DTI? CMA? PMI?... If you’re new to the world of real estate, deciphering the industry’s language can be tricky. The process of buying and selling in the real estate market is complicated, and believe it or not, so is all the terminology that comes with it. To help you get started, we’ve compiled a list of real estate terms and acronyms to help you speak the language like a pro. 

A to C

  • Adjustable-rate mortgage (ARM): A type of mortgage loan with an interest rate that can change throughout the loan’s lifetime. 

  • Appraisal: Prepared by a licensed and certified appraiser to determine the value of a home-based on data about comparable homes in the area. 

  • Agent: A real estate professional that is licensed to buy and sell property on behalf of their clients. An agent must work under a licensed broker.

  • Broker: A real estate professional that is licensed to represent clients and manage a brokerage in their state. A broker is legally allowed to operate independently and manage individual agents through a firm. 

  • Buying Agent: A real estate professional that represents a buyer to help them find and purchase a property.

  • Comparative Market Analysis (CMA): An in-depth analysis to determine the value of a home-based on the sale prices of similar homes in the area. 

  • Closing Costs: Fees associated with purchasing a home that is due at the end of the closing transaction. Both the buyer and seller have expenses during the closing costs. Some of the most common closing costs include homeowner’s insurance, property taxes, and agents’ commission. 

  • Contingency: Conditions written into a home purchase contract that must be met for a contract to be finalized. 

D to F

  • Days on Market (DOM): Number of days a property is considered active on the market.

  • Debt-to-income ratio (DTI): The total of all monthly debt payments divided by monthly gross income. This percentage helps lenders calculate the risk associated with giving out a loan to a borrower. 

  • Equity: Calculated by taking the market value of a property and deducting the amount that is still owed on the mortgage (if any). 

  • Escrow: An arrangement when a neutral third party holds on to funds during a transaction.

  • Foreclosure: A legal process by which the homeowner fails to pay the mortgage and forfeits all rights to the property. 

  • Fixed-rate mortgage: A home loan with an interest rate that remains the same throughout the loan’s lifetime. 

G to L

  • Guaranteed replacement coverage: A property insurance valuation option found in some homeowners' policies. This policy pays the full cost of replacing the home even if this amount exceeds the policy limits. 

  • Homeowners Association (HOA): An organization in a subdivision, planned community, or condo that makes and enforces rules for the properties and its residents. 

  • In escrow: A period (30 days or longer) after a buyer has made an offer on a home and the seller has accepted. 

  • Listing: A property that is up for sale. 

M to P 

  • Mortgage: A long term loan given by a bank, mortgage company, or other financial institution to purchase a real estate property. 

  • Multiple listing services (MLS): A digital database of current real estate listings that operated by a group of agents or brokers. 

  • Origination fee: Charged by a broker or lender, a fee to initiate and complete the home loan application process. 

  • Private mortgage insurance (PMI): A fee charged to borrowers that requires payment of additional premiums. This fee is designed to  protect lenders in case the borrower goes into default. 

  • Pocket listing: A property that is for sale but hasn’t been made publically available to other agents or buyers. 

R to T 

  • Refinancing: Process that involves obtaining a new mortgage loan to pay off a current one. Refinancing usually allows for a lower interest rate. 

  • Short sale: The sale of a home by an owner that sold for less than the amount is owed on the mortgage. 

  • Title insurance: Insurance that protects both buyer and lender in case the seller does not have full lawful ownership of the property. 

  • Title search: Protects real estate owners and lenders against any property loss or damage in case the seller does not have full lawful ownership of the property. 

U to Z 

  • Under contract: When the buyer has made an offer on the home and the seller has accepted but  the sale is not yet final. 

  • VA loan: A federal mortgage loan designated for veterans of the United States Armed Forces. 

  • Walkthrough: The buyer’s final inspection of a home before closing. 

You’re now one step closer to becoming an expert! Next time you hear real estate lingo come up in a conversation, you’ll be more prepared.