Equity is ownership. In homeownership equity refers to how much of your home you actually own—meaning how much of the principal you’ve paid off. The more equity you have the more financial flexibility you have as you can refinance against whatever equity you’ve built. Put another way equity is the difference between the fair market value of the home and the unpaid balance of the mortgage. If you have a $200 000 home and you still owe $150 000 on it you have $50 000 in equity.

Escrow is an account that the lender sets up that receives monthly payments from the buyer.

An earnest money deposit (EMD), sometimes referred to a “good faith deposit”, is the initial funds that a buyer is asked to put down once a seller accepts the buyer’s offer. It shows not only that the buyer is serious about buying, but that they are also willing to put their money where their mouth is. The amount of the EMD can vary between 1 to 5 percent of the sales price. The EMD is often held by an escrow company, or as otherwise provided for under the purchase and sale agreement (PSA).

Equal Credit Opportunity Act ( ECOA)

Federal legislation requiring lenders to make credit equally available without discrimination based on race, sex, color, religion, marital status, age, national origin, or receipt of income from public assistance.

A fixture or structure, such as a wall or fence, that invades a portion of a property belonging to another.

A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land. An easement appurtenant passes with the land when conveyed.

An easement allowed by law as necessary for the full enjoyment of a parcel of real estate.

An easement acquired by continuous, open, uninterrupted, exclusive, and adverse of the property for the period of time prescribed by state law.

An amount of money deposited by a buyer under the terms of a contract. In the event that the buyer, for no valid or legal reason, backs out of the transaction, earnest money is sometimes used as liquidated damages.

An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner.

The period of time over which an improved property will earn an income adequate to justify its continued existence.

The impairment of desirability or useful life arising from factors external to the property, such as economic forces or environmental changes, that affect supply-demand relationships in the market. Loss in the use and value of a property arising from the factors of economic obsolescence is to be distinguished from loss in value from physical deterioration and functional obsolescence, both of which are inherent in the property.

Growing crops that are produced annually through the tenant’s own care and labor and that she or he is entitled to take away after the tenancy is ended. Emblements are regarded as personally property even prior to harvest, so if the landlord terminates the lease, the tenant may still reenter the land and remove such crops. If the tenant terminates the tenancy voluntarily, however, she or he generally is not entitled to the emblements.

The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court determines that the use is a public use and determines the price or compensation to be paid to the owner.

The status of one who works as a direct employee of an employer. An employer is obligated to withhold income taxes and Social Security taxes from the compensation of his or her employees.

A document evidencing formal employment between the employer and the employee or between the principal and the agent. In the real estate business, this generally takes the form of a listing or management agreement.

Any lien that may diminish the value of the property, such as a mortgage, tax, or judgment lien; easement; restriction on the use of the land; or an outstanding dower right.

The act of writing one’s name, either with or without additional words, on a negotiable instrument or on a paper attached to such instrument.

Federal legislation requiring lenders to make credit equally available without discrimination based on race, sex, color, religion, marital status, age, national origin, or receipt of income from public assistance.

The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.

The interest held by a vehicle under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.

The interest or value that an owner has in a property over and above any mortgage indebtedness.

The gradual wearing away of land by water, wind, and general weather conditions; the diminishing of property caused by the elements.

Insurance coverage for real estate agents against claims for innocent and negligent misrepresentations.

The reversion of property to the state in the event that its owner dies without leaving a will and has no heirs to whom the property may pass by lawful descent.

The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered on the performance of certain conditions in the escrow agreement.

An interest for a certain, exact period of time in property leased for a specified consideration.

The degree, quantity, nature, and extent of interest that a persona has in real property.

An estate owned by one person.

A legal instrument executed by a mortgagor showing the amount of the unpaid balance due on a mortgage and stating that the mortgagor has no defenses or offsets against the mortgagee at the time of execution of the certificate.

A legal process to oust a person from possession of real estate.

A proof of ownership of property, which is commonly a certificate of title, a title insurance policy, an abstract of title with lawyer’s opinion, or a Torrens registration certificate.

A transaction in which all of part of the consideration for the purchase of real property is the transfer of like-kind property. Ex. real estate for real estate.

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner’s stated terms for a commission. The owner, however, reserves the right to sell without paying anyone a commission by selling to a prospect who has not been introduced or claimed by the broker.

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner’s stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.

A contract in which all parties have fulfilled their promises and thus performed the contract.

The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.

The person designated in a will to handle the state of the deceased. The probate court must approve any sale of property by the executor.

A contract under which something remains to be done by one of more of the parties.

The short-term costs that are deducted from an investment property’s income, such as minor repairs, regular maintenance, and renting costs.

An oral or written contract in which the parties state their terms and express their intentions in words. Real estate terms that begin with F

An account designed to manage taxes and insurance premiums, usually connected to your principal and interest payments