The Ultimate Real Estate Glossary: Terms Every Buyer and Seller Should Know

Real estate has a language all its own. That’s why I’ve created this comprehensive real estate glossary—so you’ll always have a quick reference guide to help you understand the process. Whether you’re a first-time homebuyer, selling your house, or investing in property, the terms you’ll hear during the process can feel overwhelming- until now! Knowledge is power.

A

Amortization – The process of gradually paying off a loan through scheduled monthly payments of principal and interest.

Appraisal – A licensed appraiser’s opinion of a home’s market value, typically required by a lender.

Assessment – The value assigned to a property by the county tax assessor for calculating property taxes.

Assumption of Mortgage – When a buyer takes over the seller’s existing mortgage, with lender approval.

B

Balloon Mortgage – A loan with small regular payments and one large final payment.

Bill of Sale – A document transferring ownership of personal property (like appliances) included in a home sale.

Bridge Loan – A short-term loan that helps cover the gap when buying a new home before selling the current one.

Broker – A licensed real estate professional who can own a brokerage and employ other agents.

C

Closing – The final step in a real estate transaction when ownership is officially transferred.

Closing Costs – Fees and expenses (2–5% of purchase price) paid at closing, including lender fees, title insurance, and more.

Comparative Market Analysis (CMA) – A report showing the value of a home compared to recent sales in the area.

Contingency – A condition in a purchase agreement that must be met before closing (financing, inspection, appraisal).

Conventional Loan – A mortgage not insured by a government program like FHA, VA, or USDA.

D

Deed – The legal document that transfers property ownership.

Default – Failure to meet the legal obligations of a mortgage, often due to missed payments.

Down Payment – The upfront amount (usually 3–20%) paid toward the purchase price.

Dual Agency – When one real estate agent represents both the buyer and the seller in the same transaction.

E

Earnest Money – A deposit showing a buyer’s serious intent to purchase a property, applied at closing.

Easement – A legal right for someone else to use part of your property (like utility access).

Equity – The difference between the market value of your home and what you owe on the mortgage.

Escrow – A neutral third party that holds funds and documents until all conditions of the sale are met.

F

Fair Market Value – The price a property would likely sell for on the open market.

FHA Loan – A government-backed mortgage insured by the Federal Housing Administration, popular with first-time buyers.

Fixed-Rate Mortgage – A loan where the interest rate stays the same over the entire term.

Foreclosure – When a lender takes back a property after the borrower defaults on the loan.

G

Gift Letter – A letter confirming funds given to a buyer for a down payment are a gift, not a loan.

Good Faith Estimate (GFE) – A breakdown of estimated closing costs (now replaced by the Loan Estimate).

Grantee/Grantor – The grantee receives ownership of a property, while the grantor transfers ownership.

H

Home Equity Line of Credit (HELOC) – A revolving line of credit secured by the equity in a home.

Home Inspection – A professional evaluation of a home’s condition before closing.

Homeowner’s Association (HOA) – An organization that manages shared amenities and enforces community rules.

HUD-1 Settlement Statement – A document listing all fees and charges in a real estate transaction (replaced by the Closing Disclosure).

I

Interest Rate – The cost of borrowing money, expressed as a percentage of the loan amount.

Investment Property – Real estate purchased to generate income, not for personal use.

J

Joint Tenancy – Ownership by two or more parties where each has equal rights and survivorship benefits.

Judgment Lien – A legal claim against a property due to unpaid debts.

K

Kick-Out Clause – A clause allowing a seller to continue marketing a property if a buyer’s offer is contingent (like needing to sell their home first).

L

Listing Agreement – A contract authorizing a real estate agent to market and sell a property.

Loan-to-Value Ratio (LTV) – The ratio of the loan amount to the property’s appraised value.

Lock-In – A guarantee from a lender to hold a certain interest rate for a set period.

M

Market Value – The price a property should bring in a fair, competitive sale.

Mortgage – A loan used to finance the purchase of real estate.

Multiple Listing Service (MLS) – A database used by agents to share and find property listings.

N

Net Proceeds – The amount a seller receives after all costs and expenses are deducted from the sale price.

Note (Promissory Note) – A legal document in which the borrower promises to repay a loan.

O

Offer – A buyer’s proposal to purchase a property under certain terms.

Origination Fee – A lender’s charge for processing a new loan application.

Owner’s Title Insurance – Protects the buyer against claims on the property’s ownership.

P

Pending – A property that has an accepted offer and is in the closing process.

PITI – Principal, Interest, Taxes, and Insurance—components of a monthly mortgage payment.

PMI (Private Mortgage Insurance) – Required for buyers with less than 20% down payment, protecting the lender.

Pre-Approval – A lender’s conditional approval stating how much they are willing to lend.

Q

Qualifying Ratios – Financial calculations lenders use to determine if a borrower qualifies for a mortgage.

Quitclaim Deed – A deed that transfers any ownership interest in a property but offers no guarantees.

R

Refinance – Replacing an existing mortgage with a new one, often to lower interest rates.

Right of First Refusal – The right to match an offer before the property is sold to someone else.

S

Seller’s Market – When demand for homes exceeds supply, giving sellers an advantage.

Short Sale – When a property is sold for less than the amount owed on the mortgage.

Survey – A map showing property boundaries and features.

T

Title – Legal ownership of a property.

Title Insurance – Insurance that protects against future claims on a property’s ownership.

Truth in Lending Act (TILA) – A federal law requiring lenders to disclose loan terms and costs clearly.

U

Underwriting – The process lenders use to evaluate a borrower’s risk before approving a loan.

Upside Down Mortgage – When the amount owed on a mortgage is higher than the home’s value.

V

VA Loan – A loan guaranteed by the Department of Veterans Affairs, available to eligible veterans and service members.

Variable-Rate Mortgage – A mortgage with an interest rate that can change over time.

W

Walk-Through – A final inspection by the buyer before closing to ensure the home’s condition hasn’t changed.

Warranty Deed – A deed that guarantees the seller owns the property free and clear.

X

“X” Signature – Historically used as a mark in place of a written signature. Rare today but sometimes referenced in old documents.

Y

Yield Spread Premium (YSP) – A commission paid to a mortgage broker by a lender for originating a loan with a higher interest rate.

Z

Zoning – Local government rules dictating how land can be used (residential, commercial, etc.).

Zero Lot Line – A property where the building is positioned right against the property line with little or no yard.

Final Thoughts

Real estate comes with a language of its own—but now, you’ve got a guide to make it easier. Whether you’re buying, selling, or investing, understanding these terms will give you confidence and clarity throughout the process.

💬 Thinking about buying or selling in Central Arkansas? I’d love to walk you through the process and explain every step—no jargon, just clear guidance. Call or text me today!