Glossary

Welcome to the Real Estate Glossary! 

Below is our complete list of terms you might need to know before buying or selling your house! If you still have questions feel free to contact us.

  • Acceptance

    the date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract.

  • Adjustable Rate Mortgage

    A mortgage that permits the lender to adjust the mortgage’s interest rate periodically on the basis of changes in a specified index. Interest rates may move up or down, as market conditions change.

  • Adjustment Date

    The date the interest rate changes on an adjustable-rate mortgage.

  • Amortized Loan

    A loan that is paid in equal installments during its term.

  • Amortization Schedule

    A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero

  • Appraisal

    An estimate of real estate value, usually issued to standards of FHA, VA and FHMA.  Recent comparable sales in the neighborhood is the most important factor in determining value

  • Appreciation

    An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

  • Assumable Mortgage

    Purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage.

  • Back Up Offer

    A backup offer is one made on a home where the seller has already accepted an offer. The backup puts the buyer in line to buy the home if the accepted offer falls through.

  • Bill of Sale

    Document used to transfer title (ownership) of PERSONAL property.

  • Broker

    Broker has several meanings in different situations. Most Realtors are “agents” who work under a “broker.” Some agents are brokers as well, either working form themselves or under another broker. In the mortgage industry, broker usually refers to a company or individual that does not lend the money for the loans themselves, but broker loans to larger lenders or investors. (See the Home Loan Library that discusses the different types of lenders). As a normal definition, a broker is anyone who acts as an agent, bringing two parties together for any type of transaction and earns a fee for doing so.

  • Buyer’s Agent Fee

    The fee or commission paid to a buyer’s agent or brokerage for finding and managing a home purchase for a buyer. Typically represented as a percentage of the sales price, the fee is paid by the seller at closing.

  • Buyer’s Market

    Market conditions that exist when homes for sale outnumber buyers. Homes can sit on the market for a long time, and prices tend to drop.

  • Closing Costs

    Closing costs are separated into what are called “non-recurring closing costs” and “pre-paid items.” Non-recurring closing costs are any items which are paid just once as a result of buying the property or obtaining a loan. “Pre-paids” are items which recur over time, such as property taxes and homeowners insurance. A lender makes an attempt to estimate the amount of non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue to the borrower within three days of receiving a home loan application.

     

  • Closing Disclosure

    This is a statement a borrower will receive from their lender at least three days before closing on a home. The line items should look similar to what a borrower sees on their loan estimate when first applying — there are limits to how much any fees can change in the time period between application and closing day, so borrowers should review their closing disclosure closely and ask their lender about any changes.

  • Cloud on Title

    Any condition that affects the clear title to real property.

  • Comparative Market Analysis (CMA)

    An in-depth analysis, prepared by a real estate agent, that determines the estimated value of a home based on recently sold homes of similar condition, size, features and age that are located in the same area. 

  • Comparable Sales (AKA Comps)

    Recent sales of similar properties in nearby areas and used to help determine the market value of a property. Also referred to as “comps.”

  • Condominium

    A type of ownership in real property where all of the owners own the property, common areas and buildings together, with the exception of the interior of the unit to which they have title. Often mistakenly referred to as a type of construction or development, it actually refers to the type of ownership.

  • Consideration

    Anything of value to induce another to enter into a contract, i.e., money, services, a promise.

  • Contingency

    A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

     

  • Conventional Loan

    A home loan not guaranteed by a government agency, such as the FHA or the VA.

  • Days On Market (DOM)

    The number of days a property listing is considered active.

  • Deed

    A written instrument, which when properly executed and delivered, conveys title to real property.

  • Debt-to-Income Ratio (DTI)

     A ratio that compares a home buyer’s expenses to gross income.

  • Discount Points

    A loan fee charged by a lender of FHA, VA or conventional loans to increase the yield on the investment.  One point = 1% of the loan amount.

  • Down Payment

    The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.

