The Big Glossary of Real Estate

I’ve created this glossary to be as comprehensive a list of real estate terms as possible, with terms you might actually need to know. If you don’t like a definition, however, or feel an explanation is not “serious” enough, click on over to the wide world of search engines and find one that suits your mood! I promise not to be offended. Please send questions and feedback if something doesn’t make sense to you, or if we should add another definition! Happy House Hunting!

One More Thing: please note that nothing written here is legal advice!

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28/36 Rule: A guideline for calculating the amount of debt an individual or household can responsibly assume. It suggests a maximum housing expense-to-income ratio of 28% and a maximum total debt-to-income ratio of 36%.

401(k): A workplace retirement savings plan for private companies. Employees can contribute a percentage of their paycheck either before or after tax, depending on the options offered in the plan. The contributions are put into a 401(k) account where the employee is often able to select investments based on the options provided in the plan. Lenders do not always consider the money you’ve saved in a 401(k) towards your liquid assets, because you can’t take it out without penalty.

403(b): A retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers (also known as a tax-sheltered annuity plan). Lenders do not always consider the money you’ve saved in these plans towards your liquid assets, because you can’t take it out without penalty.

529 Plan: A savings plan for families saving money for future educational costs. 529 plans include tax advantages not available for regular savings products. Lenders do not always consider the money you’ve saved in these plans towards your liquid assets, because you can’t take it out without penalty. You must use it towards schooling expenses.

Accepted Offer: An accepted offer is when a seller has agreed to move forward at the latest price and terms you have given them, directly or through a representative. It can feel like you’ve already won, but this doesn’t always mean you have a deal. It’s but the first step toward locking down your house. It’s a good place to start for our glossary, too. See offer for more details on the basics of making an offer.

Account Balance: The dollar amount of available funds in a financial repository, such as a checking or savings account.

Adjustable Rate Mortgage (ARM): A mortgage loan with an interest rate that can change, usually adjusted in response to the market or Treasury bill rates. An ARM loan usually starts off with a lower interest rate than a fixed-rate mortgage, but the rate may increase over time.

Mortgages are not always set, or “fixed,” for a particular rate for a long period of time (see fixed rate mortgage and mortgage for more on that). An adjustable rate means that it will change before it reaches its end point. That is, your mortgage will be fixed for a short period of time, say six months to five years, or even seven years, but then it will go up or down at a predetermined time based on some agreed-upon metric. This can be the Fed’s rate plus a certain add-on. For example, you might see what’s called a 7/1 ARM. This means that your rate is set for seven years, and then the rate adjusts up or down every year after that. Luckily, most ARM’s only allow for your rate to go so high (see rate cap, or life cap), say 3% above your initial rate. So a 5% rate can only go up to 8%. However, be careful that you and your mortgage professional look at what that maximum can be, and when the rates start to adjust. What might look exciting to start could get less so very quickly.

Adjustment Date: See adjustable rate mortgage. The adjustment date is when your rate changes at the predetermined time. For instance, some ARM’s adjust on the month of the anniversary of your mortgage. Some adjust as of January 1st of each year. You will undoubtedly get a letter at least 30-60 days in advance letting you know what your new payment will be. That can be a very stressful letter to receive when your rate is jumping 1-2%

Affidavit: A legally binding document that you sign to indicate that all the information you provided is accurate.

American Disabilities Act (ADA): In 1990, the American Disabilities Act, or ADA, was signed into law. Its impact on real estate is profound. Building owners, property developers, condominium boards and neighborhood associations are just some of the groups that had to ensure that protected groups’ accessibility issues were addressed. Among many changes, new doorways are wider, to accommodate wheelchairs, small ramps became commonplace on street corners, braille was added to elevator buttons. New construction faces higher hurdles to meet the ADA standards than pre-existing buildings, generally speaking.

Amortization: Amortization is the process of paying off a loan with regular payments over time, so that the amount owed decreases with each payment. Most home loans amortize, but some do not fully amortize. In the case of the latter situation, the buyer still owes money after making all payments during the term of the loan. For instance, an interest-only mortgage does not amortize.

Many mortgages will have a consistent monthly cost to the borrower. An “amortization table” will show you how much of that payment goes to the debt itself, and how much goes to the interest. Over time, the percentage that goes to the debt will rise. But at the beginning, you’re paying mostly interest on your loan. That’s what happens when you pay off a loan over thirty years.

Annual Percentage Rate (APR): The effective rate that includes the interest rate and any other fees over the life of the loan (e.g., closing costs, fees) and indicates your total annual cost of borrowing. As a result, the APR is higher than the base interest rate of the mortgage. Be sure to consider APR, and not just interest rate, when comparing lenders.

Appraisal (or Appraisal Report): A report of estimated value. (Also refers to the evaluation process by which a value estimate is obtained.)

An appraisal is a report created by an appraiser (see definition below) that outlines a professional opinion of the value of a home (or any tangible item). The appraiser will either drive by the home they are appraising, walk around the outside, or go into the home, measure it and take a bunch of photos. They might measure it to create a floorplan (see below), look at its condition in detail, and even speak to the listing agents (see below) to understand more about how the asking price was settled on.

The report usually includes the following: (1) a few pages and photographs giving the description of the “target property”—aka your new home; (2) the homes the appraiser uses to get to a valuation (“appraised value”), including their sale prices, along with how the appraiser adjusts the value of them up or down based on whether they think your home is worth more or less than those nearby sales. This report is used by your lender to determine how much they will lend you. If your appraisal comes in below your contract price, that can create more than a little drama. If your appraisal comes in above your contract price, you’re in great shape.
Usually, and oddly, most appraisals come in at your contract price. Why that happens is for another, longer discussion. If you end up with a “low appraisal,” your real estate agent can strategize with you about how to either renegotiate the sales price, or “challenge” the appraised value.

Appraised Value: The appraised value is the amount that an appraiser deems your property worth. Don’t mistake a Zillow “zestimate” for an appraised value.

Appraiser: A person qualified by education, training, and experience to estimate the value of real estate and personal property. An appraiser is the professional who creates the appraisal report. Sometimes this person has deep experience appraising homes in the neighborhood in which you’re buying. Sometimes they do not. And they do not work for you. They work for the bank. Fingers crossed, you have a house that is easy for the appraiser to appraise!

Appreciation: An increase in the value of property for any reason other than inflation. Appreciation is when an asset, like a house, gains value over time. Every homeowner hopes that their home will be worth much more than what they paid in a short amount of time. For your sake, I do, too.

Approval: Approval has multiple meanings in the context of real estate. See board approval below for one. Your lender can give you a loan commitment, in which case your loan has been approved. Sometimes, you might need your mother-in-law’s stamp of approval to purchase your home. There’s no telling which of these will be the most difficult to get.

APR (Annual Percentage Rate): The annual percentage rate, or APR, is the actual rate of your loan, after all of the costs are factored in. This rate is likely to be a little higher than your official mortgage rate. I would encourage you to look here to see the difference between the two, so you’re not surprised later.

Architect: The person or team who oversees the creation of plans to do renovation, the hiring of a contractor, the submission of plans to any and all people who will approve beginning the work, and the execution of the work. They are a partner in thinking through every detail of home renovations with you.

Area Median Income (AMI): The median income in a specific locality, typically a county or Metropolitan Statistical Area (MSA), as determined by the Department of Housing and Urban Development (HUD).

ARM Index: For an adjustable-rate mortgage (ARM), the ARM index is a benchmark interest rate that reflects general market conditions.

ARM Margin: For an adjustable-rate mortgage (ARM), the margin is the number of percentage points added to the index by the mortgage lender to set the interest rate after the initial rate period ends.

Asking Price: The asking price is the advertised price of the house you’re looking at online or in person. Note that it doesn’t just say “price.” It assumes that this price is negotiable, depending on the demand for it. There might be a huge gap between the asking price and the ultimate selling price. In a bidding war, the sale price may eclipse the asking price. In a down market, the sale price may be much lower.

Assessed Value: The assessed value of a house is different from its appraised value. The former is what your taxing authority decides your home is worth, based on its formula. It could be much, much less than what Zillow tells you your house is worth. It often has nothing to do with reality, so you can usually ignore it, unless you’re unhappy with what your real estate taxes are. In that case, you’ll want to discuss how to address this issue with your local assessor’s office (the people who generate your tax bill, and the assessed value).

Assessment: An assessment is an extra charge that may be levied on your property to help cover an cost that can’t be paid for through your regular monthly fees. If you live in a community, it could pay for a new clubhouse. If you live in a building, it could be used to pay for a new roof. An assessment may be structured so you can pay for it over time, or it could be a lump sum due immediately. No one likes assessments, unless your clubhouse is really run down.

Assignment: Assignment refers to one of two scenarios with a sales contract: (1) you are assigning your sales contract (usually at a higher price) to a third party, and walking away with a profit before you actually close on the sale, or (2) you’re assigning your contact to either to a new entity that you control, because you don’t want to put the purchase in your name. Your sales contract is usually worded to allow for this, especially in states like California, that have probate laws (the process to settle an estate after death). My assignment for you is to stay calm and carry on.

Associate Broker: Associate Broker refers to a real estate agent whose license is held by a company, not their own. An associate broker would tell you that they “work” for a brokerage, not their own. See below for Broker of Record that discusses this further. The designation of Associate Broker is usually the step above that of salesperson, which is the starting place for new agents.

Assumable Mortgage: An assumable mortgage is one which can be ported over from one owner to a new buyer. The mortgage rate may be lower than current market conditions might allow a new buyer to get. Don’t get your hopes up. Assumable mortgages come with lots of strings attached. They’re highly uncommon, at any rate.

Attorney, Real Estate: A real estate attorney has a variety of roles in your real estate transaction. Depending on where you live, you may or may not need one for a normal transaction. In other places, both buyer and seller need one. If things go sideways, wherever you are, you will need one. Attorneys are tasked with ensuring that your real estate contract protects their client. Other roles include reviewing the details of the building or house to ensure there aren’t any red flags that would make a deal inadvisable. Real estate attorneys are very important, and whom you choose incredibly so.

