Here's a guide to some of the common terms you may encounter when buying or selling a home:
BD - bedroom
BA - bathroom
DR - dining room
FP - fireplace
HB - half bath
LR - living room
W/D - washer dryer
Active - a property that is on the market and available for sale. It may have received offers but none have been accepted.
ARM - adjustable rate mortgage. A mortgage loan with a fluctuating interest rate.
Appraisal - an estimate of the market value of a property based on comparable recent sales of homes nearby. It is done by a licensed appraiser, usually for a lender.
Arms-length transaction - both parties to a transaction are acting in their own self-interest. Neither party is pressured by ar acts in connection with the other to assure the fair market value of the property.
Assessed Value - an estimate of the home's value for property tax purposes
Closing costs - the expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal fees and lender fees.
Closing Disclosure - a final statement of loan terms and closing costs. The buyer must receive it three business days before closing and recording of the sale. Replaced the HUD-1 form.
Commission - a fee charged by a real estate brokerage for its services. In most cases, the seller pays the commission to his broker/agent as well as the buyer's broker/agent.
Contingency - a condition that must be met before a sale can close. Common contingencies include inspections, financing, and appraisal.
DTI - debt-to-income ratio. The total percent of a borrower's income that is paid toward debt each month calculated as a ratio of a borrower;s gross monthly income over his debts including such items as car payments, student loans, and credit card bills. A borrower's DTI affects their credit rating.
Deed - a legal document filed with the county that records home ownership.
Down payment - the amount of money a buyer pays in addition to the loan amount at closing toward a home purchase.
Earnest money deposit - a partial payment by a buyer when submitting a purchase offer that demonstrates the buyer's commitment to the transaction. The money, which is held in an escrow account, is applied toward the total down payment and closing costs.
Equity - the amount remaining after subtracting the amount of a mortgage loan from the sales price of the home.
Escalation clause - a tool used by buyers to outbid competitors for a property. In the purchase offer submitted by the buyer to the seller, the buyer states that they will increase their offer by a certain amount of the seller receives offers higher than theirs. There is generally a cap on the increase.
Escrow - a neutral third party who handles the exchange of money and documents on behalf of two other parties before the closing of a sale.
Fixed-rate mortgage - a mortgage loan with an interest rate that won't change during the length of the loan.
FSBO - For Sale By Owner. The owner of the property is selling without representation of a real estate agent/broker.
LTV - Loan-to value. The ratio of the amount of money borrowed over the appraised value of the home.
MLS - Multiple Listing Service. A local or regional real estate service that compiles available properties for sale submitted by real estate brokers and agents. An MLS can only be accessed by real estate brokers and agents.
Pending - An offer has been accepted and all contingencies have been removed.
Points - a one-time fee paid to a lender equal to one percent of the loan amount to reduce the interest rate.
Preapproved - a buyer completes a mortgage application, pays a fee and supplies the necessary documentation to the lender who performs an extensive financial background check. The lender will issue a conditional commitment in writing for an exact loan amount. Preapproval does not guarantee a loan.
Prequalified - an informal estimate of how much a buyer can afford to borrow for a mortgage. It does not include an analysis of a buyer's credit report or an in-depth look at his ability to purchase a home.
PITI - Principal, Interest, Taxes, and Insurance. The major homeownership costs included in many monthly mortgage payments.
PMI - Private Mortgage Insurance. Insurance that protects a lender against loss if a borrower defaults on a loan. PMI is required for conventional loans that have less than a 20 percent downpayment.
Rate lock - an agreement between a borrower and a lender that allows the borrower to lock in an interest rate on a mortgage for a specified period of time.
SFR - Single Family Residence
Title insurance - compensates the buyer or lender if title defects, liens, or competing claims of ownership on a property arise after close of escrow.
Under contract - a seller has accepted the buyer's offer but any contingencies have yet to be met.