Glossary of Real Estate Terms

When selling a home, it’s important to understand some of the key concepts and terms. Throughout the sales process, Joyce will be available to explain any unfamiliar terms you encounter. 

Here is a short list of terms you’ll want to know:

Abstract of Title— A complete historical summary of the public records relating to the legal ownership of a particular property from the time of the first transfer to the present.

Adjustable Rate Mortgage (ARM)— Also known as a variable-rate loan, an ARM is one in which the interest rate changes over time, relative to an index like the Treasury index.

Agreement of Sale— Also known as contract of purchase, purchase agreement, or sales agreement, according to location or jurisdiction. A contract in which a seller and buyer agree to transact under certain terms spelled out in writing and signed by both parties.



Assessed Value— The value places on a home by municipal assessors for the purposes of determining property taxes.




Contingency— A clause in the purchase contract that describes certain conditions that must be met and agreed upon by both buyer and seller before the contract is binding.


Conventional Mortgage— One that is not insured or guaranteed by the federal government.

Debt-to-Income Ratio— A ratio that measures total debt burden. It is calculated by dividing gross monthly debt repayments, including mortgages, by gross monthly income.


Earnest Money— A deposit given by the buyer to bind a purchase offer which is held in escrow. If the property sale is closed, the deposit is applied to the purchase price. If the buyer does not fulfill all contract obligations, the deposit may be forfeited.

Equity— The value of the property, less the loan balance and any outstanding lien or other debts against the property.

Easements— Legal right of access to use of a property by individuals or groups for specific purpose.

Escrow— Funds held by a neutral third party (the escrow agent) until certain conditions of a contract are met and the funds can be paid out. Escrow accounts are also used by loan servicers to pay property taxes and homeowner’s insurance.

Fixed-Rate Mortgage— A type of mortgage loan in which the interest rate does not change during the entire term of the loan.

Free Market Evaluation— An offer made by Joyce, to provide a complimentary assessment of your home’s current market value.



Lien— A claim or charge on property of payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don't make the mortgage payments.


Mortgage Insurance— Purchased by the buyer, to protect the lender in the event of default (typically for loans with less than 20% down). Available through a government agency like the Federal Housing Administration (FHA) or through private mortgage insurers (PMI).

Pre-Approval Letter— A letter from a mortgage lender indicating that a buyer qualifies for a mortgage of a specific amount.


Purchase Offer— A detailed, written document which makes an offer to purchase a property, and which may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally-binding sales agreement.

Title— The right to and the ownership of property. A Title or Deed is sometimes used as proof of ownership of land. Clear title refers to a title that has no legal defects.

Title Insurance— Insurance policy that guarantees the accuracy of the title search and protects lenders and homeowners against legal problems with the title.

Truth-In-Lending Act (TILA)— Federal law that requires disclosure of a truth-in-lending statement for consumer loans. The statement includes a summary of the total cost of credit.

Title Search— A historical review of all legal documents relating to ownership of a property to determine if there have been any flaws in prior transfers to ownership or if there are any claims or encumbrances on the title to the property.