HANDY HOMEBUYER GLOSSARY

Simple Definitions for Real Estate Terms You’ll Actually Hear

Buying a home can feel like learning a new language — and sometimes it seems like everyone else already knows the lingo. This glossary is here to help you feel confident, informed, and ready to make smart decisions.

Below are some of the most common terms you’ll encounter during your home search, explained in plain English. Bookmark this page or share it with a friend who’s diving into homeownership.

Appraisal

A professional estimate of a home’s market value, conducted by a licensed appraiser, usually required by a lender before approving your loan.

Closing Costs

The total of all fees and expenses due at closing — including lender fees, title insurance, taxes, and other charges. These usually range from 2–5% of the purchase price.

Comparative Market Analysis (CMA)

A report prepared by your Realtor® that compares your home (or one you’re interested in buying) to recently sold properties nearby, to help determine a fair market value.

Contingency

A condition that must be met for a real estate contract to move forward — for example, a home inspection or mortgage approval contingency.

Down Payment

The amount of money you pay upfront toward your home purchase, typically 3–20% of the price depending on your loan type.

Earnest Money Deposit (EMD)

A good-faith deposit made by the buyer when submitting an offer to show commitment. It’s usually held in escrow and applied toward closing costs or the down payment.

Escrow

A neutral third party (often the title company) that holds funds and important documents during a real estate transaction until all conditions are met.

Fixed-Rate vs. Adjustable-Rate Mortgage (ARM)

A fixed-rate mortgage has the same interest rate for the entire loan term, while an ARM starts lower and can adjust periodically based on market conditions.

Home Inspection

A detailed review of a property’s condition conducted by a professional inspector. It helps identify potential issues with structure, systems, or safety before closing.

Pre-Approval

A formal evaluation by a lender determining how much you can borrow, based on income, credit, and debt. Pre-approval gives you a stronger position when making an offer.

Private Mortgage Insurance (PMI)

Insurance required on certain loans when your down payment is less than 20%, protecting the lender in case of default.

Title Insurance

A policy that protects against potential ownership disputes or hidden claims on the property. Typically required by lenders and paid at closing.

Under Contract

When a seller has accepted an offer, but the sale hasn’t closed yet. During this period, inspections, appraisals, and financing are finalized.

Underwriting

The lender’s process of reviewing all your financial documents and verifying eligibility before issuing final loan approval.