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Real Estate Glossary

Adjustable rate mortgage: Loans with interest rates that can fluctuate during the term, based on an index to which the interest rate is tied.

Amortization table: A chart that breaks out the total annual payment per year, over the entire term.

Amortized loan: A loan that is paid off in equal installments during its term.

Annual percentage rate: The amount a loan costs, paid yearly and expressed as a rate of costs over the loan itself.

Appraisal: An estimate of real estate value. The most important factor in determining its value is comparable neighborhood sales.

Arbitration agreement: An agreement between the seller and buyer to insure that an independent arbitrator will decide, out of court, any disputes over the property.

Assessments: A city determined tax on homeowners, used to pay for improvements to the city in which the homeowner lives.

Association dues: Payments made by home owners to pay for the maintenance and management of shared property.

Assumable loan: A type of mortgage that allows the buyer to take over the responsibility of the mortgage on the encumbered real estate.

Capital Gains Tax: A tax on the profit obtained from the sale of a capital asset.

Closing Costs: Expenses incurred for the purpose of closing a real estate or mortgage transaction. Examples include: attorneys fee, recording charges, survey fee, title policies, lender fees, discount points, appraisal fee, et cetera.

Commitment letter: A letter which your lender may send you, stating the terms of the loan and its approval.

Conventional Loans: Non governmental home loans

Contingency: A clause within a purchase agreement that has to be met before the contract can be exercised.

Down Payment: The initial payment of a home. There are certain minimums of down payments depending on the type of loan. Most down payments are 5 to 30 percent of the loan.

Earnest Money: Money that accompanies an offer made on a property. The money is then applied to the down payment at closing. If the offer is not excepted the money is returned.

Equity: The difference between indebtedness and market value of a property.

Escrow: Funds, many times a bond, held by a third party which will not be released to the grantee until conditions of a contract or an agreement are fulfilled.

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