Here is a glossary of commonly used real estate terms that you are likely to enconter when you're buying or selling a home.

ADJUSTABLE RATE MORTGAGE (ARM) - A loan with an interest rate that can move up or down as financial industry indexes change. Typically an ARM starts with a lower beginning interest rate and rises slightly through the life of the loan. Some lenders offer convertible ARMs that can be converted to a fixed rate, often for an additional fee.

ADVANCE FEE - A broker may charge an advance fee to cover the costs of promoting the property.

AMORTIZATION - A schedule of loan repayment by a series of regular payments, covering all interest and principal.

APPRAISAL - An estimate of market value based on an analysis of a property.

APPRECIATION - The increase in value of real estate.

ASSESSED VALUE - The value given a property by the tax assessor for tax purposes. This is rarely the same as the market value.

ASSUMABLE MORTGAGE - A loan that can be passed along to a new buyer in the event of a sale.

BUY-DOWN - The payment of additional points to lower the interest rate of the mortgage.

CLOSING - The date on which a property legally becomes the property of the buyer.

CLOSING COSTS - Settlement expenses related to the transfer of ownership of the property. Closing costs may be paid by the buyer, the seller, or both.

CONVENTIONAL MORTGAGE - A mortgage that is not secured by a governmental agency such as the VA or the FHA.

CONTINGENCY - A condition that must be met before a contract is binding. A buyer may have a contingency clause that states he must sell his existing home before being obligated to an offer on a new home.

COUNTER-OFFER - A bargaining move in which a buyer or seller rejects the offered terms of sale and advances a new set of terms. Counter-offers can cover issues ranging from purchase price to move-in date to property that stays with the house.

DEED - The legal instrument that conveys title to a property.

DOWN PAYMENT - Part of the purchase price that the buyer pays in cash and does not finance.

EARNEST MONEY DEPOSIT - Deposit made by a buyer to show good faith. Usually the earnest money is forfeited if the buyer defaults on the offer.

EASEMENT - The right or privilege to use another person's property, such as a path to public facilities.

ENCROACHMENT - Any portion of a structure that encroaches on another person's property.

EQUITY - The market value of a property minus any loans owed against it.

ESCROW ACCOUNT- A part of your mortgage account set aside to pay future taxes, insurance and other fees. Many loans require an escrow account.

FHA LOAN - A loan insured by the federal government guaranteeing its payment in case of default. These loans can be easier to qualify for than a conventional mortgage.

LIABILITY INSURANCE - Protection against claims that a homeowner's negligence resulted in injury or loss to another person, typically part of a homeowner’s insurance policy.

LIEN - A legal claim against a property used to secure the payment of debt.

LOAN RATIO - Also called loan-to-value, this is the percentage relationship between the amount of a loan and the appraised value or purchase price of a property.

MORTGAGE BROKER - A mortgage company that originates loans, then places those loans with other lending institutions.

ORIGINATION FEE - Fee charged by the lender for originating a real estate loan - usually a percentage of the amount loaned, such as one percent. This is not the same as an application fee.

PMI (Private Mortgage Insurance) - Insurance that insures repayment of a loan balance if the borrower defaults. PMI is usually required for homes financed with less than a 20 percent down payment or with less than 20 percent equity.

PROMISSORY NOTE - A note signed by the borrower promising to repay the loan under stipulated terms. The note establishes personal liability for its repayment.

REAL PROPERTY - Land and whatever by nature or artificial annexation is a part of it.

REFINANCING - Replacing an existing loan with a new one. The purpose is to secure a lower interest rate, to change the type of loan you have, or to convert the home's equity to cash.

SPECIAL ASSESSMENT - A charge by a public authority to pay the cost of public improvements such as street lights, sidewalks or other improvements.

SWEAT EQUITY - A homeowner's contribution to a property in the form of labor or services rather than cash.

TITLE SEARCH FEE - Typically part of closing costs, the fee charged to check title records to ensure that the seller is the legal owner of the property and that there are no other claims against it.

TRUST ACCOUNT - An account separate from broker's in which broker is required to deposit all funds collected for clients.

VA LOAN - A loan guaranteed by the Veteran's Administration insuring payment in case of default. Available to qualified veterans.

WARRANTY DEED - A deed used to convey real title of real property.

-- Source: Gazette research