Balloon Mortgage: A mortgage loan with initially low interest payments but requiring one large “balloon” payment due upon maturity. A balloon mortgage is different from an amortizing mortgage (see above), in that at the end of a fixed period of time, there is still a bucket of money that is due. Balloon mortgages are more common in commercial real estate. However, some banks may only want to commit to your loan for a certain amount of time, less time than it would take to fully pay off your mortgage. For example, you could buy a $350,000 house and put $50,000 down. With a balloon mortgage, you might still have a 30-year amortization of a fixed-rate mortgage. However, at the end of ten years, your $300,000 mortgage has $252,854 due. You’ll have to either pay it off at the time, through a refinance or a sale.

Balloon Payment: The balloon payment is a larger-than-usual, one-time payment at the end of a loan term. A balloon mortgage may allow lower payments during the years before the balloon payment comes due, but you could owe a larger amount at the end of the loan term or with earlier payoff of the loan.

Bank Check: Also known as a certified check. A bank check is issued by a banking institution from an account holder’s account. By certifying it, a buyer can bring a bank check to a closing, and the seller can rest assured that the funds are guaranteed.

Bank Statement: A bank statement is a document sent by a bank to an account holder with a summary of account transactions for a specified period of time (typically monthly). Banks will ask you to provide these to verify the assets you show on a Personal Financials Statement.

Bankruptcy: A legal proceeding in federal court in which a debtor seeks to restructure or eliminate their obligations to creditors pursuant to the Bankruptcy Code. This may remove a borrower’s personal liability for a mortgage debt but generally not the lien securing a mortgage.

Basis Points: A basis point is one-hundredth of a percentage. So if a mortgage rate goes from 5% to 5.1%, it has increased ten basis points, or ten one-hundredths.

Best and Final Bids: See bidding war just below here.

Best and Highest Bids: See bidding war just below here.

Bidding War: A bidding war occurs when more than one person is interested in a home, so much so that they all decide to bid at or near the asking price. If enough bids come in, the agents for the seller may decide to create a structure so that any other interested parties, and those who have already made bids, can compete fairly. These agents usually say they’re “going to a best and highest bidding process.” This doesn’t imply that the negotiations are final after one round. No, it leaves the seller the opportunity to perhaps go back for another round of discussions. A best and highest bid includes all terms under which a buyer is prepared to proceed. Price is the biggest one. But is the buyer financing? If not, will the buyer want to include a financing contingency (see more on that below)? What is their timing? The answers could make a difference in a seller’s openness to the bid.

Billing Cycle: Typically 30 days, it’s the time between two billing statement closing dates (also known as billing period or statement period). If you’re thinking about buying a home, pay your bills on time.

Board Approval: Also see co-op board approval. Board approval is the process by which a condominium or cooperative building’s board reviews a purchase application for a home buyer and makes the determination that they are “worthy” to purchase in the building. Condominium approval is easier than co-op approval (for which you should think “joining a country club”).

Board Interview: The board interview is part of the co-op board approval process. The co-op board will meet with a prospective buyer face-to-face in person or virtually. The interview is usually a formality. If a board wanted to reject a buyer, they will usually do it before this meeting.

Board Rejection: The worst part of the co-op purchase process is when a board decides that they don’t like you. As I write this, a co-op doesn’t not need to provide any reason whatsoever for rejecting you. It usually is because they don’t think you have enough money, or they don’t like you personally. Lots of fun, right?

Bond: A bond is a type of debt, similar to an IOU, issued by a government, municipality, or corporation. When a bond is purchased, the issuer promises to pay a specified interest rate during the life of the bond and to repay the principal — also known as the face value or par value — when the bond comes due after a specified period.

Borrower: A person or organization that borrows something, especially money from a bank or other financial institution.

Borrower: A borrower is the person or people named on loan documents.

Bridge Loan (or “bridge financing”): A bridge loan is what it sounds like. It is a short-term loan that carries you from one transaction to another. Usually, someone buying before they close on the sale of their home needs enough money for their down payment.

Broker of Record: See associate broker above and brokerage below. It is another name for a brokerage firm. If your agent works for a brokerage firm, the broker of record is who would be involved when things go sideways, and whom the buyer or seller pays commission to.

Brokerage: See broker of record above.

Brokerage Commission: This is how real estate agents get paid. Brokerage commission is usually a percentage of the sale price or purchase price, or can sometimes be a flat fee. It is negotiated before properties go to market. It can be renegotiated in the middle of a transaction. It can also be renegotiated before a closing.

Builder: See developer or home builder. Builders are the backbone of real estate. They create all the housing that home buyers gobble up. There are publicly held real estate builders across the US, and there are local builders who create a few spec homes a year.

Bump Clause: A bump clause is a protection for a seller when a buyer demands a sale contingency in a purchase contract (see sale contingency below). If a seller gets a more attractive offer that does not have a sale contingency included, or is at a higher price, a buyer would get five business days to remove the sale contingency, or they could get “bumped” from the deal. It’s a tit-for-tat situation. If you want to have a sale contingency, you may have to accept a bump clause.

Buyer’s Agent: In most transactions, there is a listing agent, the person or team who represents the seller. This entire book focuses around home buyers, though. And most buyers will have their own representation. A buyer’s agent (or buyer’s broker) represents the home buyer. This agent may be paid by a buyer directly, or via a seller.

Buying Down The Rate: Buying down the rate refers to paying money up-front to your lender to reduce your mortgage rate.

Bylaws: Rules governing the internal management of a residential community, such as condos. They must be agreed upon prior to purchase.

Cape Cod: A house design originating in New England in the 17th century, Cape Cod houses are characterized by their steep, pitched roof, central chimney, and symmetrical design. They usually feature a simple rectangular layout with a central door flanked by multi-paned windows. The upper floor often consists of dormer windows that bring light to the attic space, which may be converted into bedrooms.

Cash to Close: Total amount to be paid by the buyer at closing.

Cash-Out Refinance: A cash-out refinance is a kind of mortgage refinancing. However, instead of just borrowing the amount of your old mortgage, you want to take out some of your equity (see equity below) that you’ve been building. For example, John and Lisa’s home is worth $500,000. They have been in their home for 15 years, and have a mortgage of only $200,000. They realize that they want to put in an extra bathroom and a few other things. They decide to do a cash-out refinance, and take out a new mortgage for $250,000. This will pay off their old mortgage, and give them approximately $50,000 in their hands (after closing costs, see below). New bathroom, here we come!

Cash-out Refinance Loans: A mortgage refinancing option that allows you to convert home equity into cash.

Certificate of deposit (CD): A savings product with a fixed term length and a fixed interest rate.

Certificate of Occupancy (if newly constructed home): A certification that indicates a house is in compliance with building codes and is suitable for occupancy.

Certified Check: See bank check above.

Chain of Title: See title. Chain of title refers to the ownership of a house over time. The goal is to make sure that when you buy a house, it’s clear that you know exactly who you are buying from, and that the transfer of the house is clean (see clear title and clouded title below). There is an entire business dedicated to ensuring that title is clean: Title Insurance.

Charge-off: To treat as a loss; to designate an amount originally considered an asset as an expense. The lender, or landlord doesn’t expect to recoup what they are owed anymore.

Clear Title: See chain of title above. Clear title is when there are no problems ensuring who owns a house. If you don’t have clear title, you can have clouded title, or a tangled title.

Closing: A closing is the name for the official transfer of the house from one owner to another. A closing can move a house from a person’s name into an entity they own, or from one person to a third party. See chapter eight for lots of details.

Closing Costs: Amounts paid in connection with the closing, typically itemized under “Closing Cost Details” on the Closing Disclosure. This generally includes (a) loan-related amounts, such as origination fees, discount points, title exam, lender’s title insurance, appraisal fees, and prepaid items such as taxes and insurance escrow payments, and (b) other costs, such as owner’s title insurance, real estate agent commissions, inspections and transfer taxes.

Closing Credit: A closing credit is a catchall term that refers to an adjustment to the sale price at the end of a transaction. Usually, a seller provides some amount to the buyer to cover one cost or another. However, a buyer could also give a credit to a seller, say, to purchase furniture.

Closing Date: In real estate, the date on which the documents pertaining to a sale or loan transaction are officially signed.

Closing Disclosure: A required five-page form that describes the final details of your mortgage loan, including the loan terms, projected monthly payment, and details of any fees and costs to get your mortgage. The lender is required to provide the disclosure at least 3 days prior to the closing date.

Closing Statement: A closing statement is usually created by the buyer’s or seller’s attorney or the bank attorney for the accounting of funds around the sale of the property. For example, it will include funds that have been prepaid, such as the buyer’s down payment, or the real estate commissions that will be due at the closing, along with the amount remaining on the seller’s loan, if any. The buyer’s lender will often be cutting checks to various parties. The closing statement summarizes everything in one place.

Clouded Title: The opposite of clean title above. Clouded title means that it’s not 100% clear who owns a property. Lenders will not fund your loan if the property has a clouded title. This is exceedingly rare. I am told that title insurance is a great business for that reason. And it’s a reason why many believers in the power of “blockchain” ledger systems see chain of title as a great use case for their technology.

Co-Borrower: This is another person who will be named on loan documents for a home purchase. And who will also be on the hook if you do not pay your monthly mortgage bills.

Co-op (cooperative): Housing in which each member shares in ownership of the whole project with the exclusive right to occupy a specific unit and participate in project operations through the purchase of stock.

Co-op (or Cooperative): A co-op, or cooperative, is a building that has been converted into a corporation, and divided into shares. Each apartment is assigned two things: (1) a number of shares, and (2) a lease that turns those shares into effective ownership of a particular apartment. Cooperative ownership comes with certain benefits, such as the right to approve every sale. It comes with downsides for prospective purchasers, such as the possibility of being rejected by said right. In the end, cooperative ownership has been a net positive, creating community in buildings, and the opportunity for a group of strangers to be fiduciaries for what can be very expensive real estate.

Co-purchase: A co-purchase usually refers to a purchaser buying a home with the help of family or friends. The co-purchaser does not live in the property, but offers financial stability for a lender or, in NYC, to a co-op board (see cooperative above). That person may or may not be a co-borrower on the mortgage, depending on what your lender requires.

Collateral: An asset that a lender can take if you don’t repay a loan. In this way, the loan is considered “secured.” For example, if you have a home loan, the collateral asset is usually the home itself.

Collections: The efforts a mortgage company takes to collect past-due payments.

