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The words, in plain English

Nobody is born knowing what earnest money is. Real estate has its own vocabulary, and most of it goes unexplained until you're already in the middle of it.

These are the terms you're most likely to run into during a transaction, defined the way we'd explain them at a kitchen table — not the way a contract reads.

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Showing 31 of 31 terms

Adjustable-Rate Mortgage (ARM): A loan with an interest rate that stays fixed for an initial period — often 5 or 7 years — then adjusts on a schedule. Usually starts lower than a fixed rate, and carries the risk of rising later.
Amortization: The schedule of how each payment splits between interest and principal over the life of a loan. Early payments are mostly interest; later ones are mostly principal.
Appraisal: An independent professional opinion of a property's market value, ordered by your lender. If it comes in below the sale price, you'll need to cover the gap or renegotiate.
Assessed Value: The value your county assigns for property tax purposes. It's often different from — and sometimes well below — what the home would sell for.

Closing: The meeting where ownership transfers, funds move, and documents get signed. In both North and South Carolina, an attorney handles this.
Closing Costs: Fees due at closing beyond the down payment — lender charges, title and attorney fees, recording taxes, and escrow funding. Typically 2–5% of the purchase price for buyers.
Closing Disclosure: The final itemized statement of your loan terms and costs, which you must receive at least three business days before closing. Compare it line by line against your Loan Estimate.
CMA (Comparative Market Analysis): An agent's report valuing a home by comparing it against similar properties that recently sold nearby. Less formal than an appraisal, but far more specific to your immediate market.
Contingency: A condition in an offer that must be satisfied for the sale to proceed — inspection, financing, and appraisal being the most common. Contingencies are what protect your earnest money.
Conventional Loan: A mortgage not backed by a government program. Usually requires a higher credit score and down payment than FHA or VA loans, but often costs less overall.

Debt-to-Income Ratio (DTI): Your total monthly debt payments divided by your gross monthly income. Lenders use it to judge how much you can borrow — and it's a big reason pre-approval amounts vary between lenders.
Deed: The legal document that transfers ownership of a property from one party to another. It's recorded with the county to make the transfer a matter of public record.
Due Diligence: The period after going under contract when you investigate the property — inspections, title search, survey, and financing. What you find here shapes what you ask for.

Earnest Money: A deposit showing you're serious about the offer. It's held in escrow and applied to your costs at closing, or returned if you exit within a valid contingency.
Equity: The difference between what your home is worth and what you still owe on it. It grows as you pay down the loan and as the property appreciates.
Escrow: An account your lender uses to collect and hold money for property taxes and insurance, then pay those bills when due. Also used to describe the neutral third party holding funds during a transaction.

FHA Loan: A mortgage insured by the Federal Housing Administration. More forgiving on credit scores and down payments, but requires an upfront mortgage insurance premium and ongoing monthly insurance.
Fixed-Rate Mortgage: A loan whose interest rate never changes for the life of the loan. The payment is predictable, which makes budgeting straightforward — the trade-off is usually a slightly higher starting rate.

Home Inspection: A professional examination of the home's structure and systems. It's for your information, not the lender's, and it's usually the basis for any repair requests you make.
Homeowners Association (HOA): An organization that manages shared elements of a community and enforces its rules. Dues are mandatory, and the HOA can place a lien on your property for non-payment.

Lien: A legal claim against a property that must be resolved before clean ownership can transfer. Mortgages are liens — so are unpaid taxes and some contractor claims.
Loan Estimate: A three-page summary of the loan terms and estimated costs your lender must send within three business days of your application. It's designed to be compared across lenders.
Lock (Rate Lock): An agreement holding your interest rate for a set period, usually 30 to 60 days. If rates drop before closing, ask whether your lender offers a float-down.

PMI (Private Mortgage Insurance): Insurance protecting the lender — not you — when your down payment is under 20%. It's added to your monthly payment and can usually be removed once you reach 20% equity.
Prorated: Divided proportionally by date. Property taxes and HOA dues are typically prorated at closing, so each party pays only for the days they actually owned the home.

Recording: The act of filing a legal document with the county register of deeds so it becomes part of the public record. Recording fees appear on your closing statement.

Title: The legal right to own and use a property. A clear title means no outstanding claims, liens, or ownership disputes.
Title Insurance: Coverage protecting against defects in the title that weren't discovered during the search. Lenders require a policy for themselves; an owner's policy protects you and is worth asking about.

Under Contract: The point at which a seller has accepted an offer and both parties have signed. The sale isn't final — inspection, appraisal, and financing still have to clear.

VA Loan: A mortgage backed by the Department of Veterans Affairs, available to eligible service members, veterans, and some surviving spouses. Often requires no down payment, with a funding fee instead.

Walk-Through: A final visit shortly before closing to confirm the home is in the agreed condition and that any negotiated repairs were completed.

Still not sure what something means?

That's completely normal, and it's never a dumb question. If a term isn't here, or the definition didn't quite land, just ask. Understanding what you're signing is the whole point — nobody should be guessing their way through the largest purchase of their life.

This is an educational estimate — not a quote or an offer. Real numbers depend on your lender, taxes, insurance, and the specific property. Use this to understand your options, then let's talk through what fits your situation.

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