RE/MAX Real Estate Glossary

Popular Terms

FHA loans

Mortgages that are insured by the Federal Housing Administration. The FHA's 203(b) loan program provides low-rate mortgages to buyers who make a down payment as small as 3 percent. The agency also operates loan plans for investors and purchasers of rural property.

For Sale By Owner (FSBO)

The owner acts as the agent to avoid paying a sales commission.

Equity

A determination of the value of a property after existing liens are deducted.

Fannie Mae

The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Escrow

A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.

Underwriting

The process that lenders go through to evaluate the risks posed by a particular borrower and to set appropriate conditions for the loan.

Short Sale

When the lender agrees to allow a property to be sold for less than the remaining balance due on the loan, typically to prevent foreclosure.

Motivated buyer

Any buyer with a strong motivation to make a purchase.

Loan -to-value ratio

A technical measure used by lenders to assess the relationship of the loan amount to the value of the property.

Foreclosure

The legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted upon.