Colonials: Colonial-style homes are symmetrical and orderly, with a focus on proportion and balance. They feature a centered front door, evenly spaced windows, and often have two to three stories. Common design elements include brick or wood exteriors, shutters, and a gabled roof. Inside, rooms are arranged in a traditional, formal layout, with a central hallway and staircase.

Commercial Real Estate: Commercial real estate, or CRE, refers to properties that aren’t used for living. Think malls, shopping centers, medical facilities, warehouses, hotels, and so on.

Commission: See brokerage commission above.

Commission Income: Income that is earned for services rendered for a specific sale or transaction.

Community Development Financial Institution (CDFI): A specialized and certified organization that provides financial services in low-income communities and to individuals without access to financing.

Comparable Sales (Comps): Comparables sales, or comps, are the list of properties that a real estate agent curates to help determine the value of a property. Comps are used for appraisal purposes, for listing presentations, for negotiations, and for discussions with sellers after properties have gone on the market.

Concierge: For our purposes, a concierge is not the guy at the hotel desk from Pretty Woman. He or she is the person who you meet in the lobby of a residential property that calls up when you want to see your friend in apartment 8A. If you live in a building, the concierge will get your packages, give and receive keys, and be your main point of contact when you’re going in and out. However, many people use concierge and doorman interchangeably. It depends on how your lobby is staffed. Some buildings have both a person who opens the door (a traditional doorman) and a person who sits at the desk. But many only have one person who does both roles.

Condo Dues: Payments required from condo unit owners (typically paid monthly) to cover the community operating costs and contributions to the reserve fund. These fees are not included in mortgage payments and are paid directly to the condo/homeowners association. The specific purposes of the fees vary for different communities (also known as association dues).

Condo Special Assessments: Special levies (charges) against individual unit owners in a condo project to cover the homeowners association’s expenses and/or to repair, replace, maintain, improve, or operate the common areas. These charges are in addition to the regular recurring common fees.

Condominium (condo): A form of homeownership that combines individual ownership of a unit with shared ownership of common facilities. Each owner pays a recurring fee that covers their share of the cost to repair and maintain the common facilities.

Condominium (or condo): A condominium is an ownership structure in real estate. It is a corporation like a cooperative, but instead of ownership being laid out in shares, it is “real property.” Often, apartment buildings are structured as condominium units. They follow the guidelines set out in the bylaws, house rules, and a document called an offering plan. Condos can be bought and sold like houses, with less rigorous approval processes.

Condominium Board (or condo board): A condominium board serves the same purpose as a co-op board, but with less approval authority. Their main purpose is to ensure the building is running smoothly, financially and operationally.

Conforming Loan: A conforming loan is a size or structure of a loan that follows the guidelines of government-sponsored entitles (See GSEs) like Fannie Mae and Freddie Mac. If a loan conforms to the rules, then those GSE’s will buy them from those lenders who originate them. And mortgage rates for these loans will often be determined by how easily it is for these originating banks to get them off their balance sheets. If a loan doesn’t follow guidelines, it is said to be non-conforming.

Construction: Construction for our purposes is the same as renovation. It’s work that is done on a property to improve it.

Construction Loan: A construction loan is taken out specifically for doing renovation. It is very hard to get a construction loan for an apartment in New York City, and unusual for most private owners to take when doing home renovations.

Consumer Financial Protection Bureau (CFPB): A U.S. government agency dedicated to ensuring fair treatment of consumers by banks, lenders, and other financial institutions.

Contingent: See financing contingency below.

Contract: As it relates to your real estate a purchase contract is the legal document created by the state you live in, a seller’s real estate agent, or a buyer agent. It controls the transaction you’re entering into. And it should cover every element of the transaction. All of the agreed-upon terms should be in the contract. If they aren’t in writing, you cannot guarantee that they’ll be taken care of.

Contract of Sale: A contract of sale is the legal document that memorializes the terms to sell a property. Buyer and seller must both sign it. It’s also known as a Purchase Contract or Sales Contract.

Contractor: Also known as a general contractor. This is the person who executives the construction, renovation, or projects of home improvement. They will subcontract your plumber, painter, and other “specialty trades.” Normally, you will sign a contract directly with this person, even if you hire an architect to oversee it.

Conventional Financing: Mortgage financing that is not insured or guaranteed by a government agency, such as the Federal Housing Administration, Department of Veteran Affairs, or Department of Agriculture.

Conventional Mortgage: See conforming loan above. They are essentially the same thing.

Conversion (From Rental To Cooperative or Condominium): A conversion is one of these “only-in-New-York” things, or something that is rarely done elsewhere. We’re not talking about converting from Christianity to Islam, or Judaism to Catholicism. We mean when a rental building turns into a for-sale building. The owner of the building may decide, rather than sell the building, to sell it off in pieces. Enter the condo conversion. The big overview: the renters get a series of pre-marketing offers, decide if they want to buy their apartment, move out if they don’t, and let the world come in and buy the units. Co-op conversions were commonplace in the late 70’s and early 80’s. But the laws allowing conversations in New York City have made either condo or co-op conversations highly unusual today.

Convertible ARM: An adjustable-rate mortgage loan that can be converted into a fixed-rate mortgage during a certain time period.

Cooperative (or Co-op) Approval: See Chapter Seven of The Pursuit of Home. Just kidding. Co-op approval is the process by which a purchaser applies to purchase in a cooperative building. Usually, a buyer will need to provide backup information about all of their assets, along with reference letters. With all this background scoop, a co-op board will decide if you’re up to snuff. In our experience, the heavy lifting of co-op approval happens before the buyers ever get to an application. It happens with your real estate agent, who helps determine which buildings you’re qualified to buy in. If that sounds gross, welcome to New York. Co-ops exist elsewhere, but in tiny amounts.

Cooperative Board: The cooperative board are the fiduciary body elected by shareholders in a cooperative. They make the day-to-day decisions for the owners in the building, including approving purchases and sales. They make many larger decisions, although the entire ownership body has the right to approve changes to by-laws and big financial commitments. Co-op boards have been vilified for their lack of transparency in rejecting buyers and doing back-door deals. I can’t say they haven’t earned their reputations.

Cosigner: A person who agrees to pay back a loan if the borrower does not. Usually, the cosigner has a higher credit score than the borrower, making the borrower eligible for a larger loan than they could qualify for on their own.

Craftsman: A Craftsman house emphasizes handcrafted, quality materials and architectural details. They often feature low-pitched roofs with wide eaves, exposed rafters, and large front porches supported by tapered columns. Interiors typically have built-in furniture, woodwork, and open floor plans. This style became popular in the early 20th century as part of the Arts and Crafts movement.

Credit: The ability to borrow money with the understanding that it must be repaid. “Credit” may also refer to the amount of money that is lent.

Credit Bureau: A company that collects credit information about individuals, generates credit reports and credit scores, and provides this information to creditors who subscribe to their services.

Credit Counselor: An individual or organization that advises on financial and credit matters, including budgets and money management strategies.

Credit History: A record of your credit accounts and history of payments as shown in your credit report, created by each of the three major credit reporting bureaus.

Credit Limit: The maximum amount someone is allowed to charge to a credit card or that is available to borrow under a line of credit.

Credit Report: A statement with information about your past and current credit activity, including loan/account payment history and the status of your credit accounts.

Credit Score: A numerical score intended to predict how likely you are to pay back a loan on time. Credit bureaus generate this number with a mathematical formula (called a scoring model) using the information from your credit report — including your payment history, the types of accounts you’ve opened, and more. Different bureaus use different scoring models, so you may have multiple credit scores.

Credit Utilization Ratio: The amount of credit a person has available to use, compared with the amount they have used.

Curb Appeal: The overall external attractiveness of a house or other property to a prospective buyer as if seen from the street (or curb).

Debt-to-Income (DTI) Ratio: DTI is a ratio used by mortgage companies when qualifying borrowers for a mortgage. It is calculated by dividing your monthly debt payments by your gross monthly income.

Debt-to-Income Ratio (DTI): The debt-to-income ratio, or DTI, is one metric used by banks to determine how much they will lend you (others include the appraisal, explained above). Let’s take a couple whose mortgage and real estate tax, combined, will cost them $2500 per month. They earn $10,000 per month. Their debt-to-income ratio is $2500 divided by $10,000, or a DTI of 25%. The typical DTI banks are looking for is in the 28-32% range, though some banks will lend to a DTI of 40%. If that seems like a high percentage of your monthly income, you’ll want to be more conservative with your purchase price, or consider putting more money down on your purchase.

Deductible: The total amount of expenses an insured person must pay before the insurance company contributes towards the covered item. For example, a health insurance deductible of $1,000 means you must pay directly for all covered health care services up to a maximum of $1,000 before the insurance plan begins to pay.

Deed: A legal document indicating or transferring property ownership.

Deed-in-lieu of Foreclosure: See Mortgage Release™.

Default: Failure to meet the terms of a loan agreement, usually the result of not making payments on time (being “in default”).

Deferred Payments: Payments that are authorized to be postponed as part of a process with a lender to avoid foreclosure.

Deficiency Balance: The monetary difference between what a foreclosed home sells for and the remaining mortgage balance. The mortgage company may require a borrower to pay the amount of the deficiency balance.

Delinquency: Failure to make a payment when it is due. A loan is generally considered delinquent when it is 30 or more days past due.

Department of Veterans Affairs (VA): A government agency that runs programs benefiting veterans and members of their families. Programs include education opportunities, rehabilitation services, compensation payments for disabilities or death related to military service, home loan guaranties, pensions, burials, and health care.

Depreciation: A presumed decrease in the value of a property over time, as a result of physical wear or economic loss of utility.

Designer: Also known as Interior Designer. This is the person who helps you choose furniture to put in your house, but at times they may help you select finishes, fixtures, and even hire contractors to perform your architect’s plans.

Developer: See builder. Developers are the lifeblood of the real estate industry. They create all the homes you will live in!

Disclosure Document: The disclosure document is a little different from the closing statement, in that you’ll get this from your lender before you get your loan commitment. It will lay out every closing cost that either you or the seller will have to pay. I’ve heard lenders call it a “heart attack package,” because when you get it in the mail, you think that you’re responsible for all of the closing costs yourself, when that’s usually not the case (and the costs can be higher than you expected). Including every cost may feel like overkill, but the intentions are good; it is a result of the federal government trying to protect consumers like you.

