Real Estate Words You Need To Know

How many hours a week do you wave farewell to while answering buyer or seller questions about basic real estate concepts and terminology? My guess is a lot. It’s part of a realtor’s job to guide their clients through a confusing legal process as they make what’s likely the biggest purchase of their lives. 

"Real Estate Terms and Definitions

1. An acceleration clause also known as an acceleration covenant is a contract provision requiring the borrower to repay all of their outstanding loan to a lender if certain requirements -- outlined by the lender -- aren’t met.
2. Active contingent when a seller accepts an offer from a buyer, that offer is contingent upon the buyer’s ability to meet certain conditions before finalization of the sale. Contingencies might include the buyer selling their home, receiving mortgage approval, or reaching an agreement with the seller on the home inspection.
3. Active under contract, a house is listed as “active under contract” when the seller has accepted an offer with contingencies, but still wants the house to be listed as active. In this situation, the seller is also likely to accept backup offers in case their current offer fails to meet its contingencies.
4. Addendum: If a buyer or seller wants to change an existing contract, they might add an addendum outlining the specific part of the contract they’d like to adjust and the parameters of that change. The rest of the contract stays the same, regardless of the addendum.
5. Adjustable-rate mortgage (ARM). The interest rate for an adjustable-rate mortgage change periodically. You might start with lower monthly payments than you would with a fixed-rate mortgage, but fluctuating interest rates will likely make those monthly payments rise in the future. 
6. The adjustment date: This is the date your mortgage begins to accrue interest (though you might not have made a mortgage payment yet). The adjustment date usually falls on the first day of the month after mortgage funds are advanced or dispersed to the borrower.
7. Amortization: Amortization is the schedule of your mortgage payments spread out over time. In real estate, a buyer's amortization schedule is usually one monthly payment scheduled over a 15- or 30-year period of time.
8. Annual percentage rate (APR)The annual percentage rate (APR) is the amount of interest charged on your loan every year.
9. Appraisal: An appraisal of your home is an unbiased estimate of how much a home is worth. When buying a home, the lender requires an appraisal by a third party (the appraiser) to make sure the loan amount requested is accurate. If the home’s appraised value is below what the buyer has offered, the lender may request the buyer pay the difference in cost.
10. Appreciation: Appreciation is the amount a home increases in value over time. To calculate a home’s likely appreciation rate, add one to the annual appreciation rate, raise this to a power equal to the number of years you’d like to estimate, then multiply that by the current value of the property.