Terms You Should Know
Real estate is like learning a whole new language! Below are terms you should know as you go through
the real estate process.
Adjustable-Rate Mortgage- A mortgage with an interest rate that changes based on a specific index,
after a predetermined number of years.
Amortization Schedule- A timetable showing the amount of each mortgage payment applied to interest
and principal and the remaining balance after payment is made.
Appraisal- A qualified appraiser’s written analysis of the estimated value of a property.
Attorney’s Fees- If the lender requires an attorney to draw up any of the settlement documents, you may
be charged a fee.
Capital Gains- The profit obtained from the sale of an asset, such as real estate.
Certificate of Title- A statement provided by a title company or attorney stating that the title to real
estate is legally held by the current owner.
Closing Costs – Expenses incidental to a sale of real estate; such as loan fees, title fees, appraisal fees,
attorney fees, etc.
Deed- The legal document conveying title to a property.
Earnest Money- Earnest money is a deposit paid to a seller to show you are serious about buying a
house. If you buy the home, the earnest money is applied to your down payment. If not, the earnest
money is returned, minus expenses, provided the contract allows.
Escrow Fees- Escrow involves having a third party hold funds and/or documents until you and the seller
complete settlement. Money in the account may be used to pay taxes, insurance and other regular
assessments as they fall due.
Good-Faith Estimate-GFE An estimate of closing costs associated with the purchase of your home.
Home Inspection- A thorough examination that evaluates the condition of a property.
Home Warranty- A guarantee for mechanical systems and appliances against repairs not covered by
homeowners insurance.
Lock-In- A lender’s written guarantee of a specified interest rate if a mortgage is closed within a set
period of time.
Loan Origination Fee- A lender will charge a fee for the cost of processing the loan.
Andrea Warner, REALTOR
3107 W Colorado Ave #261 Colorado Springs, CO 80904
WWW.ColoradoPeakRE.com
719-648-9345 Andrea@ColoradoPeakRE.com
Terms You Should Know
Loan Discount Points- The largest of your settlement cost may be the points lenders require to make the
yield on your loan more profitable. A point is one percent on your loan amount. Points are tax deductible
if they are paid separately and not deducted from the loan amount.
Loan to Value- The ratio of the amount of a mortgage loan to the appraised value or sales price of the
property mortgaged.
Mortgage Insurance- A contract that insures the lender against loss caused by a borrower’s default on a
mortgage.
PITI- Principal, Interest, Taxes and Insurance: four components of a monthly payment on mortgage
loans.
Prime Rate- The interest rate that banks charge to their preferred customers.
Property Survey Fee- You may have to pay to have your lot surveyed, especially if there is a question
about the boundaries.
Recording Fee- Since the title is changing hands, the transaction must be recorded with your city, county,
or other appropriate branch of government.
Sales Contract- Known as a purchase agreement, the legal document that details the price and terms of
the property sale between a seller and a buyer.
Settlement Statement- A document prepared by a broker, escrow company, or lender detailing the
complete breakdown of the costs and disbursements in a real estate transaction.
Title Search- A check of public records to ensure that the seller is the legal owner of the property being
sold and that there are no liens or other claims against the property.
Title Insurance- Insurance to guard against a faulty title search as well as hazards that might not be
revealed in the search.
Truth in Lending- A federal law that requires lenders to fully disclose, in writing, the terms and
conditions of a mortgage.
Underwriting- The lender’s process of evaluating a loan application to determine the risk of providing
the applicant the requested funds.
Andrea Warner, REALTOR
3107 W Colorado Ave #261 Colorado Springs, CO 80904
WWW.ColoradoPeakRE.com
719-648-9345 Andrea@ColoradoPeakRE.com