The ABCs of Real Estate
A glossary of Real Estate Terms. Learn how to "talk the talk" of Real Estate before you buy or sell!
Whether you're a seasoned Seller brushing up or a first-time Buyer dipping your feet in the water, you've probably heard a ton of real estate jargon thrown around during your research and preparation. At Fine New England Living we are committed to cutting through the confusion of the real estate world for our clients. If you ever have any questions about real estate, please do not hesitate to get in touch with us. In the meantime, though, here's a helpful glossary of terms to assist you in your journey.
TERMS
"As-Is"
A term used by Sellers to indicate that they are selling a property in its current condition, and will not accept any requests for improvement by a Buyer. These types of sales are often used for a quick sale, and the home is usually marketed under value.
"Clear to Close"
One of the final stages before a mortgage is funded, which is the lender stating that the underwriter has reviewed your documents and approved your loan. After you’re “clear to close,” lenders will assemble any final documentation and prepare for Closing.
Amortization
The process of gradually reducing or paying off debt on an asset with regular installments; i.e., paying off your mortgage. This process dictates what proportion of the payment goes to interest versus principal (see “Amortization Schedule”)
Amortization Schedule
A table that shows how much of your monthly mortgage payment goes to interest, and how much to principal. Typically, installments made at the beginning of a mortgage loan go primarily toward interest, whereas installments made near the end of a mortgage go primarily toward principal
Appraisal
An analysis by a trained and licensed appraiser used to estimate the current market value of a property. Ordered by Banks during the mortgage process to help determine how much to lend. Includes reviewing recent sales of similar nearby properties, and often a visit to the property by the appraiser to examine the outside and/or inside of the property. The value determined by the Appraiser is the "Appraised Value." Differentiated from "Assessment" (below).
Appreciation
An increase in the market value of a home over time, due to market conditions, home improvements, and many other factors.
Asbestos
A toxic material that was popularly used in a variety of construction materials due to its insulating and fire-retardant properties. It is now known to be highly hazardous to human health.
Assessment
An analysis by a public official used for taxation purposes. The process of assessment may include a visual assessment as well as a review of comparable (see below), building permits, improvements, etc. Differentiated from "Appraisal" (see above)
For Assessments on Condominiums - see "Special Assessment"
Backup Offer
A secondary Offer that Seller can fall back on in case the accepted Offer does not go through
Balloon Mortgage
A real estate loan that is usually short term, 5-7 years, with an initial period of low monthly payments, and the remaining full balance due at the end of the term.
Binder
The initial deposit made by a Buyer included in an Offer, which, if accepted, grants the Buyer the rights to purchase the home for a specified period of time. The amount paid is subtracted from the amount owed by the Buyer at closing. The standard Binder amount varies by market, but is typically between $1,000 - 1% of the purchase price.
Bona Fide
Refers to someone’s actions or negotiations being in good faith, without fraud.