  • Due Diligence

     An in depth investigation of a property that helps ensure you know as much about a property as you can before buying it. Due diligence officially starts once an offer has been accepted, and typically involves a home inspection, review of property records to ensure improvements received the necessary permits, etc. within a period of time agreed to by the buyer and seller. Buyers can renegotiate their offer if they uncover problems, or they can cancel the offer without paying a penalty.

  • Earnest Money

    A deposit made by the potential home buyer to show that he or she is serious about buying the house.

  • Easement

    The right to use the land of another.

  • Encumbrance

    Anything that burdens (limits) the title to property, such as a lien, easement, or restriction of any kind.

  • Equity

    The value of real estate over and above the liens against it.  It is obtained by subtracting the total liens from the value.

  • Escalation Clause

     A clause or addendum to a real estate contract or offer that states a buyer is willing to raise his or her offer price to a predetermined amount if the seller receives a higher competing offer for the property.

  • Escrow Payment

    That portion of a mortgagor’s monthly payment held in trust by the lender to pay for taxes, hazard insurance and other items as they become due.

  • Fair Housing Act

    A federal law that makes discrimination based on a person’s race, color, religion, sex (including gender identity and sexual orientation), national origin, disability, or familial status illegal within the housing context, including buying a home or getting a mortgage.

  • Fannie Mae

    Nickname for Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by congress to support the secondary mortgages insured by FHA or guaranteed by VA, as well as conventional loans.

  • Federal Housing Administration (FHA)

    An agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing.

  • FHA Insured Mortgage

    A mortgage under which the Federal Housing Administration insures loans made, according to its regulations.

  • FICO Score

    A FICO score is a measure of creditworthiness that lenders use to determine whether they will lend you money to buy a home. The score, reported as a single number, is based on data compiled by the three major credit reporting bureaus (Experian, Equifax and TransUnion). Scores range from 300-850.

  • Fixed Rate Mortgage

    A loan that fixes the interest rate at a prescribed rate for the duration of the loan.

  • Forbearance

    Forbearance is an agreement with a lender that allows a homeowner to catch up on payments if they fall behind on their mortgage. The agreement allows the borrower to catch up either by the lender reducing the amount owed or suspending loan payments for a certain period.

  • Foreclosure

    Procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default.

  • Freddie Mac

    Nickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market.  It purchases and sells residential conventional home mortgages.

  • Graduated Payment Mortgage

    Any loan where the borrower pays a portion of the interest due each month during the first few years of the loan.  The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life.

  • Home Inspection

    A thorough inspection by a professional that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser.

  • Homeowner’s Insurance

    An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.

  • Housing Ratio

    Housing Ratio: One of two debt-to-income ratios that a lender analyzes to determine a borrower’s eligibility for a home loan. The ratio compares total housing cost (principal, homeowners insurance, taxes and private mortgage insurance) to gross income.

  • Homeowner’s Warranty

    A type of insurance often purchased by homebuyers that will cover repairs to certain items, such as heating or air conditioning, should they break down within the coverage period. The buyer often requests the seller to pay for this coverage as a condition of the sale, but either party can pay.

  • In Escrow

    A period of time (typically 30 days or more) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised, and the title searched for liens, etc.

  • Jumbo Loan

    A jumbo loan is a mortgage that exceeds the conforming loan limits for a given area as set by two federally backed home mortgage companies. In 2023, a jumbo loan for most of the United State is one over the conforming limit of $726,000. Areas with especially high home prices have higher limits. 

  • Lease Purchase Agreement

    Buyer makes a deposit for future purchases of a property with the right to lease property in the interim.

  • Lease with Option

    A contract, which gives one the right to lease property at a certain sum with the option to purchase at a future date.

  • Legal Description

    A property description, recognized by law, that is sufficient to locate and identify the property without oral testimony.

  • Lien

    A lien is any legal claim upon a property for a debt or a non-monetary interest in the property. A lien is a security interest that can give a creditor the right to take possession of a property secured by a loan, such as a mortgage, when the borrower defaults on the loan obligations. Most lenders will require title insurance to protect their interests should there be outstanding liens on the property securing their security interest.