Disclosures: Disclosures: A catchall term for the variety of documents chock full of legalese that no one reads. Your attorney, agent or mortgage broker will explain them to you—I hope—at the appropriate time.

Discount Points: See buying down the rate.

Discretionary Spending: Money spent by a household or business that is not for essential expenses.

Doorman: See concierge above. Your doorman is the person whom you tip at the holidays, who stands at the front door. They grab a taxi for you. They help you bring in your strollers and groceries from your car. They open the door for you, of course. And they know everything that’s going on in your building, who’s cheating on whom, who’s getting a divorce, who’s smoking weed, you name it. Sometimes people confuse the concierge for the doorman. Most buildings with an attended lobby only have a concierge, technically, though they will serve this function as well.

Down Payment or Downpayment: See earnest money below. And no, I don’t know what the “right” spelling is!

Due Diligence: Due diligence refers to the legal term for information gathering that you, your agent, or your attorney conducts to make sure there aren’t any red flags with your property or purchase. For instance, an inspection is part of due diligence.

Earnest Money: Earnest money is the funds that are held from when a contract is signed until the closing takes place. It can be known as a down payment or good faith money, or escrow. All of them mean the same thing. These monies can range from as little at $5000 to 10% of the purchase price (as is customary in New York City). The lower the amount, the less risk the buyer has in walking away from a deal. You’re not likely to bolt if a seller’s attorney is holding tens, if not hundreds of thousands of dollars of your money.

Equity: Take the value of your home, and subtract the amount of your mortgage. That is the equity which you have in your home. You started building equity in your home when you put in your down payment. And with every monthly payment, you’ve been building it, ideally (unless the market has gone down since you purchased).

Escrow: Escrow is a catchall term for an account where money is held. In some markets, an escrow account is where your down payment is held. In some places, “closing escrow” means your regular closing.

Exclusive Agent: An exclusive agent is the agent representing a seller. The seller would have signed an exclusive agreement (see below), empowering the agent to show in their behalf.

Exclusive Agreement: An exclusive agreement is signed between a seller and their agent. It gives the agent (or their firm) the right to be the only entity marketing a property, and to potentially collect a commission when it closes. Seeing homes with your buyer agent and an exclusive agent (see above) is the typical experiences you’ll have. So it’s not that exclusive of an experience, really.

Exclusive Listing: Once an exclusive agreement (see above) has been signed, a property becomes an exclusive listing.

Fair Credit Reporting Act (FCRA): A federal law that gives consumers rights to their credit files, such as the right to know what’s in them, the right to dispute inaccurate information, and the right to know if information in the files has been used against them.

Fair Housing Act (or FHA): Fair-housing laws have been enacted across the United States. They are known under the banner of the Fair Housing Act. They prohibit discrimination of different kinds, such as racism, bias or gender discrimination. Penalties may be imposed if buyers, sellers, or landlords are found guilty of violating the FHA. And boy, have they been imposed over the past decades.

Fair-Market Value: Fair-market value refers to what an appraiser (see above) determines as what a property is worth. It’s helpful when you’re trying to value an estate. This is slightly different from market-value, which is based solely on what the “market” is willing to pay for a home.

Fannie Mae: The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New Deal,the corporation’s purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations (or “thrifts”). Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac.

Fannie Mae-owned Mortgage: A conventional mortgage loan that is guaranteed by Fannie Mae. (See also conventional loan.)

Farmers Home Administration (FmHA): A former agency of the Department of Agriculture that provided loans and grants to eligible recipients in rural areas.

Farmhouses: Farmhouses are rustic, practical homes designed for rural living. They often have large, covered porches, gable roofs, and wood siding. Inside, they emphasize simplicity and function, with open spaces, large kitchens, and cozy living areas. The design reflects a connection to the land and agricultural roots, with a focus on comfort and utility.

Federal Housing Administration (FHA): A government agency that provides mortgage insurance on loans made by FHA-approved lenders throughout the U.S. and its territories. This includes mortgages for single-family, multifamily, and manufactured homes as well as hospitals.

Fee Simple: A form of ownership where the owner has unrestricted ownership of the land and any structures on it. It is the most complete form of ownership under the law.

FHA Loan: An FHA loan is a mortgage insured by the Federal Housing Administration. It allows for lower down payments and is often used by first-time homebuyers.

FHA Mortgage: An FHA mortgage meets the guidelines of the Federal Housing Administration, allowing the FHA to insure the loan and reduce risk to the lender.

FHA Mortgage: Loan from a private lender that is regulated and insured by the Federal Housing Administration (FHA). These loans differ from conventional loans in that they allow for lower credit scores and lower down payments.

Fiduciary: A fiduciary is someone who has a financial responsibility to you. In the context of real estate, a real estate agent has a fiduciary responsibility to his client or customer, depending on whether he represents the buyer or the seller. There are cases where an agent can theoretically serve two masters. This is called dual agency. However, the fiduciary responsibility. I’ve never been quite clear how someone can be fiduciary to two different people.

Fiduciary Responsibility: See fiduciary

Financing: Financing refers to the process of borrowing money from a lender.

Financing Contingency: A financing contingency is formal language in a purchase/sale agreement for a home. It refers to a situation in which a buyer applies for financing, and cannot get it. In that event, a buyer would be able to walk away from the purchase and not lose their downpayment.

Finishes: Finishes refer to all of the cosmetic parts of the inside of a property. Specifically the make of the cabinets, the type of stone on the countertops, the moldings, the details on the ceiling, the type of sink, the make and model of the appliances. The other part of a property is the systems.

First Mortgage/First Lien: A lien corresponding to a real estate loan that is considered the primary lien against a property. Also known as first position. Unrelated to ballet in any way. Don’t think of a ballerina in first position.

Fixed Mortgage: See fixed rate mortgage.

Fixed Rate Mortgage: A fixed-rate mortgage has a set mortgage rate that will not change for the duration of the loan. For instance, 30 year fixed mortgage is the most common mortgage type in the United States. In other countries that time. May be different (usually shorter).

Fixed-rate Mortgage (FRM): A mortgage loan in which the interest rate remains the same (i.e., fixed) for the life of the loan.

Fixer-Upper: This is a property that needs everything. See full renovation.

Fixtures: Fixtures refers to anything that’s outside of the walls in your apartment. Think: sinks, faucets, shower parts you can see, lights, and the like.

Flip Tax: Originally, flip tax was a charge put in place to discourage original buyers from immediately selling their apartments the second after they bought them from their landlord. however, flip taxes soon became a revenue source for cooperative buildings, and became a charge that every seller had to pay on the way out. Now, a flip tax is a charge that is levied on a buyer or seller at the time of the transaction, usually by a cooperative apartment building (but occasionally a condominium building). This can be one to 2% of the sale price, but other times it’s a percentage of the profit that the seller is making on the sale. in other cases, the flip taxes treated almost like a buying fee at a country club; the buyer pays it on the way in.

Flipping Apartments: Flipping an apartment: One can flip an apartment in one or two ways. First, they can sell it for a profit as soon as they close. This was especially common before the great recession of 2008, when real estate was appreciating at an incredibly quick rate. The other way to flip an apartment is actually to sell the contract. You’ve signed to a new buyer. This is especially lucrative because you avoid the closing costs of a purchase and the only money that you’ve had to come up with is a down payment to secure the contract. you can turn a 10% or even a 5% down payment into a significant profit and you have less money at risk. Both types of flipping apartments still occur today. However, many sellers put in specific language to prevent the assigning of contracts before a closing.

Flood Insurance: Insurance covering flood-related damage to the structure and/or contents of their property.

Forbearance: An agreement to temporarily suspend or reduce monthly mortgage payments for a specific period of time. A forbearance is usually granted by a mortgage company when a homeowner experiences a short-term or temporary hardship. After forbearance, the homeowner must make satisfactory arrangements to bring the mortgage loan up to date.

Foreclosure: Foreclosure proceedings begin after a period of time when a borrower ceases to pay their monthly mortgage. It is the process by which banks assert their rights to a property. In the event that a foreclosure actually takes place, a lender will end up with the property, and the borrower will lose 100% of the equity, if there is any.

Foreclosure: The legal process by which a property may be sold and the proceeds of the sale applied to the mortgage debt. A foreclosure occurs when the loan becomes delinquent because of missed payments or when the homeowner is in default for a reason other than the failure to make timely mortgage payments.

Foreclosure Prevention: Steps by which a mortgage company works with the homeowner to find a permanent solution to resolve an existing or impending loan delinquency.

Freddie Mac: Brother company to Fannie Mae; a government sponsored entity (GSE) that lends money to property buyers across the United States. It was created in 1938 to assist homebuyers in acquiring properties. Freddie Mac and Fanny Mae have, at times, then the only funders of real estate purchases in the market. At other times, they are a lender of last resort. However, today they are underwriting guidelines tend to be the overarching guidelines followed by most lenders. Differentiate government sponsored entities from Private lenders.

FSBO (For Sale By Owner): When an owner tries to sell his or her property without a real estate agent. Has mentioned in the book, 97% these owners ultimately higher, a real estate agent to represent them. You should definitely read the book to learn why this happens!

Gazumped (Getting Gazumped): This is a word used mostly in the United Kingdom (England, Great Britain, etc. Why does that place have so many names?!?) Getting gazumped refers to a seller’s right to find a better buyer up until the deal has closed. If this happens, and a new buyer steals a house out from under you, you have just gotten gazumped. I’m glad we don’t have something like this in the US. Except a bump clause, which still has built-in protections (see bump clause).

Gift: In the context of real estate, a gift is money given to a homebuyer, with no strings attached. Whether this gift is reported to the IRS or not is unclear. disclaimer: this is not tax advice.

Good Faith Money: See earnest money and down payment above.

Government Sponsored Entity (or GSE): See Fannie Mae and Freddie Mac above.

Government-guaranteed Loan: A loan guaranteed by either the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA).

Grant: Financial aid (often need-based) that does not need to be repaid as long as certain conditions are met.

Greek Revivals: Greek Revival homes are inspired by classical Greek architecture, characterized by grand columns, pediments, and symmetrical facades. These homes often have tall windows, a gabled or hipped roof, and large entryways. The style, which became popular in the early 19th century, evokes a sense of grandeur and formality, with references to ancient temples.

