final costs and payments for the home sale.
Co-Borrower
Another person who signs a loan with you and shares the responsibility for paying it back.
Code Violation
When a home breaks a rule set by the city or town—like bad wiring, unsafe stairs, or missing smoke alarms. It usually needs to be fixed before selling.
Collateral
Something valuable (like your house) that a lender can take if you don’t pay your loan.
Commission
Money paid to someone (like a real estate agent) for helping sell something, usually a percentage of the price.
Commitment Letter
A letter from a lender saying they agree to give you a loan, and listing the loan details.
Common Areas
Shared spaces in condos or neighborhoods, like pools, hallways, or parks.
Comparables
Similar homes nearby used to figure out how much a house is worth.
Concession
When a seller agrees to give the buyer something extra, like help with closing costs.
Condominium
A home you own inside a larger building, but you share walls and common spaces with neighbors.
Construction Loan
A short-term loan to help pay for building a house.
Contingency
A condition in a contract that must happen before the sale is final—like passing a home inspection.
Conventional Mortgage
A regular home loan that isn’t backed by the government.
Conversion Option
A feature that lets you switch from a loan with changing rates to one with a fixed rate.
Convertible ARM
A type of loan where the interest rate can change, but you’re allowed to lock it into a fixed rate later on.
Cooperative (Co-Op) Project
A building where you don’t own your unit, but instead own shares in a company that owns the whole building—and you get to live in one unit.
Cost of Funds Index (COFI)
A number used to decide how much your mortgage interest rate should change.
Counter-offer
When someone responds to an offer by suggesting new terms (like a higher price).
Credit
The ability to borrow money and pay it back later.
Credit Bureau
A company that collects information about your borrowing and payment history.
Credit History
A record of how you’ve handled money you borrowed in the past.
Credit Life Insurance
Insurance that pays off your loan if you die before it’s paid back.
Credit Report
A detailed list of your credit history that lenders use to decide whether to give you a loan.
Credit Score
A number that shows how likely you are to pay back a loan—higher is better.
Creditor
A person or company you owe money to.
Creditworthy
A way of saying you’re trusted to borrow money and pay it back.
D
Debt
Money you owe to someone else.
Debt-to-Income Ratio
A comparison of how much you owe each month versus how much you earn.
Deed
The official document that proves you own a home.
Deed-in-Lieu of Foreclosure
When you give your home back to the lender instead of going through foreclosure.
Deed of Trust
A document that lets a third party hold your home title until your loan is paid off.
Default
When you don’t do what you promised in a legal agreement—usually, not paying your loan.
Delinquency
Being late on a payment, especially by 30 days or more.
Depreciation
When something, like your home, loses value over time.
Discount Point
An optional fee you can pay to get a lower interest rate on your loan.
Down Payment
The amount of money you pay upfront when buying a house, usually 3–20% of the price.
Downsize
Selling a bigger home and moving into a smaller one. People often do this to save money or because they don’t need as much space.
Due-on-Sale Clause
A rule in a loan that says you must pay the loan off if you sell the home.
E
Earnest Money Deposit
A small amount of money you put down to show you’re serious about buying a home.
Earthquake Damage
Cracks or destruction caused by an earthquake. It can mess up a home’s walls, roof, or even the foundation.
Easement
The right for someone else to use part of your land—like for a sidewalk or power lines.
Employer-Assisted Housing
When your job helps you buy a home by giving money for costs like your down payment.
Encroachment
When something (like a fence or shed) crosses onto someone else’s property by mistake.
Encumbrance
A legal claim or problem that affects who owns the property or what they can do with it.
Equal Credit Opportunity Act (ECOA)
A law that makes sure people are treated fairly when applying for credit, no matter their race, gender, or age.
Equity
The part of your home that you really own—it’s the home’s value minus what you still owe on the mortgage.
Escrow
Money or documents held by a neutral third party until everything is ready to close the deal.
Escrow Account
A savings account your lender uses to pay your taxes and insurance from your monthly mortgage payments.
Escrow Analysis
A check your lender does to make sure there’s enough in your escrow account to cover costs like taxes and insurance.
Eviction
When someone is legally forced to leave a home they’re renting.
Exclusive Right-to-Sell Listing
An agreement that says only one real estate agent can sell your home—and they get paid no matter who finds the buyer.
