First-Time Home Buyer Glossary

Buying a home introduces new terms that shape financing, contracts, and timelines. A clear understanding of terms like pre-approval, appraisal, and closing costs helps a buyer make informed decisions, communicate effectively with a Realtor®, and avoid delays during the transaction.

Representation & Agency Terms

Agency
The relationship in which a Real Estate Agent represents a client in a transaction.

Agent
A licensed professional authorized to act in a client’s best interest during a real estate transaction.

Buyer’s Agent (Buyer Broker)
A Real Estate Agent who represents the buyer and is responsible for protecting the buyer’s interests.

Buyer Broker Agreement
A written agreement outlining the services provided by the Buyer’s Agent and the responsibilities of the buyer.

REALTOR®
A licensed Real Estate Agent who is a member of the National Association of REALTORS® and follows a strict code of ethics.

Fiduciary & Legal Responsibilities

Fiduciary Duties
Legal obligations that include loyalty, confidentiality, full disclosure, and reasonable care.

Confidentiality
The requirement that an Agent protects private client information.

Full Disclosure
The requirement that all known material facts about a property or transaction are shared with the client.

Fair Housing Laws
Federal, state, and local laws that prohibit discrimination in housing based on protected characteristics.

Financing & Mortgage Terms

Mortgage
A loan used to purchase real estate, secured by the property.

Adjustable-Rate Mortgage (ARM)
A mortgage with an interest rate that adjusts periodically based on a specific index.

Loan-to-Value (LTV)
The ratio of the loan amount compared to the property’s appraised value.

Mortgage Insurance
Insurance that protects the lender if a borrower defaults.

Private Mortgage Insurance (PMI)
A type of mortgage insurance required when a buyer puts down less than 20%.

Points
Fees paid to a lender at closing to reduce the interest rate.

Lock-in
An agreement that guarantees a specific interest rate for a set period.

Loan Process Terms

Pre-Qualification
An initial estimate of how much a buyer may be able to borrow.

Pre-Approval
A lender’s written commitment after verifying income, credit, and financial details.

Underwriting
The process where a lender evaluates the risk of approving a loan.

Good-Faith Estimate
An estimate provided by a lender outlining expected loan and closing costs.

Offer & Transaction Terms

Purchase & Sale Contract
A legally binding agreement outlining the terms of the home purchase.

Earnest Money Deposit
A deposit submitted with an offer to demonstrate commitment to the purchase.

Escrow
Funds or documents held by a third party until transaction conditions are met.

Commission
The fee paid to a Broker or Agent for services in a real estate transaction.

Technology & Systems

Multiple Listing Service (MLS)
A database of properties listed for sale by real estate professionals.

DotLoop
A digital platform used to manage, sign, and share transaction documents.

DepositLink
A secure system used to transfer earnest money electronically.

Property Evaluation & Condition

Appraisal
A professional assessment of a property’s value used by lenders.

Home Inspection
An evaluation of the property’s structure and systems.

Seller Property Information Report (SPIR)
A disclosure completed by the seller about the condition of the property.

Home Warranty
A service contract covering certain systems and appliances for a limited time.

Ownership, Value & Title

Equity
The owner’s financial interest in a property.

Deed
The legal document that transfers ownership of a property.

Title Search
A review of public records to confirm ownership and identify liens.

Comparative Market Analysis (CMA)
An analysis of similar properties used to estimate market value.

Closing & Costs

Closing
The final step where documents are signed and ownership is transferred.

Closing Costs
Fees associated with completing the purchase, including taxes, insurance, and lender charges.

Settlement Statement
A document detailing all financial aspects of the transaction.

Taxes and Other Local Fees
Costs that may include prorated property taxes and transfer taxes.

Additional Terms

For Sale By Owner (FSBO)
A property being sold without representation by a real estate professional.