Guarantor: A guarantor is someone who stands behind your purchase when you may not have enough income or assets to qualify on your own for a mortgage. They are either on the hook with your lender, for the purposes of getting approved by a condo or co-op board, or both. They are very nice people, and you should thank them.

Hamptons, The: Also known as Out East or the South Fork. The Hamptons are located at the east end of Long Island. If you look at a map of Long Island, it looks like a fish and the Hamptons are at the bottom part of its tail. The upper part of the tail is known as the north Fork. It has a totally different vibe than the Hamptons. The Hamptons are best known as a playground for the wealthy, with gorgeous properties hiding behind hedges and beachfront mansions sometimes worth an excess of $100 million.

Hard Money: Hard Money is, in many ways, easy money, actually. Hard money lenders are lenders of last resort. They’re who you go to when you can’t get a conventional mortgage. They’re who you go to for bridge lending or bridge financing (see above). Builders sometime go to hard money lenders when they need a shorter-term loan to complete a construction project. NOTE: their borrowing rates are, well, higher. Often much higher. If you have poor credit, or some other big issue that’s in the way, you may find yourself speaking with a hard money lender.

Hardship: A hardship is the reason a homeowner is having trouble making their mortgage payments, such as a job loss, medical emergency or illness, divorce, etc. A hardship may be short term (less than 6 months) or long term (more than 6 months).

Harlem: A neighborhood in Manhattan known for its historical significance and diverse real estate offerings, ranging from brownstones to new developments.

Hazard Insurance: Insurance coverage that pays for the loss or damage on a person’s home or property (due to fire, natural disasters, etc.).

Highest Interest Rate Method: A debt reduction strategy that focuses on paying off debts with the highest interest rates first.

HO-6 Insurance: Condo unit owner’s property insurance covering the unit interior. Condo buyers may be required or choose to purchase an HO-6 policy to obtain mortgage financing. (See also master insurance.)

Holdover Period: This is very common in most housing markets in the United States. A holdover period occurs when a seller stays in the home. They’re selling for a short period of time, usually enough time for them to purchase their new home with the proceeds from their sale. It’s far less common in New York City, but not altogether rare. This is equivalent to a leaseback option, but often this is not in a contract, only negotiated later when the seller realizes they need a very short stay between selling and buying. An agreement is drawn up, with very strict penalties if the seller doesn’t move out after the specified period of time. So the buyer is protected. A seller usually covers the cost of the buyers mortgage and any HOA or common charges, as they’re known in different places.

Home Appraisal: A written estimate or opinion of a property’s value prepared by a qualified appraiser.

Home Equity Line of Credit: A way a homeowner can borrow money, using their equity or assets in the home as collateral.

Home Equity Line of Credit (or HELOC): Your down payment is part of the equity in your home. Any part of the principal you pay each month on your mortgage is also part of the equity. And later on, once you’ve been building equity in your home, you may want to borrow against it. Enter the Home Equity Line of Credit, or HELOC. This is a second loan against your home, at a different rate than your mortgage.

Home Equity Loan (HEL): A loan using your equity in your home as collateral.

Home Inspection: Home inspection is different than an appraisal, because the home inspector is not interested in what the property is worth. An inspector only wants to point out the areas of the home that either require immediate attention, future repair, or are in good condition. Depending on where you live a home inspection may result in a secondary negotiation on the price of the home, especially when certain defects are discovered. In other markets or in very competitive markets, an inspection may serve only to give a buyer peace of mind. Home inspections are commonplace in every market in the country, except New York City, oddly enough. In New York City, single-family homes act very much the same as everywhere else, but homebuyers often do not get home inspections before they purchase apartments. The reason is because the building has responsibility for the majority of the systems that connect to an apartment, so there’s not much to inspect. At the time of this writing, only one and five buyers that we work with ask to get a home inspection. And most of them are first time buyers in New York who are coming from other markets.

Home Inspection: An examination of a property by a qualified home inspector, often including testing of structural and mechanical systems like heating, ventilation, air conditioning, and electrical. A home inspection is usually part of the homebuying process.

Home Purchase Price: The final selling price of a home.

Homeowner’s Association (HOA): See condo board. Homeowners association is a decision-making body. That’s attached either to a housing development or to a condominium building. It makes determination of charges that each owner will have to pay and makes fiduciary decisions for the upkeep of the particular property. Homeowners associations are more commonplace outside of New York City. In New York City, they’re called Condo Boards.

Homeowner’s Insurance: Homeowners insurance: this kind of insurance is required by a lender to make sure that if anything horrible happens to your home, that you can rebuild it. In areas that have recently seen massive flooding, hurricanes, tornadoes and the like, homeowners insurance has gotten very expensive, so much so that it’s begun to affect sale prices in certain areas. Additionally, owners that don’t have a mortgage are beginning to consider what is known as “self funding,” which is a euphemism for putting some money away for a rainy day, if the proverbial poop hits the fan.

Homeowners Association (HOA) Dues: Payments required from homeowners in a specific neighborhood or community (typically paid monthly) to cover the community operating costs and contributions to the reserve fund. These fees are not included in mortgage payments and are paid directly to the homeowners association. The specific purposes of the fees vary for different communities (also known as HOA dues).

Homeowners Insurance: Insurance that covers a home’s structure and the personal belongings inside in the event of loss or theft (helps pay for repairs and replacement).

House Finding: This is a term that I’ve created in chapter 6 of The Pursuit of Home. It refers to an intuitive process which disregards the traditional “house Hunt,“ and replaces it with a vision-based process of buying. its primary tenet is “believing is seeing.“

Household: All persons living in a dwelling as their principal residence, except for live in aides, foster children, and foster adults.

Housing Counselor: A HUD-approved housing counselor is an experienced, trained professional who can provide guidance on avoiding foreclosure, buying a home, managing credit, and other issues. The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country, and counseling is available in many languages.

Housing Finance Agency (HFA): A state or local agency responsible for financing and preserving low- and moderate-income housing within a locality.

Housing Hubris: Housing hubris is in the framework of real estate the pride that comes before the fall. Homebuyers think that they have it all figured out, based on whatever research and television, they’ve watched. Ultimately, they are disappointed to find out that it’s not going to work have they thought it would.

HUD (Department of Housing and Urban Development): A government agency that helps people get and maintain quality affordable housing. HUD-approved housing counseling agencies provide homebuyer counseling to help you understand the process.

In Contract: See pending or under contract. They mean the same thing. This is a term of art in real estate. That means that a buyer and seller have both agreed on a sale price and terms, but I’ve also “papered it up, “so that they are contractually obliged to one another.

Income Tax: Federal, state, and/or local taxes on income of any kind, including earned (salaries, wages, tips, commissions) and unearned (interest, dividends). Some states and localities do not have income taxes.

Inflation: The price increase of goods and services over time.

Initial Escrow Disclosure: Document required by federal law when creating an escrow account. This disclosure accounts for financial obligations that extend beyond the loan itself, such as real estate taxes as well as mortgage and homeowners insurance premiums.

Inspection: See home inspection.

Insurance Claim: Notice to an insurer that under the terms of a policy, a loss may be covered.

Insurance Premium: The amount of money an insurance company charges for insurance coverage.

Interest: This is the money that is charged to a borrower on top of the purchase price. When you study an amortization table, you will see how much of your monthly payment goes to principal, and how much goes to interest. Over the course of a fixed-rate, 30- year loan that percentage will go from very high to quite low, until the vast majority of what you’re paying for your home in the last years is nearly entirely principal. However, the interest rate is the primary determinant in most cases of your monthly costs for your home.

Interest Rate: A percentage of the total amount borrowed that is paid as a fee to a lender for a loan. (This may also refer to the percentage of deposited money paid as interest by a bank or credit union to certain account holders.)

Interest Rate (Mortgage): Also see mortgage rate. The percentage of the principal amount that must be paid each year to borrow the money for a mortgage loan. It does not reflect fees or any other charges associated with the loan.

Interest-Only Mortgage: Contrast the fixed rate loan with the interest only mortgage. An interest only mortgage you never pay back the principal of the loan you only pay the monthly cost derived from the interest rate. A simple example: A $100,000 at 5%. The annual interest rate ($5000) would be spread out over the year. So your monthly cost is roughly $416.67 plus your costs of insurance, real estate taxes, and either condo fees or homeowners association dues.

Interest-Only Mortgage: A mortgage where the homeowner pays only the interest on the loan for a specified amount of time.

Investment Property: A property not considered a primary residence that is purchased by an investor to generate income, resell for profit, or gain tax benefits.

Jumbo Loan: Think of all home loans in two buckets: the first are all loans that fit under the conforming lending limits of government-sponsored entity, Fannie Mae. The other bucket is those that do not conform. This in that bucket of loans that are for amounts above the conforming limits. That line varies from market to market, largely determined by prevailing income and housing prices. Depending on the lending environment, jumbo loans may feature higher mortgage rates than conforming loans, or can actually have lower lending rates than conforming loans. If your loan is right on the border of the conforming limit, and the jumbo rate is lower, you may choose to borrow a little bit more than you intended.

Landlord: The person or entity to whom you pay your rent.

Leaseback Option: Sometimes the seller of a property may have the option to stay in the property, either for a short pair of time or for a longer period of time this would be known as a leaseback the language in the contract of sale is known as a leaseback option.

Lender: The “who” who is lending money for the purchase of a home. Your Lender can be family members, a consortium of private investors, or, more traditionally, your local bank.

Lender: An organization or person that lends money with the expectation that it will be repaid, usually with interest.

Lender’s Title Insurance: Insurance protecting a lender against problems with the title to a property, such as someone else having a legal claim against the home.

Lien: Eileen is a debt obligation that is secured by a property. Technically a mortgage is a kind of a lien, known as a consensual lien. However, leans as their thought of our imposed on a homeowner in other specific circumstances. For instance, if a contractor you hire feels that they’re not paid in full they can place what’s known as a mechanics’ lien on your property Until their debt is paid it’s the protection that contractors have. There are other types of liens as well: Judgment liens (the result of a lawsuit filed for money owed. they can ding your credit), and are non-consensual liens; tax liens (for non payment of taxpayer obligations). If not resolved prior, lienholders will be able to receive their outstanding debt from the proceeds of the sale of the property.

Lien: A legal claim of a creditor on the property of another as security for a debt.

Life Cap (on a mortgage): This is the maximum rate that a mortgage can be over the lifetime of the mortgage. For instance, some mortgages can adjust annually up to perhaps 2% a year. But they max out 5% above the original rate. Life caps are very common, thankfully.

