Real Estate Definitions

Appraisal

In order to get a loan from a bank to buy a home, you first need to get the home appraised so the bank can be sure they are lending the correct amount of money. The appraiser will determine the value of the home based on an examination of the property itself, as well as the sale price of comparable homes in the area.


Equity

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.


HELOC

Home Equity Line of Credit


Income Property

An income property is just what it sounds like.  It’s a property that is purchased and rented out or Airbnb for producing income.  There are many types of income properties such as single family or multi-family homes, or commercial properties like a strip mall.


NOI

Net Operating Income


Refinancing

Refinancing is when you restructure your home loan, replacing your old loan with an entirely new loan that has different rates and payment structures. The main reason people refinance their home loans is to get a lower interest rate on their mortgage, and therefore lower not only the monthly payment but also the overall debt owed.


ROI

Return On Investment


 

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