Exclusive Agency Listing
An agreement that says only one real estate agent can sell your home, but you don’t have to pay the agent if you find the buyer yourself.
Executor
The person who carries out someone’s will after they die.
F
Fair Credit Reporting Act (FCRA)
A law that gives you the right to see your credit report and fix any mistakes.
Fair Market Value
The price a home would sell for if both the buyer and seller were being fair and honest.
Fannie Mae
A government-sponsored company that helps make sure people can get home loans by buying loans from banks.
Fannie Mae-Seller/Servicer
A bank or company approved to sell loans to Fannie Mae and manage them afterward.
Federal Housing Administration (FHA)
A government agency that helps people get loans by insuring them for lenders.
FHA-Insured Loan
A loan that’s backed by the FHA so lenders are more willing to give it to people with smaller down payments.
Fire Damage
Damage caused by a fire inside or near the home. It can affect walls, roofs, wiring, and more.
First Mortgage
The main loan used to buy a home—paid before any other mortgages.
First-Time Home Buyer
Someone who has never owned a home, or who hasn’t owned a home in the past 3 years (depending on the loan).
Fixed-Period Adjustable-Rate Mortgage
A loan where the interest rate is fixed at first, then changes regularly after a few years.
Fixed-Rate Mortgage
A home loan where the interest rate stays the same the whole time.
Flood Certification Fee
A fee to check if the house is in a flood zone, so lenders know if flood insurance is needed.
Flood Insurance
Extra insurance that covers damage to your home from flooding.
Forbearance
When the lender (like a bank) lets a homeowner pause or lower their mortgage payments for a little while. It’s usually done during hard times, like if someone loses their job.
Foreclosure
When the bank takes your home because you didn’t keep up with your mortgage payments.
Forfeiture
Losing something (like your house or money) because you broke a legal agreement.
Foundation
The base of a house that holds everything up. If the foundation is cracked or damaged, the house could have serious problems.
Fully Amortized Mortgage
A loan where your monthly payments are set up so that by the end of the term, you’ve paid it off completely.
G
General Contractor
The main person in charge of building or fixing a home. They hire and manage the workers.
Gift Letter
A note from someone (usually a family member) saying the money they gave you for your home is a gift, not a loan.
Good-Faith Estimate
A list of expected fees and costs you’ll pay when getting a mortgage, given to you before closing.
Government Mortgage
A loan backed by the government to help people qualify more easily.
Gross Monthly Income
The money you make each month before taxes and deductions are taken out.
Ground Rent
Money you pay to use land that you don’t own, even if you own the building on it.
Growing-Equity Mortgage (GEM)
A loan where your payments get a little higher over time so you can pay it off faster.
H
Hazard Insurance
Insurance that covers damage to your house from things like fire, storms, or vandalism.
Hazardous Material (HAZMAT)
Dangerous stuff that might be in a home—like asbestos, lead paint, or toxic chemicals. It has to be cleaned up safely.
Hidden Fees
Extra costs that aren’t obvious at first. These might show up during or after the home-buying process, like closing costs or inspection fees.
Home Equity Conversion Mortgage (HECM)
Also called a reverse mortgage, it lets older homeowners turn their home’s value into cash without selling it.
Home Equity Line of Credit (HELOC)
A flexible loan that lets you borrow money based on how much of your home you already own.
Home Inspection
When a professional checks a house to make sure everything (like the roof and plumbing) is working properly before you buy it.
Homeowner’s Insurance
Insurance that protects your home and belongings in case of things like fire, theft, or accidents.
Homeowner’s Warranty (HOW)
A short-term insurance plan that covers repairs in your new home after you buy it.
Homeowners’ Association
A group that manages shared spaces and rules in neighborhoods with townhouses, condos, or gated communities.
Housing Expense Ratio
A number that compares your housing costs to your income, used by lenders to see if you can afford a home.
HUD-1 Settlement Statement
A final list showing all the costs you and the seller will pay when closing the home deal.
Hybrid Loan
A loan that starts with a fixed rate and then changes to a variable rate after a few years.
I
Income Property
A home or building you buy to make money, like by renting it out.
Index
A number that lenders use to decide how much to change your loan’s interest rate.