Listing: A listing is the catch-all term for an exclusive agreement between a seller and a real estate agent to sell a property.

Listing Agent: Listing agent is the real estate agent who has been hired on an exclusive basis to represent a seller in the sale of a property.

Listing Agreement: A listing agreement is the legal document that’s been signed between a seller and the real estate company they’ve hired to sell their property. The listing agreement can very based on many terms, including length of time of the exclusive period, the commission being paid, and many other factors.

Listing Presentation: See pitch or marketing presentation. A listing presentation is the catchall term for the meeting between a seller and a real estate agent during which the agent will explain their services, give a valuation of a property, and offer their services to the seller on an exclusive basis. This presentation may result in the signing of a listing agreement, where in the sellers property becomes a listing.

LLC: An LLC is a corporate structure in which some buyers will own a property.

Loan: For the purposes of your real estate purchase, a mortgage is a kind of loan. You will be borrowing money, which you will be obliged to pay back overtime.

Loan Administration (Servicing): A mortgage banking function that includes the receipt of payments, customer service, escrow administration, investor accounting, collections, and foreclosures (also known as “loan servicing”).

Loan Application: The submission of a borrower’s financial information in anticipation of a loan decision. An application may be submitted in writing or electronically.

Loan Estimate: A form containing important loan information, including the estimated interest rate, monthly payment, and total closing costs for the loan as well as estimated costs for taxes and insurance. It must be provided by the lender within three business days of receiving your mortgage application.

Loan Officer: A loan officer is a bank representative normally, who will guide you through the borrowing process for a particular bank or lender. Offen, buyers will look to a mortgage broker rather than a loan officer because they will have more lending options. however, loan officer can also be a catchall term for mortgage broker. Real estate agents will throw around these terms quite loosely, and it may be easy to get confused.

Loan Origination: Loan origination is the process by which a mortgage or regular loan is created. Many mortgage brokers will originate alone and, if it fits into Fannie Mae or Freddie Mac or another government, sponsored entities guidelines, that GSE will purchase the loan from the loan originator. In this way, the loan originator gets a small fee for originating the loan, and their money is not tied up for an extended period of time. This enables loan originators to go out and create many many Loans in a short period of time

Loan Servicing: Loan servicing is the act of administrating and collecting loan payments from a borrower. Banks and lenders will often outsource loan servicing to companies, presumably because it’s a pain and probably has little upside financially. Worse, the only time borrowers think about loan services when things go wrong and banks probably don’t want you to think about them in a negative way if they can avoid it.

Loan-To-Value: The loan-to-value (LTV) ratio is a number that shows how much of a home’s value you’re borrowing. You get this percentage by dividing your loan amount by the home’s appraised value. For example, if you’re buying a house for $200,000 and borrowing $150,000, your LTV ratio is 75% ($150,000/$200,000). The higher your LTV ratio, the more risk the loan is for the lender. A higher down payment means a lower LTV, which can help you get a better interest rate on your mortgage. A lower LTV is generally considered a safer bet for lenders.

Loan-to-value (LTV): A calculation frequently used by mortgage companies when qualifying borrowers for a mortgage. It is calculated by dividing the mortgage balance by a home’s current market value.

Lock-In Period: Also see right lock. A lock in. Is the amount of time that a particular loan rate is guaranteed by a lender. In market, where it takes less than 60 days to close lenders know they need to have lock in periods that fit. However, in other markets or with new construction borrowers may get into a situation where they’re closing date extends past a locking period. In that instance, if rates have gone up, borrowers can be in real pickle. Lock in. Are without question a source of argument between buyers and sellers.

Loss Mitigation: When a homeowner and a mortgage company are working together to determine the appropriate option/workout solution to bring a mortgage current and avoid foreclosure.

Managing Agent: Technically, A managing agent is the company that is hired by a building to operate it on a day-to-day basis. It would be in charge of payroll and filings, and would become an intermediary with city and state authorities. Within the managing agent, you will have a particular representative who is your liaison. When it’s time to sell a property managing agent will have what’s called a closing department, which I reference in the book. Managing agents are common place in office buildings rental buildings, and commercial buildings around the country. However. There’s a concentration of managing agents due to the number of buildings in New York City. It is a low margin basis, and I’ve always found that managing agents struggle to keep their level of service where it needs to be.

Mansion Tax: The mansion tax is a tax imposed on the sale of high-value residential properties, typically those over $1 million, depending on the state or local regulations. This is the actual term used in New York City. When this was created in New York State, it was not written to adjust for inflation. Therefore, it now hits one-bedroom apartments that often sell for more than $1 million. It’s impossible to think of them as mansions. They’re not even large one bedrooms.

Manufactured Home (MH): A dwelling (at least 12 feet wide and at least 400 square feet total), constructed according to the HUD code for manufactured housing, which is built on a permanent frame, installed on a permanent foundation system, and titled as real estate. Also know as a mobile home, though manufactured home companies prefer you not call them that.

Master Insurance: An insurance policy purchased by a condo or homeowners association to provide coverage for the building’s exteriors and common areas. Costs are paid by the condo owners through condo fees. (See also HO-6 insurance.)

Minimum Payment: The smallest amount that a borrower can pay on their credit account each month to remain in good standing with their creditor.

MLS (Multiple Listing Service): The Multiple Listing Service (MLS) is a database used by real estate agents to list properties for sale and share information with other agents.

Modification: Any change to the terms of a mortgage loan, such as extending the number of years you have to repay the loan, reducing your interest rate, and/or reducing your principal balance. A modification can reduce your monthly payment to an amount you can afford.

Mortgage: A mortgage is a loan used to purchase real estate, where the property itself serves as collateral for the loan.

Mortgage: A legal document that pledges property to the mortgage company as security for the repayment of the loan. The term is also used to refer to the loan itself (also known as a “mortgage lien” or “deed of trust”).

Mortgage Banker: A kind of loan officer. The difference is that mortgage bankers usually work for one particular lender.

Mortgage Broker: Technically, a mortgage broker is able to represent multiple banks and private lenders to get you alone. Depending on your situation, it may benefit you to work with a mortgage broker rather than a mortgage banker or loan officer at a bank. For instance, banks tend to be more conservative in their lending underwriting, and if your credit is compromised, you may need more options to find a loan for your purchase.

Mortgage Company: A company that can originate (i.e., lends) a mortgage loan or service a loan. The company that originates a mortgage may or may not service it. Servicing includes collecting mortgage payments, delivering periodic statements, paying taxes and insurance, managing escrow accounts, and providing customer service.

Mortgage Insurance: Mortgage insurance is usually a requirement of a lender if you’re borrowing more than 80% of the purchase price for your purchase. In the event that you fall behind in your mortgage payment mortgage insurance protects the lender, not you, and makes them whole. It also increases your monthly cost for your mortgage.

Mortgage Insurance (MI): Insurance that protects the mortgage company against losses caused by a homeowner’s default on a mortgage loan. Mortgage insurance (MI) is typically required if a homeowner’s down payment is less than 20% of the purchase price.

Mortgage Interest: The amount a lender charges to a borrower for money to buy or refinance a home.

Mortgage Note (or Promissory Note): The legal document that specifies the loan terms, including the loan amount, interest rate, and duration. It also represents a commitment to pay the money back (also known as a “promissory note”).

Mortgage Payment: The amount paid each month toward the balance of a mortgage loan. Each payment typically includes principal, interest, taxes, and insurance.

Mortgage Rate: This is the percentage rate that impacts what your monthly cost will be to borrow for your purchase. Make sure that you don’t confuse the Fed rate which is a different rates set by the federal government for lending, and mortgage rates which can be quite a bit from what that Fed rate is. They do tend to move in the same direction, but not instantaneously.

Mortgage Release™ (deed-in-lieu of foreclosure): A transfer of title from a homeowner to the mortgage company to satisfy the mortgage debt and avoid foreclosure (also known as a “deed-in-lieu of foreclosure”).

Mortgage Servicer: The company that sends your mortgage statements, collects payments, and handles the day-to-day tasks for managing your loan.

Mutual Funds: Offerings by companies that invest pooled money from many shareholder investors in securities, such as stocks, bonds, and short-term debt.

Negative Amortization: The process of paying off a loan with regular payments that are less than the amount of interest accrued over the same period — therefore the total amount you owe continues to increase with each payment. (See also amortization.)

No Cash-Out Refinance: No cash-out refinance is when you’re simply borrowing the amount that you currently owe to your current bank from a different lender, or when you’re simply asking your current lender to offer you a new loan with new terms.

No-Cost Mortgage: No-cost mortgage refers to a new mortgage that doesn’t have any associated fees. There is a catch, however. The cost of the mortgage are actually added to the amount that you’re borrowing. So it will cost you a lot more over the long run, but you don’t have to pay it out-of-pocket.

Non-Contingent: Also known as “waiving your contingency” or “waiving your mortgage contingency.” In competitive bidding situations, making your offer non-contingent on financing may make you more attractive to a seller than someone who requires a mortgage to close. This is the opposite of having a financing contingency. A buyer paying cash would be more than happy to make a non-contingent deal, because they aren’t even taking financing. For someone who is financing, there is a risk of a non-contingent offer, albeit low. If a buyer does not get the financing they expect, or is unable to finance their purchase, they would either need to pay all-cash for the property, or risk losing their downpayment. That said, your agent and mortgage broker will help you weigh these risks when you’re formulating a bid.

Non-Doorman Building: A non-doorman building is a residential building without a doorman. These buildings typically have fewer amenities and lower maintenance costs.

Offer: An offer is a proposal made by a buyer to purchase a property at a specific price and with certain terms. The seller can accept, reject, or counter the offer.

Offer Price: The offer price is the amount a buyer proposes to pay for a property in their offer. This may differ from the asking price.

One Million Dollars: In real estate, one million dollars often serves as a threshold for high-end properties and triggers certain taxes and fees, such as the mansion tax.

Open House: An open house is an event where a property is available for viewing by potential buyers without an appointment, often hosted by the listing agent.

Open Listing: An open listing is a non-exclusive agreement where a property owner may work with multiple agents to sell the property, paying only the agent who brings the buyer.

Origination Fee: An origination fee is a charge by a lender to cover the cost of processing a new mortgage loan. It is usually a percentage of the loan amount.

