8 Common Real Estate Terms That Aren't as Complicated as They Sound
on Wednesday, May 29th, 2013 at 11:11am.
Whether you buy a house, rent an apartment, sell one of the two, or anything in between, you’re going to find yourself, at least once, staring at a jumbling of words on a sheet of paper that you’ve never seen before.
There are hundreds (if not thousands) of real estate terms that you’ll probably never see, but there are a select few that nearly everyone has to deal with at some point, so you should be well aware of what they mean – and the next time you encounter one in the wild, you’ll be more knowledgeable and more confident.
APR: If you’ve ever seen a car commercial on TV, you have heard these three letters enough for a lifetime. They stand for “Annual Percentage Rate,” and it is an annual interest rate charged on a loan or credit.
Closing: As you might have guessed, this is when the deal is officially closed, and the transfer of money, title, etc. is finalized. Similarly, “closing costs” are various fees that are applied during a closing.
Deed: This is a written document that conveys “title to, or an interest in, real estate.” Basically, you need the deed for a property to have ownership.
Down Payment: Another staple of car commercials nationwide. This one is simple – a down payment is just an initial payment that a buyer puts down in order to buy property. There are some restrictions to the payment that lenders have, such as a 5% minimum for most homes.
Equity: This involves some beginner’s math. Equity is the value of a property when taking into consideration any mortgage debt. For example, if your home is worth $100,000, and you have a mortgage balance of $70,000, your equity would be $30,000.
Lien: In simple terms, a lien is a right to keep a property that belongs to a debtor until that debt is paid.
Mortgage: This is a record that shows a person is pledging his or her property as collateral for a loan. The loan, or course, was likely for the property in question, so unless the debt is paid off, the lender (likely the bank) has the right to take the property away.
Market Value: What a property is worth at a given time. In other words, if the property were to sell right that second, its market value is what it would sell for.