REAL ESTATE LINGO
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Real Estate Lingo
Purchase Agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a
property will be sold.
Earnest Money Deposit
A deposit made by the potential home buyer to show that they are serious about buying
property.
Exclusive Buyer Brokerage Agreement
An agreement to work exclusively with a licensed Realtor to assist buyer in locating and
negotiating the purchase or exchange of real property.
Pre-Approval
A loosely used term which is generally taken to mean that a borrower has completed a loan
application and provided debt, income, and savings documentation which an underwriter has
reviewed and approved. A pre-approval applies only to the borrower. Once a property is chosen,
it must also meet the underwriting guidelines of the lender.
Principal, Interest, Taxes, and Insurance (PITI)
The four components of a monthly mortgage payment on impounded loans. Principal refers to
the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is
the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid
into an escrow account each month for property taxes and mortgage and hazard insurance.
Closing Costs
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid
items." Non-recurring closing costs are any items which are paid just once as a result of buying
the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property
taxes and homeowners insurance. A lender makes an attempt to estimate the amount of
non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue
to the borrower within three days of receiving a home loan application.
Closing
This has different meanings in different states. In some states a real estate transaction is not
consider "closed" until the documents record at the local recorders office. In others, the
"closing" is a meeting where all of the documents are signed and money changes hands.
A written contract signed by the buyer and seller stating the terms and conditions under which a
property will be sold.
Earnest Money Deposit
A deposit made by the potential home buyer to show that they are serious about buying
property.
Exclusive Buyer Brokerage Agreement
An agreement to work exclusively with a licensed Realtor to assist buyer in locating and
negotiating the purchase or exchange of real property.
Pre-Approval
A loosely used term which is generally taken to mean that a borrower has completed a loan
application and provided debt, income, and savings documentation which an underwriter has
reviewed and approved. A pre-approval applies only to the borrower. Once a property is chosen,
it must also meet the underwriting guidelines of the lender.
Principal, Interest, Taxes, and Insurance (PITI)
The four components of a monthly mortgage payment on impounded loans. Principal refers to
the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is
the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid
into an escrow account each month for property taxes and mortgage and hazard insurance.
Closing Costs
Closing costs are separated into what are called "non-recurring closing costs" and "pre-paid
items." Non-recurring closing costs are any items which are paid just once as a result of buying
the property or obtaining a loan. "Pre-paids" are items which recur over time, such as property
taxes and homeowners insurance. A lender makes an attempt to estimate the amount of
non-recurring closing costs and prepaid items on the Good Faith Estimate which they must issue
to the borrower within three days of receiving a home loan application.
Closing
This has different meanings in different states. In some states a real estate transaction is not
consider "closed" until the documents record at the local recorders office. In others, the
"closing" is a meeting where all of the documents are signed and money changes hands.
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