Real Estate Glossary
Understand the Language of Homebuying & Mortgage Lending
Buying a home or applying for a mortgage comes with a flood of unfamiliar terms. Our Real Estate Glossary is here to break it all down—so you can move forward with confidence.
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Essential Homebuying & Mortgage Terms
Amortization
The process of paying off a loan over time through regular payments of principal and interest.
Annual Percentage Rate (APR)
The total yearly cost of a mortgage, including interest, points, and fees, expressed as a percentage.
Appraisal
An independent estimate of the home’s market value, used to determine how much a lender is willing to finance.
Closing Costs
Expenses over and above the home’s price—such as title fees, insurance, and lender charges—typically ranging from 2–5% of the purchase price.
Contingency
A condition in a purchase agreement (e.g., financing or inspection) that must be met for the sale to proceed.
Credit Score
A numerical rating (300–850) representing a borrower’s creditworthiness. Higher scores often mean better loan terms.
Debt-to-Income Ratio (DTI)
Your total monthly debt payments divided by your gross monthly income. A key factor in loan qualification.
Down Payment
The amount of money a buyer pays upfront. Typically ranges from 3% to 20% of the purchase price.
Earnest Money
A deposit made to show serious intent to buy a home. It’s applied to the down payment or closing costs.
Escrow
An account where a neutral third party holds funds until specific conditions are met—commonly used for taxes and insurance.
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Loan Types & Financing Terms
Conventional Loan
A mortgage not insured by the government, typically requiring higher credit scores and down payments.
FHA Loan
Backed by the Federal Housing Administration, these loans allow for lower credit and down payment requirements.
VA Loan
A mortgage for eligible veterans and military members, offering no down payment and no PMI.
Jumbo Loan
A loan that exceeds conforming loan limits. Usually requires strong credit and more documentation.
Loan Estimate (LE)
A standardized form provided by lenders showing loan terms, interest rate, monthly payment, and closing costs.
Pre-Approval
An initial credit check and income review by a lender to determine what loan amount you may qualify for.
Rate Lock
A guarantee from your lender that the interest rate offered will remain the same for a specific time period before closing.
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Property & Ownership Terms
Deed
A legal document showing ownership of property.
Homeowners Association (HOA)
An organization managing rules and services for a community, with monthly or annual dues.
Title Insurance
Protects against errors in the property title or ownership disputes.
Zoning
Laws that define how a property can be used (residential, commercial, etc.).
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Need More Help Understanding the Process?
Visit our Closing Process Explained page or Contact Us to speak with an expert.
Want to suggest a term? Email us at info@askmortgageauthority.com