The ABCs of Real Estate
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A
Appraisal
An estimation of a home’s market value by a licensed appraiser based on comparable recent sales of nearby homes.
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B
Backup offer
An offer on a home under contract that becomes active if the primary contract falls through
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C
Contingent offer
An offer that is accepted by the seller, but certain conditions must be met before the sale is final.
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D
Down payment
The percentage of the home purchased price (usually between 5% and 20%) paid upfront in cash
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E
Escrow
A neutral third party that holds funds from the buyer and distributes them when all conditions have been met.
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F
Federal Housing Administration (FHA)
The government agency that insures loans designed for low- to moderate-income borrowers
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G
Good Faith Estimate (GFE)
A form used by lenders to give to borrowers with an estimate of fees due at closing. This form was replaced by the Loan Estimate in 2015.
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H
Homeowners Association
A management organization within a community, subdivision or neighborhood that creates and enforces rules for properties within its jurisdiction.
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I
Inspection
An examination of a property and its systems performed by a qualified professional, usually before the sale of a home.
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J
Jumbo mortgage
A mortgage that exceeds the conforming-loan limit, commonly used forluxury home purchases.
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K
Key rate
An interest rate set by the federal government that determines the cost to borrow money—in this case, a mortgage to buy a new home.
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L
Loan-to-value (LTV)
The risk assessment ratio used by lenders. To calculate the LTV, divide the mortgage by the appraised value.
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M
Multiple Listing Service (MLS)
A database for real estate agents to list and market for-sale homes.
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N
Net proceed
The amount received by the seller at closing after all other costs have been deducted.
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O
Open house
An event hosted by a listing agent to showcase a home to potential buyers.
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P
Pre-approval letter
A letter indicating that a lender is willing to loan a specific amount of money for a home purchase; pre-approval does not guarantee a loan.
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Q
Quitclaim deed
A deed that transfers property rights without any validation of ownership; typically used between spouses and family members.
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R
Real estate owned (REO) property
A repossessed property owned by a lender after an unsuccessful sale at auction.
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S
Seller disclosure
A document completed by the seller disclosing the property’s history and defects.
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T
Title
The right to ownership of real property recognized and protected by the law.
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U
Under contract
A buyer has submitted an offer and the seller has accepted, but the closing is not final.
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V
VA loan
A mortgage loan for veterans and their spouses, made by private lenders and guaranteed by the U. S. Government.
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W
Walkthrough
The final inspection conducted before a home sale is final.
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X
X marks the spot
Where you sign for your dream home!
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Y
Yield-spread premium (YSP)
The amount a lender pays a mortgage officer for selling a loan with a higher interest rate than the par rate.
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Z
Zero lot lines
A residence build very close to—or directly on—the property line.
