Common Real Estate Terms


Adjustable-Rate Mortgages (ARM) –

Mortgages with interest rates that can change periodically

Commission –

A percent of the home’s sale price paid to real estate brokers upon successful close of escrow. It is customarily paid by the seller and split between the buyer and seller brokers, but it can vary.

Debt-to-Income Ratio –

Your monthly minimum debt payments divided by your monthly pre-tax income.

Down Payment –

The amount paid by the homebuyer to the lender during closing.

Earnest Money Deposit –

A “good faith” deposit by the buyer at the time of the purchase and sale to show they are serious about the purchase. It is typically put toward closing costs or returned to the buyer when the transaction is inalized.

Escrow Account –

An account overseen by a trusted third party to hold all monies related to a real estate transaction, such as down payments and closing costs, until the transaction is completed.

Equity –

The difference between what you owe on your mortgage and what your home is currently worth.

Fixed-Rate Mortgages –

Mortgages that have the same interest rate throughout the entire span of the loan.

PITI (Principal, Interest, Taxes and Insurance) –

The four basic elements of a monthly mortgage payment.

Principal –

In the context of borrowing, this is the amount of money owed on a loan.


Appraisal –

The estimated value of a piece of real estate, as judged by a qualified third party.

Close of Escrow –

When the transaction is finalized and the buyer legally takes possession of the home from the seller.

Contingencies –

Clauses in a purchase and sale agreement specifying actions or requirements that must be met for the
contract to become legally binding.

Mortgage Commitment Letter –

A formal document from your lender stating you’re approved for the loan.

Pre-Approval –

An estimate given by a lender to determine if you are able to afford a particular house you have bid on.

Pre-Qualified –

An estimate given by a lender to determine how much of a mortgage you may qualify for when you
are seeking a home.

Purchase and Sale Agreement –

The agreement between the buyer and seller noting the final sale price and terms of the transaction.

Title Search –

A review by a thirdparty professional of all public records associated with a home’s history, including previous purchases, sales, taxes and liens. The title is a document that states the property is clear of all past-due taxes, liens and property disputes.

I know the market can be confusing, but I am here to offer clear, concise information you can trust. Feel free to contact me and I will answer any questions you may have.

Home Selling Resources

Complete Guide to Home SellingGet a Free Consultation on Selling Your Home
10 Tips to Selling Your HomeHow to Prepare Your Home for Sale
Find Out What Your Home is Worth

Home Buying Resources

Search Homes For Sale NowView Open House List
Home Buying Process – A Complete Guide7 Tips to Home Buyer Success
Free Home Buyer ConsultationWhy You Need A Buyers Agent

Ron's Real Estate Minute

Episode 1: How Much Will it Cost To Sell My Home?
Episode 2: How Do I Get My Home Ready To Sell?
Episode 3: 4 Questions Everyone Asks About Home Inspections
Episode 4: What are Sellers Looking for in the Offers They Receive This Spring?
Episode 5: What are Some Tips for Buyers Going to Open Houses?
Episode 6: What is a Psychologically Impacted Property?
Episode 7: What is the Difference Between a Deposit and a Down Payment?
Episode 8: How Do I Deal With a Subject to Suitable Housing Condition?
Episode 9: What Defines a Legal Bedroom?
Episode 10: What Does it Mean to Launch a Listing?
Episode 11: What is an As-Is Home Sale?
Episode 12: What is a Betterment and What Does it Mean in a Home Sale?

Moving On With Ron

Episode 1: What Does the Assessed Value of a Home Mean?
Episode 2: Does Finishing the Basement Add Value to My Home?
Episode 3: What are the Types of Home Valuations and Which One is Correct?
Episode 4: How to Successfully Buy and Sell a Home at the Same Time
Episode 5: 2019 Housing Market Outlook
Episode 6: Should I Remodel My Home Before Selling?