Appraisal – The estimation of a home’s market value by a licensed appraiser based on comparable recent sales of homes in the neighborhood. A loan underwriter compares this appraisal price to the agreed-upon purchase price to ensure that the value of the home is equal to or greater than the purchase price.
Buyer Agency – A real estate brokerage that works with people looking to buy homes.
Buyer’s Market – A market in which there are more sellers and homes for sale than buyers.
Closing Costs – Fees incurred in addition to the purchase price of a home. The fees include excise tax, loan-processing costs and title insurance that buyers and sellers pay at closing.
Comparative Market Analysis (CMA) – An evaluation of similar, recently sold homes (called comparables) that are near a home intended to be bought or sold.
Condominium – A condo is a unit that you own in a multi-unit complex, such as an apartment building. While each condo is individually owned, the common spaces are shared by all the owners in the complex.
COOP – A type of residence where the buyer owns shares in the corporation that owns the building and has the right to live in a specific unit, but doesn’t actually own the space.
Contingency – Conditions included with an offer on a home that must be fulfilled before the deal can close. If a buyer or seller is unable to satisfy a contingency, then the offer on a home may become void.
Debt to Income Ratio – The percentage of a buyer’s gross monthly income (what he earns before tax deductions) that goes towards paying off debt.
Down Payment – The amount of money a buyer pays in cash at closing to fund a home purchase, usually expressed as a percentage of the total home price.
(EMD) Earnest Money Deposit – The money buyers pay one to three business days after agreeing with the seller on a price for the home to show that they’re serious about the offer.
Foreclosure – Foreclosure is a process that transfers the right of home ownership from the homeowner to the bank or lender. A home goes into foreclosure when the owner defaults on his mortgage loan payments.
(FSBO) For Sale by Owner – A home the owner is selling himself without the services of a licensed real estate agent.
Good faith estimate – An official document that explains all costs and deposits required by a lender for a specific loan.
HUD-1-The official settlement document for the purchase and sale of real estate from the Department of Housing and Urban Development (HUD).
(MLS) Multiple Listing Service – The MLS is a local or regional service that compiles available real estate for sale by member brokers along with detailed information brokers and agents can access online.
(PMI) Private Mortgage Insurance – Private mortgage insurance is required for borrowers of conventional loans with a down payment of less than 20%.
(PITI) Principal, Interest, Taxes & Insurance – These four items make up a total monthly housing payment.
Preapproval – A letter from a bank or a lender estimating how much they’ll lend a borrower. Getting pre-approved for a loan helps establish a price range and determines how much the borrower can afford.
REO – Short for “real estate owned,” REOs are foreclosed homes owned by banks and lenders. Banks either withhold from releasing these properties on the market because they don’t want to take a loss or list them in the Multiple Listing Service (MLS) represented by an agent.
Seller’s Market – A seller’s market is one in which there are more buyers than homes for sale.
Short Sale – A home that is listed for sale at a price lower than the amount owed on the mortgage. Homeowners hope to sell their home as a short sale to avoid penalties associated with going into foreclosure.
Title Insurance – Title insurance protects against losses resulting from problems with the title company.
Under Contract – A home where a potential buyer made an offer and signed the Purchase and Sale Agreement, but a successful closing is still contingent upon financing