Homebuying Glossary: Simple Terms Every Buyer Should Know
These are the most common words you’ll see when buying a home.
A
Agent / Realtor
A licensed person who helps you buy or sell a home.
Appraisal
A professional estimate of a home’s value.
Appraisal Gap
When the appraisal comes in lower than your offer price.
Appraised Value
The amount the appraiser decides the home is worth.
C
Closing Date
The day you sign all papers and officially become the homeowner.
Closing Disclosure (CD)
A document showing your final loan costs and the amount you need for closing.
Closing Costs
Fees you must pay when buying a home (lender fees, appraisal, taxes, insurance setup, etc.).
Comps (Comparable Homes)
Recently sold homes that are similar. Used to help estimate value.
Contingency
A condition that must be met for the sale to move forward (inspection, appraisal, loan approval).
Conventional Loan
A common loan type for buyers with good credit and stable income.
Credit Score
A number that shows how well you handle debt.
D
Debt-to-Income Ratio (DTI)
Your monthly debt compared to your monthly income.
Deductible
The amount you pay first before insurance helps cover a repair.
Deed
The legal document that shows you own the home.
Down Payment
The amount you pay upfront when buying a home.
E
Earnest Money
A small deposit showing you’re serious about buying the home.
Escrow
A neutral party that holds money and documents until closing.
Escrow Account
An account your lender uses to pay property taxes and homeowners insurance.
Equity
The part of the home’s value you actually own.
H
Home Inspection
A check of the home’s condition before you buy it.
Homeowners Insurance
Protects your home from fire, storms, theft, and certain types of damage.
Inspector
A licensed professional who looks for issues in the home.
Inspection Report
A written list of issues found during the home inspection.
Interest Rate
The cost of borrowing money for your home loan.
L
Liability Coverage
Insurance that protects you if someone gets hurt on your property.
Listing
A home that is currently for sale.
Loan Estimate (LE)
A document showing your estimated loan costs and monthly payment.
M
Major Defect
A serious issue in the home (roof damage, foundation problems, unsafe wiring).
Mortgage
A loan used to buy a home.
O
Offer
A written proposal telling the seller how much you want to pay and under what terms.
P
PMI (Private Mortgage Insurance)
A fee you may pay if your down payment is under 20% on a conventional loan.
Pre-Approval
A lender review showing how much you may be able to borrow.
Premium
The amount you pay each year for insurance.
Principal
The amount of money you borrow (not counting interest).
Property Taxes
Taxes you pay each year based on your home’s value.
R
Repair Request
What buyers ask sellers to fix after the inspection.
Reconsideration of Value
A request to review or adjust the appraisal.
T
Title Insurance
Protects you if someone later claims ownership or if hidden title issues appear.
Title Search
Checks for legal issues with the home, like unpaid taxes or past ownership claims.
Interested in learning more? Explore our Buying Basics guides for simple, step-by-step explanations.