  • Loan to Value Ratio (LTV)

    The ratio of the mortgage loan principal (amount borrowed) to the property’s appraised value (selling price).  Example – on a $100,000 home, with a mortgage loan principal of $80,000 the loan to value ratio is 80%.

  • Mortgage

    A legal document that pledges a property to the lender as security for payment of a debt.

  • Mortgage Banker/Lender

    One who originates, sells, and services mortgage loans and resells them to secondary mortgage lenders such as Fannie Mae or Freddie Mac.

  • Mortgage Broker

    A licensed professional who works on behalf of the buyer to secure financing through a bank or other lending institution.

  • Mortgage Insurance Premium (MIP)

    The amount paid by a mortgagor for mortgage insurance.  This insurance protects the investor from possible loss in the event of a borrower’s default on a loan.

  • Mortgage Interest Rate

    The price of borrowing money. The base rate is set by the Federal Reserve and then customized per borrower, based on credit score, down payment, property type and points the buyer pays to lower the rate. 

  • Mortgage Points

    When you buy mortgage points, you pre-pay the interest rate by making an upfront payment to the lender at closing in exchange for a lower interest rate. Pre-paying interest is also known as buying down your interest rate. The points or prepaid interest is usually paid during closing.

  • Multiple Listing System (MLS)

    A database where real estate agents list properties for sale.

  • Note

    A written promise to pay a certain amount of money.

  • Origination Fee

    A fee paid to a lender for services provided when granting a loan, usually a percentage of the face amount of the loan.

  • Pending

    Pending means the seller has accepted an offer, a purchase contract has been signed, and contingencies between the buyer and seller have been addressed.

  • Points

    Prepaid interest owed at closing, with one point representing 1% of the loan. Paying points, which are tax deductible, will lower the monthly mortgage payment.

  • Power of Attorney

    A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.

  • Pre-Approval

    A loosely used term which is generally taken to mean that a borrower has completed a loan application and provided debt, income, and savings documentation which an underwriter has reviewed and approved. A pre-approval is usually done at a certain loan amount and making assumptions about what the interest rate will actually be at the time the loan is actually made, as well as estimates for the amount that will be paid for property taxes, insurance and others. A pre-approval applies only to the borrower. Once a property is chosen, it must also meet the underwriting guidelines of the lender. Contrast with pre-qualification.

  • Pre-Qualification

    This usually refers to the loan officer’s written opinion of the ability of a borrower to qualify for a home loan, after the loan officer has made inquiries about debt, income, and savings. The information provided to the loan officer may have been presented verbally or in the form of documentation, and the loan officer may or may not have reviewed a credit report on the borrower.

  • Private Mortgage Insurance (PMI)

    See Mortgage Insurance Premium.

  • Property Tax Exemption

    A reduction in taxes based on specific criteria, such as installation of a renewable energy system or rehabilitation of a historic home.

  • Refinancing

    The act of paying off one loan by obtaining another. Refinancing is generally done to secure better loan terms, such as a lower interest rate.

  • Second Mortgage / Second Deed of Trust / Junior Mortgage / Junior Lien

    An additional loan imposed on a property with a first mortgage.  Generally, a higher interest rate and shorter term than a “first” mortgage.

  • Settlement Statement (HUD-1)

    A financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received or expended.

  • Severalty Ownership

    Ownership by one person only.  Sole ownership.

  • Short Sale

    The sale of a home by an owner who owes more on the home than it’s worth. The owner’s bank must approve a lower listing price before the home can be sold.

  • Survey

    A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.

  • Tax Assessment or Assessed Value

    The value assigned to a home by a local government to determine the amount of property taxes a homeowner owes. The assessment, which is usually made once a year, differs from an appraisal, which estimates the value of a home, based on market conditions when it’s listed for sale.

  • Tax Lien

    The government’s legal claim against property when the homeowner neglects or fails to pay a tax debt.

  • Tenancy In Common

    Ownership by two or more persons who hold an undivided interest without right of survivorship.  (In event of the death of one owner, his/her share will pass to his/her heirs.

