Real Estate Lingo – What does it all mean?

Real Estate is a jargon-heavy industry, which can aid in those new to the market feeling left out, uninformed, and just straight up lost. To help you navigate this vocabulary, we’ve compiled a list of terminologies.


Active Under Contract: Typically means the seller has accepted an offer, but the buyer has yet to fulfill all contingencies, therefore the seller remains open to other offers. 

Addendum: When a buyer or seller wants to change a specific part of an existing contract.

Adjustable-Rate Mortgage (ARM): Opposite of a fixed-rate mortgage, in which the interest on the loan changes from month-to-month depending on the market. 

Amortization: A fancy word for the process of paying off your loan.  A loan’s amortization rate is the length of time it takes to pay off the loan, typically 30 years for a mortgage.

Annual Percentage Rate (APR): The total amount of interest owed on a loan each year.

Appraisal: Conducted by a third party to ensure the property is accurately valued.

Appreciation: How much the value of a piece of property increases over time. 

As-Is: This means that the buyer is responsible for accepting the sale in its current state. The buyer can assess the property before buying and negotiate, however anything discovered post-purchase is not the responsibility of the seller.

Bridge Loan: Short-term loans with high interest, providing immediate cash flow in rare instances. For example, when a homeowner needs funds for a new down payment while they wait for their current home to sell. 

Broker: Real estate professionals who are licensed and educated in property management law.  These individuals manage teams of real estate agents. 

Buydown: A selling tactic that offers to pay part of the potential buyer’s mortgage, lowering mortgage payments & helping the buyer qualify for a loan, typically in exchange for a raise in the price of the property. 

Clear Title: No liens from lenders against the current owner, making current ownership undisputed.

Closing: The exciting part! This is the last step in a real estate transaction, an agreed-upon date that the property officially transfers ownership. 

Commission: A percentage of the total home cost, typically around 6%, split equally between the buyer’s and seller’s real estate agents. 

Contingency: If this (these) are not met as laid out in the agreement, the other party can cancel the contract.  

Days on the Market (DOM): This measures the length of time that a property has been listed for sale. These statistics are used to measure whether the market is, on average, better for sellers (low DOM) or for buyers (high DOM). 

Debt-to-Income (DTI): A ratio that compares a person’s gross monthly income to their total monthly payments, used to determine loan qualification. 

Deed: A legal, written document detailing ownership that is transferred from seller to buyer on the closing date. 

Due Diligence: Terminology seen in many legal agreements in real estate, referring to the reasonable steps you would expect a person to take when considering buying or selling a property.  

Earnest Money Deposit: Usually 1-2% of the home’s total purchase price that the homebuyer pays as a deposit at the time they enter into a contract with a seller. 

Escrow: Part of the home-buying process in which a third party holds something of value (most often the buyer’s earnest money check), to be released to the seller at the completion of the transaction. 

Equity: The percentage of a home that a buyer actually owns. Until a mortgage is paid off in full, the lending institution has a stake in the property. 

Fixed-Rate Mortgage: Opposite of an adjustable-rate mortgage. Most commonly used loan, ensuring the interest rate stays the same for the duration of the loan.

Home Inspection: Carried out by a qualified third-party, this determines the state of the property and identifies any major defects with the structure, safety, heating & cooling systems, etc. 

Homeowner’s Association (HOA): A community that requires participation in the form of yearly or monthly dues. HOAs take care of general maintenance and governance of areas of properties. 

Lien: A legal notice of action from a lender to the borrower for unpaid property debts. 

Loan Officer: Those who assist the homebuyer with purchasing or refinancing a home, as well as choosing the right type of loan, filling out the loan application, and communication with appraisers. 

Multiple Listing Service (MLS): A database of local & regional properties for sale, a paid service that can only be utilized by registered real estate agents. 

Per Diem: “Per day” fees that are charged if a loan isn’t approved in due time. 

PITI: Stands for principle, interest, taxes and insurance, and refers to the sum of each of these charges, quoted on a monthly basis. 

Pre-approval: A necessary step prior to submitting an offer, oftentimes before even engaging with a real estate agent. This means a lender has checked your credit, verified your information, and approved you for up to a specific loan amount. 

Rate Lock: This allows borrowers to lock in an interest rate loan before the transaction closes. 

Refinance: This replaces an existing loan with a new one, not eliminating debt,  but offering better terms, typically a lower interest rate or lower monthly mortgage payments. 

Title: The rights to the property, transferred on the closing date from seller to buyer. 


Your real estate agent is not only there to help you find the best deals, but also to help you understand and navigate the entire process of buying and/or selling your property. With 30+ years of experience in this industry, Key to the Rockies Real Estate is more than qualified to assist in these endeavors.

Reach out today if you are considering a change in your real estate position.

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