Real Estate Words You Need to Know Before Buying a Home

Dated: 04/12/2020

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Are you planning to buy a home in Jensen Beach? If this is your first time to do a real estate transaction, you need to be familiar with terms and words agents use.

Like many other fields, real estate has its own language. There are so many real estate jargon that can be confusing especially to first=time buyers.

Before you sign anything, here are real estate words you need to know:

Adjustable-rate mortgage

An adjustable-rate mortgage is a kind of mortgage where the interest rates and payments change throughout the life of the loan. This mortgage can be a great financial choice for home buyers that are planning to pay off the loan in full in a span of time.


As-is means that you as the buyer will receive all the physical and legal conditions of the foreclosed property you are going to buy.

For example, if a property badly needs repairs, or if it has illegal occupants, or if the title of a foreclosed property has a problem, or if it is located beside a garbage dump or cemetery etc, the buyer expressly agrees to buy the property in such condition. Any costs related to fixing any of these problems will be for the account of the buyer.


Amortization is the process of paying off a loan through a series of periodic payments to a lender. The payments include two items: interest, which is what it costs you to borrow the money, and principal, which is the amount of money you borrowed.


An appraisal is a written estimate of the value of something. In real estate, it is a professional opinion of the market value of the property (such as a home) as of a given date.

Buyer's agent (listing agent)

A buyer’s agent is someone who acts on behalf of and represents you in a real estate transaction. If you plan to buy a house, it may be wise for you to contact a real estate agent to act as your buyer’s agent who will have your best interests in mind and to ensure you are treated fairly throughout the home buying process.


Closing is when the home sale is considered final, which typically includes all parties’ signatures on all required documents, all monies conveyed, and when a lender is involved, with full lender’s approval.

For some markets across the nation, recording the deed with the county clerk’s office is the ultimate and final step of closing. Once all of these items are completed, then your access to the property is then provided, and you are considered the new homeowner.

Closing costs

Closing costs are an assortment of fees, including fees charged by the lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement-related companies. These closing costs are typically paid at the time of closing a real estate transaction.

Comparable Market Analysis

This is an analysis done during the appraisal process. Properties with similar characteristics are compared to the property you want to buy to determine how much the home you want to buy is worth.

Contract of Sale

A contract of sale is a contract between you, the buyer and the seller of real estate property to convey title after certain conditions have been met and payments have been made.

Conventional sale

A conventional sale is when the property is owned outright (has no mortgage remaining) or the owner owes less on their mortgage than what the market indicates the owner could sell their property for. Such conventional sales are often smoother transactions than non-conventional sales, such as foreclosures, probate related sales, and short sales.

Credit Bureau

A credit bureau or credit reporting agency is an organization that compiles the data contained in a consumer’s credit report based on the information provided by creditors, financial institutions, public records, and businesses.

Credit Report

A credit report is a full record of your credit history prepared by a credit bureau. It contains information submitted by lenders and contained in public records. It contains very extensive information on your credit history and is probably the single most important document creditors use when deciding whether to grant you credit.

Days on Market (DOM)

Days on market refers to the number of days a property has been listed on the local multiple listing services (MLS) to the date when the seller has signed a contract for the sale of the property.

Debt-to-income ratio (DTI)

Debt-to-income is a number used by mortgage lenders which is determined by the total of your debt expenses, plus your monthly housing payment, divided by your gross monthly income and multiplied by 100. This helps lenders determine affordability based on their available loan programs and allows them to estimate how much you can afford to pay monthly for a mortgage.

Delinquent loan

When you fail to make a timely payment on your loan agreement, you get a delinquent loan. Most lenders give borrowers a grace period to make up for the missed payment so you can get out of the loan delinquency.

Due diligence

Due diligence is the period of time provided to you to check the property by hiring experts to inspect the property, perform tests, and do all the other things needed so that you can decide on how to proceed.

This is also the time to renegotiate the contract based on your findings, perhaps terminate within a specified time period in order to be considered in default of the contract, and more. Due diligence gives you time to understand what you are buying.

Earnest money deposit (EMD)

Earnest money is the deposit made to the seller that represents a buyer's good faith to buy a home. The money gives you extra some time to get financing and do title search, property appraisal, and inspections. Earnest money can be considered an escrow deposit or good faith money.

The amount of EMD can vary between 1 to 5 percent of the sales price. The EMD is often held by an escrow company, or as otherwise provided for under the purchase and sale agreement (PSA).


Escrow is the money placed to a third party for safekeeping during the real estate transaction. During a real estate purchase, you are typically required to place a portion of down payment in an escrow account where it is held until the closing. After the home is purchased, a portion of each mortgage payment is typically held in an “escrow” account to pay for the property’s taxes and insurance.


