Common Real Estate and Mortgage Terms
The following are definitions explaining commonly used terms you will come across during the home buying, selling or refinancing process.
Click here for a complete glossary of real estate and mortgage terms from A-Z.
Click here for a complete glossary of real estate and mortgage terms from A-Z.
APR (Annual Percentage Rate) is the total cost of your credit expressed as an annual rate. Because you may be paying loan finance charges (closing costs), the APR disclosed is often higher than the interest rate on your loan. This APR can be compared to other loan programs to give you a consistent means of comparing rates and programs.
Earnest Money is a deposit given by the buyer as part of the purchase price to bind a transaction (purchase contract) or assure payment.
Foreclosure is a lender/bank owned property of which the lender took possession due to the borrower’s failure to make payments.
Hazard Insurance is a standard homeowner’s insurance policy.
Rate Lock is a specified period of time in which the lender will guarantee an interest rate prior to closing.
PMI (Private Mortgage Insurance) is an insurance policy required on a mortgage which does not have at least 20% equity (down payment) that covers the lender’s loss in the event of the borrower defaulting on the loan.
Short Sale is a sale of property on which the proceeds from the sale will not be sufficient to cover the balance of the total liens secured by the property and the owner cannot afford to make up the difference. The lien holder(s) allows the seller to complete the transaction with an agreement regarding how the deficiency will be handled. This will usually have a negative effect the seller’s credit history.
Title Insurance is an insurance policy which creates an agreement of indemnity between the title company and the named insured owner, buyer and lender to protect against challenges to your title (ownership) by third parties subject to certain exceptions, conditions, and exclusions. The two basic forms of title insurance are Owners, which is issued once you become owner of a property, and Lenders, which is typically purchased by the buyer for the lender in the amount and term of the mortgage.
Earnest Money is a deposit given by the buyer as part of the purchase price to bind a transaction (purchase contract) or assure payment.
Foreclosure is a lender/bank owned property of which the lender took possession due to the borrower’s failure to make payments.
Hazard Insurance is a standard homeowner’s insurance policy.
Rate Lock is a specified period of time in which the lender will guarantee an interest rate prior to closing.
PMI (Private Mortgage Insurance) is an insurance policy required on a mortgage which does not have at least 20% equity (down payment) that covers the lender’s loss in the event of the borrower defaulting on the loan.
Short Sale is a sale of property on which the proceeds from the sale will not be sufficient to cover the balance of the total liens secured by the property and the owner cannot afford to make up the difference. The lien holder(s) allows the seller to complete the transaction with an agreement regarding how the deficiency will be handled. This will usually have a negative effect the seller’s credit history.
Title Insurance is an insurance policy which creates an agreement of indemnity between the title company and the named insured owner, buyer and lender to protect against challenges to your title (ownership) by third parties subject to certain exceptions, conditions, and exclusions. The two basic forms of title insurance are Owners, which is issued once you become owner of a property, and Lenders, which is typically purchased by the buyer for the lender in the amount and term of the mortgage.
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