  • Title Insurance

    An insurance policy that protects the insured (buyer or lender) against loss arising from defects in the title.

  • Transfer Taxes

    Fees imposed by the state, county or municipality on transfer of title.

  • Under Contract

    A period of time (typically 30 days or more) after a buyer has made an offer on a home and a seller has accepted. During this time, the home is inspected and appraised, and the title is searched for liens, etc.

  • Underwater or upside down

    When a homeowner owes more on their mortgage than their home is worth.

  • Underwriting

    A process a lender follows to assess a home loan applicant’s income, assets and credit, and the risk involved in offering the applicant a mortgage.

  • Walkthrough

    A buyer’s final inspection of a home before closing.

  • Zoning

    A designation, assigned by local government, to a parcel of land that dictates how it can be used. Common designations include residential, commercial, industrial and agricultural.

     

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What Our Clients Say About Us

Megan and Natalie were wonderful! They were so helpful at the beginning of, during and at the end of my home buying experience. I had a lot of questions but they were always available for questions or to look at properties. They made it as stress free as possible and I never felt like I was alone in the process. Will definitely recommend them to everyone I know who is interested in purchasing a home!

Katie Williams
Smyrna

Megan is, as many others have said "the best!" Her knowledge of the Atlanta real estate market is second to none. She takes time with each and every client and makes them feel as if they are her only client. I have had the pleasure of working beside Megan for the past 3 years and I can say with 100% certainty that she has been an incredible asset for me. As one of the highest compliments I can pay, I have and will continue to refer her to my closest friends and family. If you are thinking about buying, selling or just want to chat about real estate, Megan should be your first call.

Mike Bernard
Atlanta

Both were great to work with! Always seemed to be available and were very patience with us during the process. Fielded numerous questions with a smile on their face. They were very honest and upfront and did an excellent job setting expectations. My wife and I both valued their opinions and felt they both lead us in the right direction. 5 out of 5 would recommend Megan and Natalie!

Will Canady
East Cobb

I recently purchased my first home with the help of Natalie and Megan. While the home buying process at times felt overwhelming, I couldn't have asked for a better team to support me. They were extremely responsive from the start of my search to my closing date. They provided me with resources to learn about the terms that would come up as I made an offer, went under contract, and closed on a property.

They answered emails and texts at all hours of the day and night, aided me in the negotiations for my purchase, assisted in the selection of a closing attorney, and continued to send me reminder texts for the various documents that I needed to review and sign leading up to my closing date.

I am grateful for how professional, responsive, and empathetic they were throughout my process, and I recommend her highly to anyone that is in the market for a new home.  

Sam Grisham (Atlanta)
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We were first time home buyers that started our search a few months ago. We were very selective in what we were looking for and wanted to find our ideal home. Natalie and Megan were very patient and guided us through the entire process. They both communicated very well and accommodated our busy schedules. If there was a house that we wanted to view, they would make it happen as quickly as possible (which is imperative in this market). They helped us find our Home and we are beyond Happy!

Anthony Bilotta (Woodstock)
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The Megan and Natalie Real Estate Team is outstanding! We worked with them to sell our home in Atlanta for a job relocation. They supported our timeline and quickly jumped in to help get our process started. This was our first experience putting a home on the market and they really took the time to answer all our questions promptly and walk us through the process with their expertise. They handled all the moving parts of our relocation with care, knowledge, and strong communication with everyone involved. They go above and beyond to make sure that everything runs smoothly and that their clients feel comfortable. We highly recommend them to anyone who is looking to buy or sell a home!

Courtney Tooley (Roswell)
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Natalie and Megan were amazing to work with for buying our home, and I can't recommend them enough. We were relocating back to Atlanta, and they were patient with our timeline, gave honest advice, were so responsive with all questions and communications, and made sure we felt comfortable with everything. These two truly care about their clients and go above and beyond to ensure a smooth buying process.
We could not have done this without them, and we highly recommend them to anyone looking to buy or sell a home.

Nicole Smith (Roswell)
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