Origination Fee: A fee that the borrower pays the lender for making the mortgage loan. This fee may include processing the application, underwriting and funding the loan, and other administrative services.

Out East: See Hamptons, the.

Overdraft Fee: A fee charged by a bank when the account holder doesn’t have enough money in an account to cover a transaction, but the bank pays the transaction anyway.

Owner Financing: Owner financing is when the seller of a property acts as the lender, allowing the buyer to make payments directly to them instead of a bank.

Owner Occupancy: Refers to individual residences being occupied by their owners (not rented out by the owner).

Owner’s Title Insurance: Insurance protecting the homeowner against problems with the title to a property, such as someone else having a legal claim against the home before the homeowner purchased it.

Park Avenue: Park Avenue is known for its luxury residential real estate within the portion that runs from approximately 57th Street to 96th Street on Manhattan’s Upper East Side. It begins at 34th street (Park Avenue South runs from 17th street to 34th street), and features high-end commercial properties within that section. It also runs underneath and around Grand Central Station.

Payment Deferral: An agreement with a mortgage company to shift any past-due balance to the end of the loan term without changing the current monthly payment.

Pending Offer: A pending offer is one that has been accepted by the seller, but the sale has not yet closed. The property is considered under contract during this time.

Pension Plan: An employee benefit plan established or maintained by an employer or employee organization (e.g., union) that provides retirement income or defers income until termination of covered employment or beyond.

Per Diem: Per diem refers to daily fees or charges, often used in real estate transactions when a closing is delayed.

Percentage Rate: See APR (Annual Percentage Rate) above.

Pied-a-Terre: A pied-à-terre is a secondary residence, often an apartment in a city, used for occasional stays by someone who primarily lives elsewhere. Translated literally as a “foot on the ground.”

Pitch (see Listing Presentation): A pitch in real estate is another term for a listing presentation, where an agent presents their marketing strategy to a potential seller.

PITI: PITI stands for Principal, Interest, Taxes, and Insurance. It represents the four components of a typical mortgage payment.

Planned Unit Development (PUD): A single-family residence located in a community with association dues and other required monthly payments.

PMI (Private Mortgage Insurance): Private Mortgage Insurance (PMI) is required by lenders when a borrower makes a down payment of less than 20%. It protects the lender in case of default. Also known as mortgage insurance.

Points: Fees a borrower pays to a mortgage lender to reduce the interest rate of their loan. Generally, one point is equal to 1% of the total loan amount.

Points (or Point): A point is a percentage point, in this case of a mortgage. So if you’re paying “a half a point” to get a discounted mortgage rate, that means you’re paying 0.50% of your mortgage amount. With a mortgage of $500,000, that’s $2500. One point would be $5000. Two points would be $10,000. You get the point.

Porter: A porter is one of the workers in an apartment building. They are busy each day handling the tasks around a building, such as picking up trash and cleaning. They will often be the guys to help you with heavy items as you go in and out of your apartment.

Power of Attorney (or POA): You’ll sometimes need to sign a power of attorney (technically a limited power of attorney) so your attorney can close a sale on your behalf. In many markets, this is commonplace. Many sellers will also empower their attorney to close for them. As I mentioned in Chapter Eight, you may not want to be in the same room as the other side. A power of attorney can be very helpful.

Pre-approval: In today’s market, it’s crucial to ensure your clients are prepared for the entire buying, financing, and closing processes. This email will dive further into the pre-qualification letters, pre-approval letters, and formal pre-approval letter (aka commitment letters).

Lending institutions often use the terms Pre-Approval and Pre-Qualification interchangeably, which can confuse sellers. Both terms mean the same thing and involve running the loan through an Automated Underwriting System (AUS) after the client completes an online application and the bank reviews their credit, income, and assets (not with the supporting documents, just what the client inputs on the application). The resulting letter, is automatically generated. That letter, whether it states pre-approval on it or pre-qualification of is a formulated letter and the verbiage cannot be switched. What’s important to take away from this is the words pre-qualified and pre-approved mean the bank has done the same exact review whichever word they have on that letter. We often see seller agents push back when the letter shows the term pre-qualified with the rationale for that being because it is less of an underwrite. I’m here to tell you it’s not!!!

Clients don’t have to choose between pre-qualification and pre-approval and can’t. The bank makes a choice what word they will use on the letter and cannot delineate from that. The buyer can start with that letter and obtain it quickly after completing the application, and then pursue what we call formal pre-approval which is slightly a lengthier process (5-7 days).

Pre-approval: The process by which a lender provides a potential borrower with the amount they can finance and the potential interest rate. This involves completing a mortgage application and providing the lender with your income documentation and personal records. It may also include a rough estimate of the monthly payment amount. (Compare with “pre-qualification.”)

Pre-Approval, Formal: This involves the underwriter reviewing all credit documents (pay stubs, tax returns, bank statements, etc.) and approving the loan without an address.

Pre-Payment: Pre-payment refers to paying off part or all of a mortgage loan before it is due. Some loans may have pre-payment penalties.

Pre-Payment Penalty: A pre-payment penalty is a fee charged by some lenders if the borrower pays off the loan early. Not all mortgages have pre-payment penalties.

Pre-qualification: The process by which a lender provides a potential borrower with the loan amount they are likely to qualify for. Typically offered quickly and at no cost, pre-qualification can give a general idea of a borrower’s financing options but is not official until they are pre-approved. (See entry for “pre-approval.”)

Prepayment Penalty: A fee some lenders charge if you pay off all or part of your mortgage early. Not all mortgages have a prepayment penalty.

Prime Interest Rate: The prime interest rate is the interest rate that banks offer to their most creditworthy customers. It is often used as a benchmark for other interest rates.

Principal: Principal refers to the amount of the loan that has not yet been repaid, excluding interest. The borrower’s mortgage payments go toward reducing the principal.

Principal: The amount a person borrows from a lender, not including interest (also referred to as the “amount financed”).

Principal Balance: The principal balance is the remaining amount of the loan that must be repaid, not including interest.

Principal Residence: The home physically occupied by the owner for the majority of the year and the address of record for such activities as federal income tax reporting and voter registration.

Private Mortgage Insurance (PMI): Insurance paid for by a buyer that protects the lender (not the buyer) if mortgage payments stop. It may be required if your down payment is less than 20% of the home purchase price.

Property & Casualty Insurance: Property & Casualty Insurance covers damage to real estate and personal property, as well as liability for accidents that occur on the property.

Property Manager: A property manager is responsible for overseeing the day-to-day operations of a rental property, including tenant relations, maintenance, and rent collection.

Property Taxes: The amount owners pay to the city/municipality and sometimes county, based on the value of their property.

Public Housing Authority: A public agency created by a state or local government to finance or operate low‐income housing.

Punchlist: A punchlist is another name for a checklist of items which need to be repaired by a seller or contractor. Often used when a buyer is purchasing a newly constructed home.

Purchase Agreement: A purchase agreement is a legally binding contract between the buyer and seller, outlining the terms and conditions of the sale of the property, including price, contingencies, and closing details.

Purchase Application: A purchase application is the formal request submitted by a prospective buyer to purchase a cooperative or condominium. It often includes financial details, references, and other supporting documents for approval.

Purchase Money Mortgage (seller financing): A purchase money mortgage is when the seller finances all or part of the sale of the property, essentially acting as the lender for the buyer. This is also known as seller financing.

Purchase Price: The purchase price is the agreed-upon amount the buyer will pay the seller for the property, as outlined in the purchase agreement.

Queens: A borough of New York City known for its diverse real estate market, including single-family homes, apartments, and new developments.

Quitclaim Deed: A quitclaim deed transfers any interest the grantor (seller) has in the property to the grantee (buyer). It provides no warranties about the property’s title.

Railroad Apartment: A railroad apartment is characterized by a series of rooms, through which you have to walk to get from the front to the back. The builders did not build a hallway to serve that function; they were too narrow, at a time when the housing was created to solve for overcrowding. These were the original tiny homes.

Ranch House: Ranch-style homes are single-story houses, often with a low, long profile. They typically feature an open floor plan with easy access to all rooms, large windows, and an attached garage. The design emphasizes practicality and a close connection to the outdoors, with sliding glass doors leading to a backyard or patio. This style became popular in the U.S. during the mid-20th century, especially in suburban areas.

Rate Cap: For an adjustable-rate mortgage (ARM), a limit that controls how much your interest rate can adjust (usually upwards). Fixed-rate mortgages don’t need rate caps, because they do not adjust up or down, ever. See life cap.

Rate Lock: A rate lock is a guarantee from the lender that the interest rate on a mortgage will not change for a specified period, usually from the time of approval until closing.

Real Estate: Physical land and structures attached to the land.

Real Estate Agent: A real estate agent is a licensed professional who helps buyers and sellers in real estate transactions. They represent either the buyer, seller, or both, depending on the situation.

Real Estate Agent: An individual who has a professional real estate license to help people buy, sell, or rent housing and real estate.

Real Estate Broker: A real estate broker is a licensed professional who has completed additional education and training beyond that of a real estate agent. Brokers can manage their own firms and employ agents. Sometimes real estate agent and real estate agent are interchangeable as ways to describe the person you’re working with as a buyer.

Realtor: A Realtor is a real estate professional who is a member of the National Association of Realtors (NAR) and adheres to its code of ethics.

Refinance: Replacing an existing mortgage with a new loan that has new terms, interest rates, and/or monthly payments.

Refinancing: Refinancing is the process of replacing an existing mortgage with a new loan, usually with better terms or a lower interest rate.

Renovation: Renovation refers to the process of improving or updating a property by making structural or cosmetic changes.

Rent Control: Rent control is a government regulation that limits the amount of rent a landlord can charge tenants, typically to protect tenants from excessive rent increases. Rent control began after WWII, when soldiers returning home in droves needed housing. The lack of housing also began the creation of the suburbs, as the baby boom created, well, lots of people who needed housing.

Rent Regulations: Rent regulations include various laws and rules that govern rental properties, such as rent control and rent stabilization laws, which aim to protect tenants from unreasonable rent increases.

Rent Stabilization Law: Rent stabilization laws limit the amount by which landlords can increase rent each year, typically to protect tenants from sharp rent hikes.

REO (Real Estate Owned): REO properties are those that have been foreclosed on by the lender and are now owned by the bank. These properties are often sold “as-is.”