Individual Retirement Account (IRA)
A special savings account that helps you save money for retirement and get tax benefits.
Inflation
When prices of things like food, gas, or homes go up over time.
Inherited Property
A home or land someone receives after a relative passes away. It usually comes through a will or a trust.
Inheritance Tax
A tax that someone might have to pay after receiving property or money from someone who passed away.
Initial Interest Rate
The starting interest rate on a loan that can later change if it’s an adjustable-rate mortgage.
Inquiry
When a lender checks your credit report to see if you’re a good borrower.
Installment
A regular payment you make (like every month) until a loan is paid off.
Installment Debt
A loan you pay off in set monthly payments, like a car loan.
Interest
The extra money you pay a lender in return for borrowing their money.
Interest Accrual Rate
The speed or percentage at which interest adds up on your loan.
Interest Rate Cap
A limit on how much your interest rate can go up if you have an adjustable-rate mortgage.
Interest Rate Ceiling
The highest interest rate your loan can reach over its life.
Interest Rate Floor
The lowest your interest rate can go on an adjustable loan.
Investment Property
A home or building you buy to make money—not to live in.
J
Judgment Lien
A legal claim that says someone can take your property because you owe them money from a court case.
Jumbo Loan
A home loan that’s bigger than the usual limit allowed by most lenders.
Junior Mortgage
A second (or third) loan on your home that gets paid off only after the main loan is paid.
K
Keogh Funds
A type of retirement savings plan for people who are self-employed.
Late Charge
A fee you pay when you don’t make your loan payment on time.
L
Lease
A written agreement between a landlord and a tenant. It says how much the rent is, how long the person can stay, and the rules for living there.
Lease-Purchase Option
When you rent a home but have the option to buy it later. Part of your rent may count toward buying it.
Liabilities
Everything you owe—like credit card debt, car loans, or mortgages.
Liability Insurance
Insurance that protects you if someone gets hurt on your property or sues you.
LIBOR-Index
A number based on international interest rates, used to adjust some mortgage rates.
Lien
A legal claim on your home that says you owe money—like a loan or unpaid taxes.
Lifetime Cap
The highest your interest rate or payment can ever go, no matter what.
Liquid Asset
Money or anything you can quickly turn into cash, like a savings account.
Loan Origination
The process of applying for and getting a loan.
Loan Origination Fees
Money you pay the lender or broker for handling your loan paperwork.
Loan-To-Value (LTV) Ratio
A comparison between how much you’re borrowing and how much the home is worth.
Lock-In Rate
An agreement that says your interest rate won’t change for a certain amount of time while you finish your loan.
Low-Down-Payment Feature
A loan that lets you buy a home with less money upfront.
M
Manufactured Housing
Homes built in a factory and moved to the property site, sometimes called mobile homes.
Margin
An extra percentage added to your loan’s base rate to figure out your full interest rate.
Market Value
What a house would sell for in today’s market.
Maturity Date
The final day you’re supposed to finish paying off your loan.
Merged Credit Report
A credit report that combines information from two or three credit agencies.
Modification
Changes to the original terms of your loan—like the interest rate, loan amount, or payment schedule.
Mold
A fuzzy or smelly fungus that grows in wet areas, like bathrooms or basements. It can be bad for your health and damage the home.
Money Market Account
A type of savings account that usually earns more interest than a regular savings account.
Mortgage
A loan you use to buy a house. The house is the lender’s security if you don’t pay it back.
Mortgage Broker
Someone who helps you find a loan by connecting you with lenders.
Mortgage Insurance (MI)
Insurance that protects the lender in case you stop paying your loan. Usually required if your down payment is low.
Mortgage Insurance Premium (MIP)
The cost you pay for mortgage insurance, either monthly or all at once.
Mortgage Lender
The company or bank that gives you the mortgage loan.
Mortgage Life Insurance
Insurance that pays off your mortgage if you die while you’re still making payments.
Mortgage Rate
The interest rate on your home loan.
Mortgagee
The lender—the one giving you the mortgage loan.
Mortgagor
The borrower—you, if you’re taking out the mortgage.
Multifamily Mortgage
A loan used to buy a building with two or more living units, like a duplex or apartment building.
Multifamily Properties
Buildings with two or more units for people to live in.
