Real Estate Terms

Simplifying Real Estate Talk

From legal jargon to industry colloquialisms, don’t let the words get in the way. Here’s a collection of words made clear, so you can read between the lines of industry professionals from Realtor to Property Inspector.

Adjustable Rate Mortgage
Real estate loan in which the interest rate is periodically (usually every six months) adjusted up or down to reflect the current market rates. ARMs usually specify limits as to how high or low the interest rate can go, and how frequently the changes can be made. Such loans usually start with an attractively low rate of interest (the ‘teaser rate’) to attract borrowers. Also called a variable rate mortgage. See also adjustable mortgage loan.

Appraised Value
Appraiser’s opinion (not determination) of the current worth of a property based on factors such as area, location, improvements, and amenities. Generally, this value is arrived at by using one of three methods:
(1) Cost approach, (2) Income approach, or (3) Market comparison approach. Not to be confused with assessed value. 

Assessed Value
The value placed on real estate or personal property by government (or court appointed) assessors for determining ad valorem taxes, or to levy damages on the orders of a court. Assessed value is used rarely as a basis for appraisal value.

Closing Costs
All costs and fees paid by a buyer in a real estate transaction, or by a borrower in mortgage loans. Expect these to be 2 to 5 percent of the purchase price of your home. Costs incurred may include loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Prepaid costs are those that recur over time, such as property taxes and homeowners’ insurance.

Fixed Rate Mortgage
A fixed-rate mortgage is a mortgage loan that has a fixed interest rate for the entire term of the loan. Generally, lenders can offer either fixed, variable or adjustable rate mortgage loans with fixed-rate monthly installment loans being one of the most popular mortgage product offerings.

This term is often used when combined with mortgages, pre-qualification by an individual for a mortgage often determines the budget that a buyer has to spend when buying real estate.  It is a very important factor for real estate salespeople to know about their clients. 

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