Repayment Plan: An agreement for a homeowner to pay down past-due amounts on a mortgage over a specified time period while still making regular monthly payments.

Replacement Reserve Fund: A fund set aside for replacement of common property in a condo community. The amount of the fund is typically determined by periodic reserve studies conducted by professional reserve analysts.

Resident Manager: A resident manager is a person who lives on-site and manages the day-to-day operations of a residential building, handling maintenance, repairs, and tenant relations.

Revolving Charge Account: A revolving charge account refers to a credit arrangement that requires the borrower to make periodic payments but does not require full repayment by a specified point of time.

Right of Egress: The right of egress is the legal right to exit a property, often through designated routes in common areas of a building or land.

Right of First Refusal: Someone or something (a renter, a condo board, or even a relative) has the first shot at buying a property before you sell it to someone else. With a condo board, this is formal and legal. They must waive this right to allow the buyer to actually purchase the unit. With your family, it may be based on a seller’s word.

Right of Survivorship: Right of survivorship is a legal concept in joint property ownership where, upon the death of one owner, their share of the property automatically transfers to the surviving owner(s).

Roth IRA: A tax-advantaged personal savings plan for which contributions are not deductible, but qualified distributions may be tax-free.

Sale Contingency: If a buyer is also selling a house, they may demand a sale contingency to protect them in their purchase contract, related to the sale of their own house. The language will be written that if their house does not sell, they are not required to close on their new purchase. This is incredibly common in most places in the country, except in New York City.

Sale Leaseback: A sale leaseback is when a property is sold to a buyer, and the seller leases it back from the buyer, often to free up capital while continuing to occupy the property.

Sale with Equity: Selling a home in which you have equity allows you to pay off your mortgage and keep the remaining amount after paying closing costs. (See also equity.)

Sales Contract: See contract of sale or purchase contract.

Sales Price: The sales price is the final amount agreed upon by the buyer and seller for the purchase of the property.

Salesperson: A salesperson is a licensed real estate agent who represents clients in buying, selling, or leasing property.

Sallie Mae: Sallie Mae is a government-sponsored entity that provides student loans. In some cases, it may also refer to certain types of mortgage-backed securities.

Second Lien/Second Mortgage: A second mortgage is a loan taken out using your home as collateral while you still have another loan secured by the same home (also known as a junior lien).

Second Mortgage: A second mortgage is a loan secured against a property in addition to the primary mortgage. It is subordinate to the first mortgage and often has a higher interest rate.

Secured Loan: A secured loan is one that is backed by collateral, such as real estate or a vehicle. In the case of a mortgage, the home serves as collateral.

Seller Assist: Seller assist refers to when a seller agrees to contribute money toward the buyer’s closing costs as part of the sale.

Seller Carry-Back: A seller carry-back is when the seller provides financing for the buyer to help complete the sale, often in the form of a second mortgage.

Seller Financing: See purchase money mortgage.

Seller’s Agent: A seller’s agent represents the seller in a real estate transaction and is responsible for marketing the property, negotiating offers, and managing the sale.

Servicer (See Mortgage Servicer): A mortgage servicer is a company that handles the day-to-day management of a loan, including collecting payments, managing escrow accounts, and addressing borrower inquiries.

Severance Pay: A payment granted to employees by their employer upon termination of employment.

Shared Equity Program: A program, usually run by governmental or nonprofit organizations, that provides first-time or low- to moderate-income buyers with access to housing at prices lower than typically available in a market.

Shareholder: In a co-op building, each apartment owner is a shareholder in the corporation that owns the building, rather than owning the apartment itself.

Short Sale: A short sale occurs when a property is sold for less than the amount owed on the mortgage, with the lender agreeing to accept the reduced amount to avoid foreclosure.

Short Sale: Selling a home for a price that is less than what is owed on the mortgage. The process is often arranged between a mortgage company and a delinquent homeowner to avoid foreclosure (also known as “preforeclosure”).

Shotgun House: See railroad apartment above.

Single-Family Home: A single-family home is a standalone residential property designed for one household, typically offering privacy and ownership of both the house and land.

SoHo: SoHo is a neighborhood in Manhattan known for its upscale residential properties, art galleries, and luxury shopping.

Spec House: A spec house is a home built by a developer without a specific buyer in mind, with the expectation that it will be sold upon completion.

Split Ranch: A split ranch is a style of home with two levels, where one section of the house is split by a short staircase leading to a different elevation.

Sponsor: In real estate, a sponsor refers to the developer or entity that creates a condominium or cooperative building and may retain unsold units for sale.

Subletting: Subletting refers to renting out a property or a room in a property by the tenant to a third party, while the original tenant remains responsible for the lease.

Subway: Subway refers to the underground public transportation system in many major cities, and in real estate, properties near subway stations often command higher prices due to convenience. The subway came first. The sandwich shop came much, much later.

Superintendent (Super, Resident Manager): A superintendent or resident manager is responsible for the maintenance and operation of a building, including repairs, heating, and managing staff.

Survey Fee: A fee paid for a survey of a property — a technical drawing showing the location of the lot, the house, and any other structures, as well as any improvements on the property.

Tangled Title: A Pennsylvania-specific term for a situation where a person lives in a home they own or have a claim to own but their name is not on the deed. Most often, tangled titles happen when a homeowner dies without a will and one or more family members continue to live in the home without taking action to put the deed in their name (see clouded title). Tangled titles can also arise under rent-to-own arrangements or result from deed theft.

Term: A certain period of time for which something lasts or is intended to last (for example, a five-year loan, a three-year certificate of deposit, a one-year insurance policy, a 30-year mortgage).

Title: Title refers to the legal right to ownership of a property. It can be transferred from one person to another through a deed.

Title: The documented evidence that a person or organization has ownership of real property.

Title Closer: A title closer is the individual who ensures that all documents related to the title transfer are properly signed, recorded, and filed during the closing of a real estate transaction.

Title Company: An agency that works with all parties involved in a real estate transaction to research, verify, and insure the title of the home being bought; facilitate the loan closing; and ensure that the transfer of ownership is completed and recorded properly.

Title Insurance: Title insurance protects the buyer and lender from potential legal issues with the property’s title, such as claims of ownership or liens that were not disclosed.

Title Insurance: Insurance through a title company to protect a property owner or lender from loss if the title turns out to be imperfect.

Title Report: A title report is a document prepared by a title company that outlines the legal status of a property’s title and any issues, such as liens or easements.

Title Search: A process whereby the title company retrieves and examines public records that document the history of a property to confirm its legal ownership.

Title/Taking Title: Taking title refers to the process of legally acquiring ownership of a property. The title serves as proof of ownership.

Townhomes: Townhomes (or townhouses) are multi-level homes that share one or more walls with neighboring units. They often have narrow, vertical layouts to maximize space in urban or suburban areas. These homes offer the feel of a single-family home while saving on space and cost, with individual entrances and small private outdoor areas like patios or balconies.

Transfer of Ownership: The transfer of ownership occurs when the title of a property is legally transferred from the seller to the buyer during the closing process.

Transfer Tax: Transfer tax is a fee imposed by state or local governments on the sale of property. It is typically calculated as a percentage of the sales price.

Treasury Index: The treasury index is a benchmark interest rate used by lenders to adjust the interest rates on adjustable-rate mortgages (ARMs).

Tudors: Tudor-style homes are reminiscent of medieval English architecture, featuring steeply pitched roofs, tall, narrow windows, and decorative half-timbering on the exterior. The style often includes brick or stucco walls with dark wood trim. Inside, these homes have cozy, compartmentalized rooms, with exposed beams and arched doorways.

Under Contract: See in contract.

Underwater: A property is considered underwater when the mortgage owed is greater than the current market value of the home.

Underwriting: In mortgage banking, the analysis to determine whether the risk of making a loan to a particular borrower is acceptable to the lender. This involves the evaluation of the property as outlined in the appraisal report and the borrower’s ability and willingness to repay the loan.

Underwriting Fee: A fee that the borrower pays the lender for underwriting — the lender’s analysis of risk involved in making a mortgage loan to determine whether the risk is acceptable.

Unsecured Loan: An unsecured loan is a loan that is not backed by collateral, meaning the lender relies solely on the borrower’s creditworthiness to determine repayment.

Upper East Side: The Upper East Side is an affluent neighborhood in Manhattan, known for its luxury real estate, cultural institutions, and proximity to Central Park.

Upper West Side: The Upper West Side is a residential neighborhood in Manhattan, known for its historic architecture, cultural attractions, and proximity to Riverside Park and Central Park.

VA Mortgage: A VA mortgage is a loan guaranteed by the U.S. Department of Veterans Affairs, available to eligible veterans, active-duty service members, and their families.

Victorians: Victorian homes are ornate, elaborate houses that became popular in the late 19th century. They often feature intricate detailing, steep roofs, bay windows, and wraparound porches. The exterior may include decorative trim, towers, and brightly painted colors. Inside, the layout is more formal, with high ceilings, multiple stories, and rooms for specific functions like parlors, libraries, and dining rooms.

Visionary Brokerage: Visionary Brokerage is Scott Harris’ system of helping buyers and sellers find homes, or homebuyers, they love, described in his book The Pursuit of Home.

Voluntary Conveyance: The transfer of the title from a homeowner to the mortgage company to satisfy the mortgage debt and avoid foreclosure (also called a deed-in-lieu of foreclosure).

Walk-through: Also known as a walk-thru, or walkthrough. This is a tour you will take specifically to ascertain the condition of the property before closing, during which you’ll inspect every items within the house: plumbing, systems, fixtures, finishes, and the like. If you find issues, you’ll have to work out how to resolve them with the seller. A walkthrough may generate a list of repair items, sometimes known as a punchlist. See punchlist.

Walkup: Or walk-up. A walkup is a building with no elevator. Legally, most walkups can no more than six stories high. However, I have shown 7-story walkups in The Village, aka Greenwich Village. We would joke that an apartment on a high-floor of a walkup has a free gym.

Workout: Options to resolve or restructure a loan or prevent someone from going into foreclosure.

Zillow: Zillow is an online real estate marketplace that provides information about homes for sale, property values, and rental listings. Its advertising programs offers an opportunity for buyers to match with buyer agents, and generates over $1 Billion in revenue per year for the publicly-listed company.