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Glossary of Real Estate Terms

1031 Exchange

Definition A 1031 Exchange is a tax-deferral strategy that allows real estate investors to sell an investment property and reinvest the proceeds into another “like-kind” property without immediately paying capital gains taxes. This e...

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage, known as ARM, is a type of home loan where the interest rate has the ability to vary at regular intervals. Consequently, the monthly payments have the potential to increase or decrease over the course of the loan. T...

Adjustable-Rate Mortgage (ARM) Cap

Definition An Adjustable-Rate Mortgage (ARM) Cap is a limit on how much the interest rate on an ARM can increase or decrease during specific periods of the loan term. These caps protect borrowers from drastic payment increases by placing...

Adjustable-Rate Mortgage (ARM) vs. Fixed-Rate Mortgage

Definition A Fixed-Rate Mortgage has an interest rate that remains constant throughout the entire loan term, while an Adjustable-Rate Mortgage (ARM) starts with a fixed rate for an initial period but then adjusts periodically based o...

Affidavit of Title

Definition An Affidavit of Title is a legal document signed by a property seller, confirming that they legally own the property, have no undisclosed liens, and that there are no legal claims against the title. This affidavit provides assur...

Amortization

Definition Amortization refers to the process of gradually paying off a loan over time through scheduled payments that include both principal (the original loan amount) and interest (the cost of borrowing). In real estate, amortization applies...

Amortization Schedule

Definition An Amortization Schedule is a detailed breakdown of a loan’s repayment over time, showing how each monthly payment is divided between principal and interest. This schedule helps borrowers understand how much of their payment ...

As-Is Condition

Definition: A property being sold in its current state, with no repairs or improvements made by the seller. Explanation: Buyers are responsible for any needed repairs. However, they can still request an inspection to evaluate the home's condit...

Assignment of Lease

Definition An Assignment of Lease is a legal agreement in which a tenant transfers their lease rights and obligations to another party (assignee) for the remainder of the lease term. The original tenant may still be partially responsible f...

Balloon Mortgage

Definition A balloon mortgage is a type of home loan that features low monthly payments for a set period, followed by a large lump-sum payment (the "balloon payment") at the end of the loan term. This type of mortgage is typically short-term (...

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