Multiple Listing Service (MLS)
A system that real estate agents use to share info about homes for sale.
Mutual Funds
A group of investments managed together that you can buy into, kind of like pooling money with others.
N
Negative Amortization
When your monthly payment doesn’t cover all the interest, so the amount you owe keeps growing.
Net Monthly Income
The money you take home in your paycheck after taxes and other deductions.
Net Worth
What you own (like cash, house, car) minus what you owe (debts and loans).
Non-Liquid Asset
Something you own that can’t easily be turned into cash, like a house or car.
Note
A written promise that you’ll pay back a loan, usually with interest.
Note Rate
The interest rate written on your mortgage note.
O
Offer
When you tell the seller how much you’re willing to pay for a home and what conditions you want.
Open House
A time when anyone can walk through a house for sale without an appointment.
Original Principal Balance
The total amount you borrowed when you first got your loan.
Origination Fee
The fee you pay the lender to process your loan.
Owner Financing
When the seller of a home lets you make payments to them directly instead of using a bank.
Owner-Occupied Property
A home where the person who owns it also lives in it.
P
Partial Payment
A payment that’s less than what you actually owe that month on your loan.
Payment Change Date
The day your monthly mortgage payment goes up or down—usually with adjustable-rate loans.
Payment Cap
A limit on how much your monthly mortgage payment can increase over time.
Personal Property
Things you own that aren’t real estate—like furniture, clothes, or electronics.
PITI
Stands for Principal, Interest, Taxes, and Insurance—the four parts of a full mortgage payment.
PITI Reserves
Extra money you keep saved up to cover future mortgage payments, especially in case of emergency.
Planned Unit Development (PUD)
A neighborhood where each person owns their home, but common areas are shared and managed by a homeowners’ group.
Point
One point equals 1% of the loan amount. You can pay points to get a lower interest rate.
Power of Attorney
A legal document that lets someone else act for you, like signing loan papers if you’re away.
Pre-Approval
When a lender reviews your credit and finances and tells you how much you can borrow for a home.
Pre-Approval Letter
A letter from a lender saying how much they’re willing to loan you, based on your finances.
Pre-Qualification
A quick estimate of how much money you might be able to borrow for a home.
Pre-Qualification Letter
A note from a lender saying you’ve been pre-qualified, but it’s less official than a pre-approval.
Predatory Lending
When lenders take advantage of borrowers with unfair or expensive loan terms.
Prepayment
Paying off part or all of your loan before it’s officially due.
Prepayment Penalty
A fee some lenders charge if you pay off your loan early.
Principal
The amount of money you borrow—not counting interest.
Private Mortgage Insurance
Insurance that protects the lender in case you can’t pay the loan—it’s usually required if your down payment is under 20%.
Probate
A legal process that happens when someone dies. The court makes sure their property goes to the right people, usually based on their will.
Promissory Note
The legal paper you sign promising to pay back the loan.
Property Appreciation
When your home goes up in value over time.
Property Tax
A yearly fee homeowners pay to the local government. The money helps pay for things like schools, roads, and fire departments.
Purchase and Sale Agreement
A contract that lists the price, details, and conditions of buying or selling a home.
Purchase Money Mortgage
A loan you get to help pay for a new home.
Q
Qualifying Guidelines
The rules lenders use to decide if you can get a loan.
Qualifying Ratios
A way lenders check if you can afford a loan by comparing your income to your monthly bills.
Quality Control
Steps lenders take to double-check that loans are handled correctly.
R
Radon
A dangerous gas that can come from the ground and get into homes. It can cause serious health problems like cancer if not fixed.
Rate Cap
A limit on how much your interest rate can go up or down when it changes.
Rate Lock
An agreement to keep your interest rate the same for a certain time, even if rates change.
Ratified Sales Contract
A final agreement signed by both the buyer and seller showing they agree on the sale.
Realtor / Real Estate Agent
Someone who helps people buy, sell, or rent homes.
Real Estate Settlement Procedures Act (RESPA)
A law that protects home buyers by making sure they understand all the costs when they get a mortgage.
Real Property
Land and anything attached to it—like a house or garage.
Recorder
The local official who keeps track of who owns what land or property.
Recording
Filing important documents (like a deed) with the local government to make it official.
