1031 Exchange: A tax-deferred exchange of like-kind properties, allowing real estate investors to defer capital gains taxes when reinvesting proceeds from a property sale into a new property.

1099-S Form: A form used to report the sale or exchange of real estate, providing information on the gross proceeds of the transaction for tax purposes.

2-1 Buydown Mortgage: A mortgage loan with a reduced interest rate during the first two years, gradually increasing to a predetermined rate for the remaining loan term.

Absorption Rate: The rate at which available properties are sold or leased in a specific market over a given period, often expressed in months.

Accrued Interest: The interest that has accumulated on a loan but has not yet been paid.

Adjustable-Rate Mortgage (ARM): A mortgage loan with an interest rate that adjusts periodically based on an index.

Amortization: The gradual repayment of a loan through regular installment payments over a specified period.

Appraisal: An estimate of a property’s value conducted by a licensed appraiser.

Assessed Value: The value of a property as determined by a taxing authority for the purpose of calculating property taxes.

Assumption: The transfer of an existing mortgage from the seller to the buyer, with the buyer assuming responsibility for the mortgage payments.

Balloon Mortgage: A mortgage loan with a large final payment (balloon payment) due at the end of the loan term.

Building Code: Local regulations that set standards for the design, construction, and safety of buildings and structures.

Buyer’s Agent: A real estate agent who represents the interests of the buyer in a real estate transaction.

Capital Gains: The profit earned from the sale of a property or investment, subject to taxation.

Cash Flow: The amount of money remaining after all expenses (mortgage, taxes, insurance, maintenance) have been paid on a property.

Cash-Out Refinance: The process of refinancing a mortgage loan for an amount greater than the current outstanding balance, allowing the borrower to receive the difference in cash.

Certificate of Occupancy (CO): A document issued by a local government authority certifying that a newly constructed or renovated property complies with building codes and is suitable for occupancy.

Closing: The final stage of a real estate transaction where ownership of the property is transferred from the seller to the buyer.

Closing Costs: The fees and expenses associated with the purchase or sale of a property, payable at the closing of the transaction.

Collateral: Property or assets that are pledged as security for a loan.

Comparative Market Analysis (CMA): An analysis prepared by a real estate agent that compares the prices of similar recently sold properties to determine a property’s market value.

Condominium (Condo): A type of housing where individual units are owned while common areas are shared among residents.

Conventional Loan: A mortgage loan that is not insured or guaranteed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA).

Counteroffer: A response to an offer made during a negotiation, which modifies or rejects the original offer.

Depreciation: The decrease in value of a property or asset over time, due to factors such as wear and tear or market conditions.

Dual Agency: A situation where a real estate agent represents both the buyer and the seller in the same transaction, with the consent of both parties.

Earnest Money: A deposit made by the buyer to demonstrate their intention to proceed with the purchase of a property.

Easement: The right to use or access a portion of another person’s property for a specific purpose, such as a shared driveway or utility access.

Equity: The portion of a property’s value that the owner actually owns, calculated by subtracting any outstanding mortgage debt from the property’s market value.

Eviction: The legal process of removing a tenant from a rental property due to non-payment of rent or violation of lease terms.

Fair Market Value: The price that a willing buyer and a willing seller would agree upon for a property, assuming both parties have reasonable knowledge of the relevant facts.

Fixer-Upper: A property in need of significant repairs or renovation.

For Sale By Owner (FSBO): The process of selling a property without the representation of a real estate agent.

Freddie Mac (Federal Home Loan Mortgage Corporation): A government-sponsored enterprise that purchases and guarantees residential mortgages.

FSBO (For Sale By Owner): A property that is being sold directly by the owner without the assistance of a real estate agent.

Good Faith Estimate (GFE): An estimate of the fees, costs, and expenses associated with a mortgage loan, provided by the lender to the borrower.

Gross Rent Multiplier (GRM): A ratio used to estimate the value of an income-producing property, calculated by dividing the purchase price by the gross annual rental income.

Home Equity Line of Credit (HELOC): A line of credit secured by the equity in a property, allowing homeowners to borrow against their home’s value.

Home Inspection: A thorough examination of a property’s condition, typically conducted by a professional inspector, to identify any issues or defects.

Homeowners Insurance: Insurance that provides coverage for damage to a home and its contents, as well as liability protection for the homeowner.

Housing Market: The overall supply and demand dynamics for residential properties in a particular area.

Inflation: The gradual increase in the general price level of goods and services, reducing the purchasing power of currency over time.

Investment Property: A property purchased with the intent of generating income, typically through rental payments or potential appreciation.

Landlord: The owner of a property that is leased or rented to tenants.

Lease: A legally binding agreement between a landlord and a tenant, outlining the terms and conditions of a rental arrangement.

Lease Option: A lease agreement that grants the tenant the option to purchase the property at a specified price within a certain period.

Lien: A legal claim against a property, often used as security for the payment of a debt or obligation.

Listing Agent: A real estate agent who represents the interests of the seller in a real estate transaction.

Loan-to-Value Ratio (LTV): The ratio of the loan amount to the appraised value or purchase price of a property, expressed as a percentage.

Market Value: The estimated price at which a property would sell in the current market, based on comparable sales and prevailing market conditions.

Mortgage Insurance: Insurance that protects the lender in the event of default by the borrower, typically required for loans with a down payment less than 20%.

Multiple Listing Service (MLS): A database used by real estate agents to share and access information about properties for sale or rent.

Net Operating Income (NOI): The income generated by an investment property after deducting operating expenses, but before deducting mortgage payments or taxes.

Open House: A scheduled period of time during which a property is available for potential buyers to view without an appointment.

Points: Prepaid interest charged by the lender at the time of closing, each point being equal to 1% of the loan amount.

Principal: The original amount of money borrowed in a loan, excluding interest.

Property Management: The oversight and administration of a rental property on behalf of the owner, including tenant selection, rent collection, and maintenance.

Real Estate Investment Trust (REIT): A company or trust that owns, operates, or finances income-generating real estate, offering investors the opportunity to invest in real estate without directly owning properties.

Real Estate Owned (REO): Properties that have been acquired by a lender through foreclosure and are now owned by the bank or financial institution.

Realtor®: A real estate agent or broker who is a member of the National Association of Realtors® and adheres to its code of ethics.

Refinancing: The process of obtaining a new mortgage loan to replace an existing loan, often to take advantage of lower interest rates or change the loan terms.

Rental Yield: The return on investment generated by a rental property, expressed as a percentage of the property’s value.

Short Sale: A sale of a property where the proceeds fall short of the balance owed on the mortgage, requiring the lender’s approval to accept less than the full amount owed.

Title Company: A company that verifies the legal ownership of a property and provides title insurance to protect the buyer and lender against any claims or disputes.

Underwriting: The process of evaluating a borrower’s financial information, credit history, and the property itself to determine whether to approve a mortgage loan.

Upfront Mortgage Insurance Premium (UFMIP): An initial premium paid by borrowers for FHA loans, typically financed into the loan amount, providing mortgage insurance coverage.

Vacation Home: A property used for recreational purposes or as a second residence, often located in a desirable vacation destination.

Walkthrough: A final inspection of a property by the buyer before closing to ensure that the property’s condition meets the agreed-upon terms.