Real Estate Glossary

Appraisal

A professional opinion of a property’s value. It is different from an inspection of its condition.

Closing costs

Loan and transaction expenses, separate from the down payment. The charges depend on the loan and purchase.

Closing Disclosure

A form showing the final terms and costs of most mortgage loans. Compare it with your Loan Estimate.

Comparative market analysis (CMA)

An agent’s comparison of relevant properties to inform pricing. It is not a formal appraisal or a guaranteed sale price.

Contingency

A condition in a contract, with its own deadlines and procedures. Ask what rights and responsibilities it creates.

Down payment

The portion of the purchase price paid without mortgage financing. It does not include closing costs.

Earnest money

A purchase deposit handled under the contract. Whether it is returned or forfeited depends on the agreement and circumstances.

Equity

The property’s value minus debt secured against it, before selling costs and other adjustments.

Escrow

In a sale, a neutral party holds funds and documents under agreed instructions. A mortgage escrow account instead pays bills such as taxes and insurance.

Fixed-rate mortgage

A mortgage with an interest rate that stays the same over the loan term. Taxes and insurance can still change.

Home inspection

An examination of the property’s condition within an agreed scope. It does not guarantee that every defect will be found.

Homeowners association (HOA)

An organization that manages specified shared interests in a community. Review its dues, rules, documents, and maintenance responsibilities.

Interest rate

The percentage charged for borrowing. It differs from APR, which includes certain additional loan costs.

Listing agreement

A contract setting out a broker’s selling services and the seller’s obligations, including agreed compensation and duration.

Loan Estimate

A standardized form describing proposed mortgage terms, estimated payments, and closing costs. It helps compare loan offers.

Mortgage

A loan arrangement secured by real property. Failure to repay can put the property at risk of foreclosure.

Pre-approval

A lender’s preliminary assessment, subject to remaining conditions. It is not a guarantee of final loan approval.

Principal

The loan amount still owed, excluding interest. Paying principal reduces the loan balance.

Title insurance

Insurance for specified ownership-related risks under the policy’s terms. Owner’s and lender’s policies protect different parties.

Underwriting

The lender’s review of financial and property information to decide whether the loan meets its requirements.

Further reading: CFPB: Mortgage terms (opens in a new tab) ↗ · California DRE: Homebuying information (opens in a new tab) ↗ · Loan Estimate (opens in a new tab) ↗ · Closing Disclosure (opens in a new tab) ↗.