8 Legal and financial terms related to real estate

This section covers legal and financial jargon used in real estate.

appraisal – an expert estimate of the value of a property.

assessment – the valuation of property for tax purposes.

capital gains tax – a tax on the profit from the sale of property.

closing disclosure – a document that provides final details about the mortgage loan.

comparative market analysis (CMA) – an evaluation of similar homes in the area to determine a property's value.

debt-to-income ratio – a personal finance measure comparing debt payments to income.

default – failure to fulfill a legal obligation, such as not making mortgage payments.

easement – a right to cross or otherwise use someone else's land for a specified purpose.

eminent domain – the government's power to take private property for public use.

encroachment – intrusion on a person's territory, rights, etc.

fair market value – the price a property would sell for on the open market.

fixed-rate mortgage – a mortgage with a consistent interest rate for the term of the loan.

private mortgage insurance (PMI) – insurance that protects the lender if the borrower defaults on the loan.

refinancing – replacing an existing loan with a new one, typically with better terms.

title insurance – insurance that protects against financial loss from defects in title to real property.

zoning – laws that regulate how land can be used in certain areas.

mortgage broker – a person who brings borrowers and lenders together.

debt service – the cash required to cover the repayment of interest and principal on a debt.

assessed value – the value assigned to a property for taxation purposes.

balloon mortgage – a mortgage which does not fully amortize over its term.

bridge loan (US) or bridging loan (UK) – a short-term loan used until a person sells their current home.

conventional loan – a mortgage loan not insured or guaranteed by the government.

good faith estimate – an estimate of the payments due upon closing a mortgage loan.