Equity is the difference between the fair market value of the property and the amount of money you owe on the mortgage. If you apply for a mortgage worth $250,000, the lender requires that you pay 20% in down payment which in this case is $50,000. If you pay the full amount of the 20% down payment, that is the total of your home equity.

Federal Housing Administration Loan (FHA)

The Federal Housing Administration, or FHA, is a mortgage insurer that offers a variety of home buying assistance programs to help people purchase homes that they otherwise couldn’t afford.

FHA-insured loans generally offer more flexible credit qualifications and lower down payment. However, you are required to pay for mortgage insurance.

Interest rates and terms depend on the FHA-approved mortgage lender you choose.

Homeowners Association (HOA)

Want to live in a community with a pool or clubhouse? Chances are you’re looking for a neighborhood with an HOA, or homeowners association.

An HOA is responsible for maintaining common areas and any amenities, and it typically sets standards for how homes should look in order to keep property values up. In some cases, homeowner’s associations may even include Internet, cable, and lawn care with their HOA dues.

If you’re considering buying a home in a neighborhood with an HOA, check the association’s CC&Rs — Covenants, Conditions, and Restrictions — to see what rules the HOA enforces.

Home inspection

A home inspection is a thorough professional examination that evaluates the structural and mechanical condition of the structure. A home inspection is a necessary step in real estate sales contracts.


Interest is the cost of borrowing money expressed in terms of yearly percentage. It is always part of the monthly loan payment.

Interest rate

The interest rate is the percentage of the outstanding balance of a loan that you are charged for borrowing money, usually expressed as an annual percentage rate.


A listing is a printed or digital description of a property for sale. Listings include details about the property, the number of bedrooms, baths, other structures, price, photos, and more.

Loan Origination Fee

This is a fee charged by lenders to prepare documents, make credit checks, inspect, and sometimes appraise the property. It is usually stated as a percentage of the face value of the loan.

Multiple Listing Service (MLS)

The multiple listing service is a massive database of available properties that is split up into hundreds of different regions. If you’ve ever heard someone refer to a home as “on the market,” it means that the home is available on the MLS.

You can search for properties that are on the MLS by using a real estate agent’s website.

Private Mortgage Insurance (PMI)

Speaking of mortgage insurance, many lenders require you to have private mortgage insurance (PMI) if you can’t put 20% down on your home. This insurance protects the lender in case you can’t pay off your mortgage.


The principal is the amount of money owed to the lender, not including interest. For example, you borrowed $300,000. That’s what you borrowed to buy the home.

As a buyer, you pay the principal plus interest each month. Payments go toward the interest first, then toward the principal.

Pre-approval letter

A pre-approval is a letter from the mortgage lender indicating that the lender has reviewed your finances and has approved you for a home loan for a certain amount.

Property deed

A property deed is a legal document that shows that an owner of a piece of real property has title to that property.

Real-estate owned (REO)

Real-estate owned is a designation given to properties that are owned by a lender due to an unsuccessful foreclosure sale at auction.

REO properties can sometimes present an opportunity for a buyer to be purchased for below market value as most banks would prefer to reinvest the proceeds, rather than waste time marketing the property for an extended period.

Furthermore, the bank will often market the property ‘as-is’. meaning they are unwilling to make any repairs to the property, which can make financing tricky.

Seller disclosure

A seller’s disclosure is a disclosure by the seller of information about the property, or which could affect a buyer’s decision to purchase the property, all of which to the best of the seller’s knowledge.

A seller must also indicate items which are not specific to the property itself but related to a person’s enjoyment of the property, such as pest problems, property line disputes, knowledge of major construction projects in the area, military base-related noises or activities, association-related assessments or legal issues, unusual odors caused by a nearby factory, or even recent deaths on the property as permitted by law.

Termite report

A termite report is a document given to the buyer by a licensed home inspector that showed the findings of their inspection. This report tells whether or not the inspector found any evidence of termites in your home.


A title refers to the right or ownership of a certain piece of real estate property.

Title report

When you've found a home that you are interested in buying and you reach an offer that is acceptable to both you and the seller, you will receive a preliminary title report. The title report shows ownership of a specific piece of land/property as well as any liens on that property. This report will also show any title defects that might not be known about otherwise.

Understanding these real estate words will help you sign a real estate document with more confidence.

Planning to buy a Jensen Beach home soon?

Call me, Melissa Conrad, at 772-240-2589 and let’s discuss your needs in a home.

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