Their Origins, Meanings, and Usage
Navigating the real estate world can be daunting, especially with a myriad of terms that can seem like a foreign language. Knowing these key terms will not only make you sound like a pro but also empower you to make informed decisions. This guide will walk you through important real estate terminology, their origins, and how to use them correctly.
Amortization
Meaning: The process of gradually paying off a debt over time through regular payments. Origin: The term comes from the Latin word “amortisare,” meaning “to kill” or “to die.” In this context, it refers to “killing” the debt bit by bit. Usage: “The amortization schedule shows how much of each payment goes towards interest and principal.”
Escrow
Meaning: A financial arrangement where a third party holds funds or assets until certain conditions are met. Usage: “The buyer deposited the earnest money into escrow until the deal closes.”
Title Deed
Meaning: A legal document proving ownership of a property. Usage: “Ensure you receive the title deed after purchasing the property.”
Closing Costs
Meaning: Fees and expenses paid at the end of a real estate transaction. Usage: “Closing costs typically include appraisal fees, title insurance, and taxes.”
Appraisal
Meaning: An expert estimate of the value of a property. Usage: “The bank required an appraisal before approving the mortgage.”
Mortgage
Meaning: A loan used to purchase real estate, secured by the property itself. Usage: “We applied for a mortgage to buy our first home.”
Equity
Meaning: The difference between the market value of a property and the amount owed on the mortgage. Usage: “As we pay down the mortgage, our equity in the house increases.”
Lien
Meaning: A legal claim against a property due to unpaid debts. Usage: “The contractor placed a lien on the property for unpaid work.”
Deed of Trust
Meaning: A document that secures a loan by transferring the title to a trustee until the loan is paid off. Usage: “In some states, a deed of trust is used instead of a mortgage.”
Zoning
Meaning: Laws that dictate how property in specific areas can be used. Usage: “Zoning regulations prevent industrial businesses from setting up in residential areas.”
Pre-Approval
Meaning: A preliminary evaluation of a potential borrower’s creditworthiness. Usage: “Getting pre-approval for a loan can give you an edge when house hunting.”
Underwriting
Meaning: The process of evaluating the risk of insuring a loan. Usage: “The underwriting process involves verifying income, assets, and credit history.”
Cash Flow
Meaning: The net amount of cash being transferred in and out of a business. Usage: “Positive cash flow from rental properties can make real estate a profitable investment.”
Encumbrance
Meaning: A claim or liability attached to a property, such as a mortgage or lien. Usage: “Always check for any encumbrances before purchasing a property.”
Probate
Meaning: The legal process of transferring property after someone dies. Usage: “The house went through probate before it could be sold.”
Do-Nothing Dave strikes again
When Do-Nothing Dave was told his client’s money was in escrow, he nodded and said, “Oh yeah, I’ve seen one of those before! Big wingspan, right?” His client blinked and replied, “No, Dave… that’s an eagle.”
Conclusion
Understanding these real estate terms will give you the confidence to navigate the market effectively. For top-notch service, rely on Philippine Property Hub for all your real estate needs.