Real Estate Glossary

"Real Estate has a language all its own. Here is some of the terminology you'll be hearing."

Norma Kania, Licensed Realtor
Norma Kania, Licensed Realtor

Adjustable Mortgage Loans

Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the loan's inception and are also called: Adjustable Rate Loans, Adjustable Rate Mortgages (ARMs), Flexible Rate Loans, and Variable Rate Loans.


Payment of a debt in equal installments of principal and interest rather than interest-only payments.

Annual Percentage Rate (APR)

The yearly interest percentage of a loan, as expressed by the total finance charge paid (interest, loan fees, points). The APR is disclosed as a requirement of federal truth in lending statutes.

Norma Kania, Licensed Realtor

Buy Down

Payment to the lender from the seller, buyer, third party, or some combination of these causes the lender to reduce the interest rate during the loan's early years.


In adjustable rate mortgages, the limit on how much the interest rate or monthly payment can change.


The final procedure in which documents are executed and recorded and the sale (or loan) is completed. Closing Statement: The statement lists the financial settlement between buyer and seller and the costs each must pay.

CMA or Comparative Market Analysis

CMA, or Comparative Market Analysis, compares homes similar to a seller's home in size, style, features, and location that have sold recently or are on the market. A real estate agent prepares a CMA to help set a home's listing price.


Commonly, a stated event must occur before binding a contract. For example, a home sale may be contingent upon the buyer obtaining financing.


The buyer gives a portion of the down payment to the seller or escrow agent with a written offer to purchase to show good faith.

Down Payment

A buyer pays the cash portion of the purchase price from his funds as opposed to the portion financed.


A procedure in which a third (neutral) party holds all funds, documents, etc. necessary to the sale, with instructions from both buyer and seller regarding their use and disposition.

FHA Loan

A loan insured by the Federal Housing Administration, a part of the Department of Housing and Urban Development. FHA insurance enables lenders to loan a very high percentage of the sale price.

Graduated Payment Mortgage

A mortgage initially offers low monthly payments that increase at fixed intervals and at a predetermined rate.

Hazard Insurance

Known as homeowners' insurance, this is a usual requirement of a mortgage lender and an advisable safeguard for any homeowner to protect against loss.

Index or Rate Index

A measure of interest rate changes used to adjust the interest rate of an Adjustable Mortgage Loan. Example: the change in US Treasury securities (T-bills) with a 1-year maturity, based upon their weekly average yield.


A legal claim or charge on property as security for payment of a debt or for the discharge of an obligation.

Loan-to-value Ratio

The ratio is expressed as a percentage of the amount of a mortgage loan to the appraised value or selling price of the property.


A key storage system is placed on a home entrance accessible only by active, licensed real estate agents who must abide by a strict set of guidelines when showing a seller's home.


In Adjustable Mortgage Loans, the percentage points the lender adds to the index rate determine the new interest rate at each adjustment.

Norma Kania, Licensed Realtor


MLS stands for multiple listing services, by which member brokers cooperate to sell each other's listings. Sellers may choose not to allow their property into multiple listings if they wish.

PITI (Principal, Interest, Taxes, and Insurance)

The four major items are included in a monthly mortgage payment.


A lender charges a fee as a service charge or as an amount needed to make the yield on a mortgage competitive with other types of investments. Each point represents 1% of the loan amount.

Norma Kania, Licensed Realtor

Price Trend Analysis

A tool developed and used exclusively by Weichert realtors to help set a home's listing price by projecting local trends, used in conjunction with a CMA or Comparative Market Analysis. Because home values appreciate over time, a Price Trend Analysis maximizes listing prices.


Amount of debt, not including interest; the face value of a loan.

Private Mortgage Insurance

Insurance issued by a private company against a loss by a lender in the event of default. Conventional financing generally requires private mortgage insurance whenever less than 20% is put down.

Second Mortgage

A mortgage that ranks after the first mortgage lien in priority.


Same definition as closing.

Title Insurance

Insurance against loss resulting from defects of title of public record.

VA Loans

Loans are partially guaranteed by the Veteran's Administration, enabling veterans to buy a home with little or no down payment.