Brett Stomps | Windermere

Real Estate Terms

An A to Z list of common Real Estate terms.

Adjustable-Rate Mortgage (ARM)

Interest rates on this type of mortgage are periodically adjusted up or down depending on a specified financial index. 


A method of equalizing the monthly mortgage payments over the life of the loan, even through 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

The actual finance charge for a loan, including points and fees, in addition to the stated interest rate. 


An appraisal is ordered by a Mortgage Broker from an AMC (Appraisal Management Company) for a borrower obtaining a loan for financing. The purpose is to help banks and lenders avoid loaning more money to a borrower than what the property is worth. 

Appraisals can cost around $300 to $2000 for a residential home depending on location, size, and due date. 


Appraisers are third parties to a real estate transaction when buying a home or buying land. They represent the bank’s interests by doing a deep evaluation of the property’s value that a buyer wants to purchase

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. 


A limit on how much the interest rate can change in an Adjustable-Rate Mortgage.

Certificate of Title

A document , signed by the title examiner , sating that a seller has an insurable title to the property. 


The deed to a property is legally transferred from seller to buyer, and documents are recorded. If purchasing a property with a loan, then Mortgage documents will also be recorded at closing.

A document , signed by the title examiner , sating that a seller has an insurable title to the property. 

Closing Agent

An individual from Escrow who walks you through your Closing Documents at closing.


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 prices of comparable homes on the market or recently sold; used to help determine a correct pricing strategy for a seller’s property. 


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


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 a property).

Covenants, Conditions & Restrictions

Covenants, conditions, and restrictions, commonly called “CC&Rs” are rules governing the use of a piece of real estate in a given community.

Consumer Pricing Index (CPI)

The monthly change in price consumers pay in the U.S.

Debt to Income Ratio (DTI)

A ratio to how much you owe each month to how much you earn.


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. 

Due on Sale Clause

A clause in a loan where if the property is transferred or sold the remaining balance on the loan is due in full. 

Earnest Money

A sum of the purchase price (usually 1-2%) that is held as collateral should the buying party default in the contract.


An easement is a right to use or enter a property without possessing (owning) it. Often used for driveways and for local utilities.


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


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. Compare to “adjustable-rate mortgage”.


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

Hazard Insurance

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

HOA (Homeowner Association)

A set of rules within a community, which governed by board members, may enforce rules for yard and building maintenance, etc. Monthly or annual dues are known as HOA fees.

Home Inspection

A Home Inspection is an examination of the home’s condition and functional features. From the roof, electrical, plumbing, appliances, furnace and more.


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


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 trends. 


Security claim by a lender against a property until the debt is paid. 

Mortgage Broker

Mortgage Brokers help buyers plan for a home loans and homeowners pull equity or refinance. They are sometimes referred to as Loan Officers.

Multiple Listing Service (MLS)

A system that provides to its members detailed information about properties for sale. 

Mutual Acceptance

When all terms of a Purchase & Sale Agreement are signed and agreed upon.

Open House

Usually a 2-3 hour period where a professional Real Estate broker opens your home to prospective buyers or neighbors. 

Origination Fee

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


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


One percent of the loan principal. It’s charged in addition to interest and fees. Mortgage points can be fees paid to the lender for a reduced interest rate.


An evaluation of a buyer’s credit worthiness (or buying power) given to a buyer from a lending institution when applying for a Real Estate loan. Providing your pre-approval in your offer makes it stronger and more likely accepted.

Prepayment Penalty

A fee paid by a borrower who pays off the loan before it is due. 


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

Promissory Note

A legal document where a buyer promises in writing to pay back to a seller (or debt holder) over a period of time under the set terms and conditions of the Promissory Note.


Divide or assess proportionately.

Purchase & Sale Agreement (PSA)

A contract between buyer and seller that outlines the details of the property transfer; or refer to “Purchase & Sale Agreement” in this guide. 

Road Maintenance Agreement

A contractual agreement among properties to share in the cost of maintaining a road within the community. Often this includes snow removal and replacing gravel.

Seller's Disclosure Statement (SDS)

A statement filled out by a property owner of all of their current knowledge about the property. To be later signed by a buyer and used to conduct further investigations.

Seller Credits

A credit from a seller given to a buyer to help with paying down buyer’s closing fees. Most often for home repairs and loan fees. 

Seller Financing

Where the seller “plays bank” and allows a buyer to take ownership over the property and make mortgage payments to the seller. Down-payment, Interest Rate, and Term are negotiable. 

Septic System

A on-site waste management system for private use in rural residential or off-grid environments. It consists of a tank, distribution box, and drain field.


All financial transactions required to make the contract final. 

Short Term Rental (STR)

A rental property rented by the day instead of per month or year.  


A document that indicates ownership of a specific property.

Title Report

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

Transaction Coordinator

An assistant who helps by managing Real Estate transactions.

Zoning Ordinance

A set of governing rules applied to an area of properties either within city limits or the county that establishes property uses and limitations.

2-1 Buydown

A mortgage where the first year of the loan is at a lower rate, then slightly higher for the second year, then moves to the full rate at the third year for the remainder of the term.