Like many other industries, the real estate industry has its own unique language and vocabulary. Without some knowledge of this specialized language, you may find yourself a bit confused if you become involved in a real estate transaction.

Whether entering the real estate market for the first time or if you have invested before, this handy reference will provide an understanding of basic real estate words and phrases.

Balloon Note – A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial (or lump sum) final payment, which represents all the principal balance that remains due on the original note. This “balloon payment” could be paid in a lump sum of cash or a refinance could be done with the “lump sum” being paid off with a new mortgage to repay the balance.

Bankruptcy – A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.

Binder – Sometimes called a “preliminary certificate or policy” or “commitment”. (1) A preliminary certificate issued to present as evidence of homeowner's insurance at closing. (2) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (3) A deposit in escrow of a small part of the purchase price of real estate, sometimes called an earnest money or good faith deposit; the consideration that binds the contract for purchase.