Appraisals: Terminology 101

Home Appraisals are a vital and important part of the home buying process.  They determine the worth or value of a property and also affect how much your lender is able to give when buying a particular property. However, if you've ever seen an appraisal you know that they can be complicated to read and understand. To help you combat this, we've created a list of the 20 most commonly used appraisal terms that should help you when going through the home buying process:

Amenities

Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains.

Buffer Zone

A segment of land that separates two municipal zones.

Comparables

A real estate appraisal term referring to properties with characteristics that are similar to a subject property whose value is being sought.

Debt Equity Ratio

The ratio of the amount a mortgagor still owes on a property to the amount of equity they have in the home.

Equity

The market value of a homeowner's unencumbered interest in their real property—that is, the difference between the home'sfair market value and the outstanding balance of all liens on the property.

Fannie Mae

A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. It was created by Congress in 1938.

Ginnie Mae

A corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income home buyers.

Independent Appraisal

An estimation of value by a certified appraiser with no vested interest in the value of the property.

Joint Tenancy

The holding of an estate or property jointly by two or more parties, the share of each passing to the other or others on death.

Liquid Asset

An asset that can be quickly converted into cash at little or no cost.

Misrepresentation

A statement by one party in a transaction that is incorrect or misleading. Some misrepresentations are deemed intentional and thus may be fraudulent.

Non-conforming Use

The use of land for purposes contrary to municipal zoning. This can occur when zoning changes after a property was already being used in a certain capacity.

Occupancy Rate

The percentage of properties in a specific area that are occupied.

Principal

The amount owed on a mortgage that doesn’t include interest or other fees.

Quitclaim Deed

A legal document which transfers property ownership.

Rate Lock

A lender’s guarantee of an interest rate for a set period of time.

Survey

A map of your property that shows legal boundaries, dimensions, structures and any other physical features of your home and property

Vacancy Rate

The percentage of vacant properties in a specific area.

Walk-Through Inspection

A process where an appraiser examines a property in preparation for estimating its value.

Zone

An area or stretch of land having a particular characteristic, purpose, or use, or subject to particular restrictions.