Federal Trade Commission
ftc.gov
The Real Estate Marketplace Glossary:
How to Talk the Talk
Buying
a home can be
exciting. It also can
be somewhat daunting, even
if you’ve done it before. You will deal
with mortgage options, credit reports, loan
applications, contracts, points, appraisals, change
orders, inspections, warranties, walk-throughs, settlement
sheets, escrow accounts, recording fees, insurance, taxes...the list
goes on. No doubt you will hear and see words and terms you’ve
never heard before. Just what do they all mean?
The Federal Trade Commission, the agency that promotes competition
and protects consumers, has prepared this glossary to help you
better understand the terms commonly used in the real estate
and mortgage marketplace.
Annual Percentage Rate (APR): The cost of
Appraisal: A professional analysis used
a loan or other financing as an annual rate.
to estimate the value of the property. This
The APR includes the interest rate, points,
includes examples of sales of similar prop-
broker fees and certain other credit charges
erties.
a borrower is required to pay.
Appraiser: A professional who conducts an
Annuity: An amount paid yearly or at other
analysis of the property, including examples
regular intervals, often at a guaranteed
of sales of similar properties in order to de-
minimum amount. Also, a type of insurance
velop an estimate of the value of the prop-
policy in which the policy holder makes
erty. The analysis is called an “appraisal.”
payments for a fixed period or until a stated
age, and then receives annuity payments
Appreciation: An increase in the market
from the insurance company.
value of a home due to changing market
conditions and/or home improvements.
Application Fee: The fee that a mortgage
lender or broker charges to apply for a
Arbitration: A process where disputes are
mortgage to cover processing costs.
settled by referring them to a fair and neu-
tral third party (arbitrator). The disputing
A
Glossary
parties a