Refinance
Getting a new loan to replace your old one, usually to get better terms or a lower interest rate.
Rehabilitation Mortgage
A loan that helps you buy and fix up an old home.
Relocation
Moving to a new place, often for a job or personal reason. It could mean moving across town or across the country.
Remaining Term
The number of months or years left to pay off your loan.
Repayment Plan
An agreement with your lender to catch up on missed payments by paying a little extra each month.
Replacement Cost
How much it would cost to replace your things if they were damaged or stolen—without subtracting for age or wear.
Rescission
The right to cancel a loan within a few days after signing, in certain situations.
Revolving Debt
Debt like credit cards that you can borrow from, pay back, and use again.
Right of First Refusal
A promise that gives someone the first chance to buy or rent something before others can.
Rural Housing Service (RHS)
A government group that helps people in small towns and rural areas buy homes.
S
Sale-Leaseback
When you sell your home but rent it back so you can keep living in it for a while.
Second Mortgage
A second loan on your home, on top of your first one.
Secondary Mortgage Market
A place where banks sell mortgages to other companies to get their money back faster.
Secured Loan
A loan backed by something valuable (like your house or car) that the lender can take if you don’t pay.
Security
Something valuable a lender can take if you don’t pay your loan—like your home.
Seller Take-Back
When the home seller gives you a loan instead of making you go through a bank.
Servicer
The company that collects your mortgage payments and handles your loan.
Servicing
The job of managing your loan—collecting payments, paying taxes, and helping if problems come up.
Settlement
The final step when you sign papers, pay costs, and officially become the owner of the home.
Settlement Statement
A document that lists all the money paid by the buyer and seller at closing.
Single-Family Properties
Homes meant for one family to live in. This can include houses, condos, or townhomes.
Soft Second Loan
A second loan where the payments might be delayed or even forgiven—usually part of a special program.
Servicemembers Civil Relief Act
A law that gives financial protections to people serving in the military.
Showing
When a home that’s for sale is opened up for people to come look at it in person. Buyers can walk through and see what it’s like.
Subordinate Financing
A second loan or lien that’s lower in priority than your main mortgage.
Survey
A map or drawing that shows exactly where the property lines and buildings are.
Sweat Equity
Instead of money, you help build or fix up your home—and that counts as part of your payment.
T
Taxes and Insurance
Money collected to pay your property taxes and homeowners insurance, often included in your mortgage payment.
Tenant
A person who rents a home or apartment from someone else. They pay rent and follow rules in a lease.
Termite Inspection
A check to see if a home has termites or damage caused by them.
Third-Party Origination
When someone other than your lender helps start your loan—for example, a mortgage broker.
Title
The legal right to own a home.
Title Insurance
Insurance that protects you and the lender in case there’s a problem with the home’s ownership history.
Title Search
A check of public records to make sure the person selling the home actually owns it and that no one else has a claim on it.
Townhome / Townhouse
A type of home that’s attached to other homes in a row. Each one has its own entrance but shares walls with the neighbors.
Trade Equity
When you give something valuable, like another property, instead of cash as part of the home purchase.
Transfer Tax
A tax you pay when the home’s ownership changes from one person to another.
Treasury Index
A number based on U.S. Treasury bonds that some lenders use to adjust mortgage rates.
Trust
A legal way to manage property or money. A person puts their home in a trust so it can go to someone else after they die—without going through probate.
Truth-In-Lending Act (TILA)
A law that requires lenders to clearly explain all the costs and terms of your loan before you sign anything.
Two- to Four-Family Property
A home with two to four separate units—like a duplex or triplex—but still owned under one title.
U
Underwriting
The process where a lender looks at your finances and the property to decide if you qualify for a loan.
Uniform Residential Loan Application
The standard form you fill out when applying for a home loan.
Unsecured Loan
A loan that doesn’t require any property or belongings as security—like a credit card.
V
VA Guaranteed Loan
A home loan for veterans that’s backed by the VA, which helps make it easier to qualify.
W
Walk-Through
A final look at the home before closing to make sure everything is as expected.
Warranties
Promises that something (like a home appliance or repair) will work properly, or it’ll be fixed or replaced for free.
Water Damage
Harm to the home caused by leaks, floods, or broken pipes. It can ruin floors, walls, and furniture.
