A glossary of essential terms for homebuyers

When you begin the homebuying process, you'll quickly notice that there's a special language people in that world speak. There are dozens of real estate-specific terms.

Many of the words can be befuddling, especially to first-time buyers.

Here's a glossary to help you.

Terms you'll hear during the mortgage process

Application fee: the fee that a mortgage lender or broker charges to apply for a mortgage to cover processing costs
Conventional mortgage: a loan offered by a traditional bank that is not guaranteed by the federal government
Credit score: a number ranking a borrower's credit risk
Government mortgage: a loan insured or guaranteed by the federal government
Loan origination: the process by which a loan is made, including taking a loan application, processing and underwriting the application and closing the loan
Loan origination fees: fees paid to a lender or broker to process your mortgage application
Mortgage insurance premium: the amount paid to a borrower for mortgage insurance typically when the down payment is less than 20%
Mortgage rate: the interest rate on the loan you use to buy a home

Terms you'll hear during the house-hunting process

Accredited Buyer’s Representative: an agent who passed a 12-hour course through the National Association of Realtors on the ethics and legal requirements associated with their duties, such as negotiating offers and handling closings
Appraisal: a professional analysis to determine the value of a property
Broker: an agent who manages the brokerage firm and agents
Buyer’s agent: a real estate agent who is bound by contract to represent the buyer
Commission: the fee charged by the agent for services performed
Comparables: a shortening of the term "comparable properties," and used to determine the current value of a property
Contingency: a condition that must be met — including the home must appraise at least at the purchase price — before a contract becomes legally binding
Counter-offer: an offer made in response to a previous offer
Depreciation: a decline in the value of a house due to changing market conditions
Down payment: the funds paid up front in cash for a home
Dual agent: an agent who represents the buyer and seller in the same transaction
Earnest money deposit: the deposit made when an offer is submitted to show the commitment of the buyer to purchase the home
Home inspection: a professional inspection of a property to determine its condition. It should include an evaluation of plumbing, heating and cooling, roof, wiring and foundation
Listing agent or seller’s agent: an agent who represents the seller
Multiple Listing Service: a clearinghouse used by real estate firms to exchange information on the listings of real estate properties
Purchase and sale agreement: a legal document outlining the terms of an agreement between the buyer and seller, stating the price and conditions for a house sale. Typically, the agreement contains information about the property, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid and any contingencies
Ratified sales contract: the signed agreement between the buyer and seller detailing the purchase of the property
Realtor: an agent, who as a member of the National Association of Realtors, that undergoes regular training and follows its codes of conduct
Selling agent: the buyer’s agent who sometimes is referred to this title once a contract with the seller is signed

Terms you'll hear at the conclusion of the process

Closing or settlement: the process of completing a loan transaction, when the mortgage documents are signed and recorded, funds are disbursed, and the property is transferred to the owner
Closing costs: the upfront fees charged with a mortgage, such as a loan origination fee, attorney's fee, title examination fee and escrow deposits for taxes and insurance
Deed: a legal document that transfers the ownership of property
Escrow: the account which holds the buyer's deposit until closing
Escrow agent: the person who coordinates the closing activities, such as preparing documents and disbursement of funds
Recording: the filing of a legal document with the applicable local government records office
Title: the right to and the ownership of a property — a title or deed can be used to prove ownership of land

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