Real estate vocabulary

Getting the most from any real estate investment is paramount for the players involved. Having a good grasp of some real estate terminologies is important in making rational decisions and understanding the true nature of your investment.

Below are a few terms that every realtor and client should know and add to their vocabulary:

Foreclosure: The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt

Amortization schedule: A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.

Escrow: An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the Earnest Money Deposit (which is a  deposit made by the potential home buyer to show that he or she is serious about buying t house) is put into escrow until delivered to the seller when the transaction is closed.

Bill of sale: A written document that transfers title to personal property. For example, when selling an automobile to acquire funds which will be used as a source of down payment or for closing costs, the lender will usually require the bill of sale (in addition to other items) to help document this source of funds.

Eminent domain: The right of a government to take private property for public use upon payment of its fair market value. Eminent domain is the basis for condemnation proceedings.