Real estate glossary

Plain-language definitions for the terms you'll see on contracts, listings, and disclosures.

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Adjustable-rate mortgage (ARM): A loan whose interest rate adjusts at set intervals — usually low for an initial fixed period (5, 7, or 10 years), then variable after.
Appraisal: An independent estimate of a home's market value, ordered by the lender to confirm the loan amount makes sense.
Appreciation: Increase in a property's value over time, driven by market conditions, neighborhood changes, and improvements.
As-is: A sale where the seller will not make repairs or offer credits for issues found during inspection. The buyer accepts the home in its current condition.

Buyer's agent: The licensed real estate agent who represents the buyer in a transaction. Has a fiduciary duty to the buyer's interests.

Closing costs: Fees paid at closing — title insurance, escrow, lender fees, prorated taxes. Typically 1–2% of the price for buyers, 6–8% for sellers.
Closing Disclosure: A federally required document detailing the final loan terms and closing costs. Delivered at least 3 business days before closing.
CMA: Comparative Market Analysis — a report comparing recent sales of similar nearby homes to estimate a property's market value.
Contingency: A condition that must be met for the contract to proceed — common ones: financing, appraisal, inspection. If unmet, the buyer can walk away with their earnest money.
Conventional loan: A mortgage not insured by the federal government. The most common loan type for buyers with strong credit.

Days on market (DOM): How long a property has been actively listed. A high DOM in a hot market often signals pricing or condition issues.
Deed: The legal document transferring property ownership from seller to buyer.
Down payment: The portion of the purchase price the buyer pays upfront in cash. The rest is financed via the mortgage.

Earnest money: A deposit (typically 1–3%) the buyer puts in escrow when an offer is accepted, signaling commitment. Credited toward the down payment at closing.
Escrow: A neutral third-party account that holds funds and documents during the transaction. Protects both parties until conditions are met.

FHA loan: A mortgage insured by the Federal Housing Administration. Allows down payments as low as 3.5% with a 580+ credit score.
Fixed-rate mortgage: A loan with the same interest rate for the entire term — typically 15 or 30 years. Predictable monthly payments.

HOA: Homeowners Association — common in condos and planned communities. Collects monthly dues, maintains common areas, enforces rules.

Inspection: A buyer-ordered evaluation of the home's physical condition by a licensed inspector. Different from an appraisal.

Jumbo loan: A mortgage above conforming loan limits (varies yearly and by county). Common in coastal Orange County's higher price brackets.

Listing agent: The agent representing the seller. Different from a buyer's agent — opposite sides of the same transaction.
Loan-to-value (LTV): The ratio of loan amount to home value, expressed as a percentage. 80% LTV = 20% down payment.

MLS: Multiple Listing Service — the database real estate agents use to share listings. Powers Zillow, Redfin, and other consumer sites.
Mortgage insurance (PMI / MIP): Insurance that protects the lender if the borrower defaults. Required on conventional loans with <20% down (PMI) and on FHA loans (MIP).

Pre-approval: A written commitment from a lender stating how much you can borrow, based on a review of your finances. Stronger than a pre-qualification.
Principal: The portion of a mortgage payment that pays down the loan balance (vs. interest, which is the cost of borrowing).
Property taxes: Annual taxes assessed by the county based on the home's value. In California, capped by Prop 13 to a base rate of about 1% plus voter-approved local additions.

Title: Legal ownership of a property. A title search verifies there are no claims (liens, undisclosed heirs, easements) that would cloud ownership.
Title insurance: Insurance protecting against legal claims on a property's title. Two types: lender's (required) and owner's (optional but recommended).

Underwriting: The lender's process of verifying your finances and the property to approve the loan. Happens during escrow.

VA loan: A mortgage backed by the Department of Veterans Affairs. 0% down, no PMI, available to qualifying military service members and veterans.

Zoning: Local government rules dictating what can be built where. Affects what you can do with a property (e.g., add an ADU, run a business).

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