Real Estate Glossary

Here is a quick list of important real estate related terms.  This is by no means a comprehensive list.  I will add terms and definitions as questions and current events make them relevant.

Adjustable Rate Mortgage (ARM): A mortgage in which the interest rate fluctuates based on an associated index.  There is a distinction between true ARMs and fixed ARMs, but all ARMs are tied to an index.

Amortization Schedule: In real estate related terms, amortization is the process of how a mortgage loan is paid off.  The amortization schedule shows what portion of each loan payment goes towards paying off interest and principal.  In the early years, much of each loan payment goes towards interest.  As the years go on more and more of each payment goes towards principal reduction.  Here’s a sample amortization schedule.

Annual Percentage Rate (APR): I’m going to go ahead and refer you to Vince Kingston, my trusted mortgage broker associate.  The APR can be confusing and I’d like you to understand it completely.

Appraisal: The valuation of a property as assessed by a licensed appraiser.  Appraisals generally compare the property in question with other comparable properties (comps) that have sold recently.  The appraisal sets the value that the bank will lend on.

Appraised Value: The price decided from the appraisal.

Appraiser: The licensed professional hired to complete an appraisal and to set the appraised value.

Appreciation: The increase of a property’s value over time.

Assessed Value: The property value as determined by the local tax assessor and used for the purposes of figuring property taxes.

Broker: The term “broker” can have many meanings in terms of real estate.  The real estate broker, often called the real estate agent or Realtor, represents buyers and sellers in the sale of real property.  Real estate agents work under the supervision of Principal Brokers, who are often to referred to simply as brokers.  Mortgage brokers work with buyers/borrowers to find the right financing for the home purchase.  Mortgage brokers do not actually lend money, but broker the loans to lending institutions such as banks.

Chain of Title: A list showing each transfer of title for a property over the years.

Closing: Closing is another terms that gets used for many things.  In Oregon, though, closing occurs when the new deed showing the new home owner is recorded with the county.  Keys can be released to the buyer only after this recording, closing, happens (unless negotiated otherwise).

Closing Costs: There are costs other than the purchase price associated with closing a sale.  These costs, some paid by buyer, some by seller, are called closing costs.  There are different categories of closing costs, some are considered “non-recurring” and some are “prepaids”.  Non-recurring closing costs include such items loan origination fee, document prep fee, courier services, title insurance, etc.  Prepaids refer to items such as prepaid interest, taxes, etc.

MLS – A Multiple Listing Service is an aggregator of real estate agent listed homes for sale.  Member agents, most Realtors, share information on each listing and agree to participate with cooperating brokers.

RMLS - The Portland regional MLS

Glossary is a work in progress and is by no means meant as an exhaustive list.