An aspiring homeowner’s guide to real estate terms

If you’re looking to buy your first home, you might feel a little overwhelmed by all the real estate lingo being thrown your way. Here’s a short glossary of some common terms to get you started.

Amortization: The process of gradually paying off your mortgage with regular payments.

Appraisal: The process of determining how much a property is worth, typically used by a lender to decide how big your loan should be.

Comparables: A list of recently sold properties in the area that can be used to determine the market value of a similar property, also known as comps.

Contingency clause: A condition or action that must be met in order for a purchase offer to become binding.

Deed: A legal document that states the official owner of a property, also called a transfer.

Equity: The percentage of a property’s value owned by the homeowner (its market value minus the amount still owed on it).

Foreclosure: A legal process that allows a lender to recover money owed on a defaulted loan by taking ownership of the property and selling it.

In escrow: A period of time after a buyer makes an offer and the seller accepts during which the property is transferred to a third party until the transaction is complete.

Lien: A legal claim to a property if the owner defaults on mortgage payments or has unpaid tax debt.

Maturity date: The last day of a mortgage term, at which time the loan must be repaid in full or a new agreement must be reached.

Principal: The amount borrowed from a lending institution. In mortgage payments, this doesn’t include interest.

Title insurance: A policy that protects a homeowner against challenges of ownership to a property or other problems related to the title of a home.

Remember, a real estate agent can be an invaluable ally when it comes to navigating the language and processes of buying a home.