Here are a few Financial Terms used in the Real Estate world.

  • Adjustable-Rate Mortgages (ARM) Mortgages with interest rates that can change periodically.
  • Commission - A percent of the home's sale price paid to the real estate brokers upon a successful close of escrow.
  • Debt to Income Ratio - Your monthly minimum debt payments divided by your monthly pre-tax income.
  • Down Payment - The amount paid by the home buyer to the lender during closing.
  • Earnest Money Deposit - A "good" faith" deposit by the buyer at the time of the purchase and sale to show they are serious about the purchase. It is typically put toward closing costs or returned to the buyer when the transaction is finalized.
  • Escrow Account - An account overseen by a trusted third party to hold all monies related to a real estate transaction, such as down payments and closing costs, until the transaction is complete.
  • Equity - The difference between what you owe on your mortgage and what your home is currently worth.