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Real estate vocabulary for exam prep

Aimed at people studying for a real estate license or simply buying their first home, this list explains the terms that show up in listings, contracts, and mortgage paperwork. Read through the words before an exam review session or before you meet with an agent or lender, so the conversation makes sense.

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Real estate vocabulary for exam prep

Word	Meaning	In a sentence
mortgagenoun	A loan used to purchase property, in which the property itself serves as security until the loan is fully repaid.	They took out a thirty-year mortgage to buy their first house.
escrownoun	Money or a document held by a neutral third party until agreed conditions of a transaction are met.	The buyer's deposit was held in escrow until the home inspection was complete.
equitynoun	Fairness and impartiality in how people are treated, or the value of ownership in property or a business after debts.	The new policy aims to promote equity by giving every student equal access to tutoring.
appraisalnoun	A formal assessment or judgment of the value, quality, or performance of someone or something.	The bank required a professional appraisal of the house before approving the loan.
closingnoun	The final part of an event, meeting, letter, or process, especially the act of formally ending it.	The lawyer explained every fee before the closing on the new house.
deednoun	An action that is performed, especially one that is notably good, brave, or wicked.	Rescuing the drowning child was the bravest deed anyone in town could remember.
liennoun	A legal right to keep possession of or claim property until a debt owed by its owner is paid.	The contractor placed a lien on the house after the owner failed to pay for the renovation.
titlenoun	The name given to a book, film, song, or other creative work.	The author struggled to choose a title that captured the novel's mood.
listingnoun	A public record or advertisement of an item, especially a property or product, that is available for sale or rent.	We found a listing for a two-bedroom apartment near the station.
brokernoun	A person or company that arranges deals between buyers and sellers, usually for a fee.	The real estate broker helped them find a house within their budget.
commissionnoun	A fee paid to someone for services rendered, usually a percentage of a sale, or an official request to create something.	The real estate agent earned a commission on every house she sold.
amortizationnoun	The gradual repayment of a debt through regular payments over time, or the spreading of an asset's cost over its useful life.	Their monthly mortgage payment covers both interest and amortization of the loan balance.
foreclosurenoun	The legal process by which a lender takes possession of a property when the borrower fails to make mortgage payments.	The bank began foreclosure proceedings after the homeowners missed six months of payments.
easementnoun	A legal right allowing someone to use another person's land for a specific limited purpose.	The neighbors held an easement letting them cross the field to reach the road.
zoningnoun	The division of land by local government into designated areas for particular uses, such as residential, commercial, or industrial.	New zoning rules prevented the company from building a factory near the school.
leasenoun	A legal agreement by which one party rents property to another for a set period.	They signed a two-year lease on the apartment downtown.
tenantnoun	A person who pays rent to occupy land, a building, or an apartment owned by someone else.	The new tenant signed a one-year lease for the downtown apartment.
landlordnoun	A person or company that owns property and rents it out to tenants.	The landlord agreed to fix the leaking faucet within the week.
contingencynoun	A possible future event or circumstance that cannot be predicted with certainty, planned for in advance.	The company kept extra cash on hand as a contingency against unexpected losses.
disclosurenoun	The act of making previously secret or private information known to others.	The company's disclosure of the data breach came weeks after it happened.
inspectionnoun	A careful and official examination of something to check its condition or quality.	The building failed its safety inspection because of faulty wiring.
principaladjective	Most important, main, or first in rank among several things or people.	The principal reason for the delay was a shortage of materials.
interestnoun	A feeling of wanting to know more about or become involved in something.	Her interest in astronomy grew after she saw Saturn's rings through a telescope.
down paymentnoun	An initial partial payment made when buying something expensive, with the remaining balance paid later.	They saved for three years to afford the down payment on their first house.
refinanceverb	To pay off an existing loan by taking out a new one, usually with better terms.	They refinanced their mortgage to take advantage of lower interest rates.
collateralnoun	Property or an asset pledged as security for a loan, to be forfeited if the debt is not repaid.	The bank required his car as collateral before approving the loan.
contractnoun	A written or spoken agreement, especially one that is legally enforceable.	Both companies signed the contract after months of careful negotiation.
negotiationnoun	A formal discussion between people trying to reach an agreement, especially in business or politics.	The negotiation over salary lasted nearly two hours before both sides agreed.
market valuenoun	The price at which an asset, property, or good would sell in the open market at a given time.	The market value of the house rose sharply after the new school opened nearby.
property taxnoun	A tax paid by owners on the value of land, buildings, or other real estate they own.	Homeowners must pay property tax to the local government each year.

Mortgage terms to know

A mortgage is a loan used to buy property, with principal referring to the amount borrowed and interest the cost of borrowing it. A down-payment is the portion of the price paid upfront, and amortization describes how payments are spread out over the loan's term. Refinancing means replacing an existing mortgage with a new one, often to get better terms.

Getting ready for the exam

Real estate exams commonly test terms tied to contracts and closing, including contingency, a condition that must be met before a sale finalizes, and disclosure, information a seller must share with a buyer. This list is a starting point for review, and candidates should always check their exam prep materials for the exact terms their state expects.

Frequently asked questions

What is escrow?

Escrow is a neutral third-party account that holds funds or documents until all conditions of a sale are met.

What is the difference between a lien and a deed?

A deed is the legal document that transfers property ownership, while a lien is a legal claim against a property, often for unpaid debt.