Key terms every buyer should know.
Appraisal: Professional estimate of a property's market value, required by lenders.
Assessed Value: Value assigned by the county for property tax purposes.
Buyer's Agent: Real estate agent representing the buyer's interests.
Closing: The final step where ownership transfers and funds are exchanged.
Closing Costs: Fees paid at closing beyond the purchase price (typically 2-3% of loan).
Comparable Sales (Comps): Recently sold similar properties used to estimate value.
Contingency: A condition that must be met for the sale to proceed.
Conventional Loan: Mortgage not backed by a government agency.
Counter Offer: Seller's response to a buyer's offer with different terms.
Days on Market (DOM): How long a property has been listed for sale.
Deed: Legal document transferring property ownership.
Down Payment: Cash paid upfront toward the purchase price.
Earnest Money Deposit (EMD): Good faith deposit showing buyer commitment (typically 3% in Bay Area).
Escrow: Neutral third party holding funds and documents during the transaction.
FHA Loan: Government-backed loan with lower down payment requirements.
Fixed-Rate Mortgage: Loan with an interest rate that stays the same.
HOA (Homeowners Association): Organization managing common areas and enforcing community rules.
Home Inspection: Professional examination of a property's condition.
Interest Rate: The cost of borrowing money, expressed as a percentage.
Jumbo Loan: Loan exceeding conforming limits (currently ~$1.15M in Bay Area).
Lien: Legal claim against a property for unpaid debts.
Listing Agent: Real estate agent representing the seller.
Loan Estimate: Document showing loan terms, projected payments, and closing costs.
Loan-to-Value (LTV): Loan amount divided by property value.
MLS (Multiple Listing Service): Database where agents share property listings.
Mortgage Insurance (PMI): Insurance required when down payment is less than 20%.
Offer: Formal proposal to purchase a property at a specific price and terms.
Pre-Approval: Lender's verified commitment to lend you a specific amount.
Principal: The loan amount borrowed, not including interest.
Property Taxes: Annual taxes based on assessed value, paid to the county.
Rate Lock: Agreement to hold an interest rate for a set period.
Rent-Back: Arrangement where seller stays in home after closing, paying rent.
Title: Legal ownership of a property.
Title Insurance: Protection against ownership disputes or claims on the property.
Transfer Tax: Tax paid when property ownership transfers (varies by city).
Underwriting: Lender's process of verifying your loan application.
VA Loan: Government-backed loan for veterans with no down payment required.
Walkthrough: Final inspection before closing to verify property condition.