If this is your first time buying or selling (or even it it’s not) you are inevitably going to come up against a plethora of acronyms.  Whereas most agents strive for clarity when communicating with our clients, sometimes we can’t help but speak in what may seem like code. As my broker (also known as Yoda around the agency) says,  “I know how people just hate the way we “market talk”…i always hated that in corporate world and i still do it…”.  Yup, even Yoda can be drawn to the Dark Side when it comes to jargon.

So….with that in mind I’ve put together an ever-expanding list of acronyms and jargon that you will invariably come across when buying or selling your home.  I tried to keep it short, and stick to those acronyms that anyone will come across in any residential transaction.

Is there an acronym out there that is not on the list?  Do please let me know!

A–The listing is Active, as in no offers have been accepted.

Adjustable Rate Mortgage (ARM)–A loan whose interest rate is adjusted according to movements in the financial market. Although these were scarce after the downturn, they are again becoming commonplace.

Annual Percentage Rate (APR)–The annual cost off credit over the life of a loan, including interest, service charges, points, loan fees, mortgage insurance, and other items.

Appraisal–An evaluation to determine what a piece of property would sell for in the marketplace.

Appreciation–The increase in the value of a property.

Assessment–A tax levied on a property or a value placed on the worth of property by a taxing authority.

Balloon–A loan which has a series of monthly payments (often for 5 years or less) with the remaining balance due in a large lump sum payment at the end.

Certificate of Occupancy–A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations.

Closing–
meeting to sign documents which transfer property from a seller to a buyer. (Also called settlement)

Closing Costs–Charges paid at settlement for obtaining a mortgage loan and transferring real estate title.

CMA–A comparative market analysis. Basically, a list of properties and their stats (square footage, price, days on market, status) that help you to get a better idea of where your house stands in relation to others.

Condominium. A home in a multi-unit complex; each purchaser owns an individual unit, and all the purchasers jointly own the common areas, such as the surrounding land, hallways, etc.

Conventional Loan.
A mortgage loan not insured by a government agency (such as FHA or VA).

Credit Rating. A report ordered by a lender from a credit bureau to determine if the borrower is a good credit risk.

Default. A breach of a mortgage contract (such as not making monthly payments).

Density.
The number of homes built on a particular acre of land. Allowable densities are usually determined by local jurisdictions.

Down Payment
The difference between the sales price and the mortgage amount on a home. The downpayment is usually paid at closing.

Due-on-Sale–A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property. A mortgage with a due-on-sale clause is not assumable.

P –The listing is pending/under contract.

PB – The listing is pending, but the seller is accepting back-up offers.

PO — For some reason or another, the listing has been pending for over four months.

SS Appliances, SS App, or some other variant – Stainless steel appliances.

The LBP addendum — Lead Based Paint Addendum.  This basically describes the seller’s knowledge (or lack thereof) of the presence or absence of lead based paint in a home.  It also describes what (if anything) the buyer intends to verify the presence of lead based paint.  This document is required of any home that was build prior to 1978.

GFCI–Ground Fault Circuit Interrupter. Basically, these are electrical outlets that have their own circuit breaker, and are designed to prevent electrical accidents.  In newer construction, you are required to have these types of outlets anywhere where there is water (outside, the kitchen, the bathroom). Around Austin, a lot of older homes don’t have these–so they often show up on inspection reports.  Typically, the cost of an upgrade is $150-200 per outlet.  However, if you’re doing a bunch, sometimes the electrician will cut you a break.

MIL floorplan – a Mother-in-law floor plan.  Basically what this means is that a). the master bedroom is on the other side of the house/somewhat removed from the other bedrooms or b) there is a second master bedroom that is somewhat removed the other bedrooms. NOTE: Whereas it is completely acceptable to tell you agent that you are looking for an MIL floor plan, it is NOT acceptable to tell your agent that you are on the market for a MILF.

HVAC – the heating and air conditioning unit when you have central air.

HOA – The homeowner’s association (if there is one).

A 3/2, 2/1, or some other variant –this is the ratio of bedrooms to bathrooms.

Balloon–A loan which has a series of monthly payments (often for 5 years or less) with the remaining balance due in a large lump sum payment at the end.

Certificate of Occupancy–A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations.

Closing–A meeting to sign documents which transfer property from a seller to a buyer. (Also called settlement)

Closing Costs–Charges paid at settlement for obtaining a mortgage loan and transferring real estate title.

COA– Condo-owners association.

Condominium. A home in a multi-unit complex; each purchaser owns an individual unit, and all the purchasers jointly own the common areas, such as the surrounding land, hallways, etc.

Conventional Loan. A mortgage loan not insured by a government agency (such as FHA or VA).

Credit Rating. A report ordered by a lender from a credit bureau to determine if the borrower is a good credit risk.

Default. A breach of a mortgage contract (such as not making monthly payments).

Density. The number of homes built on a particular acre of land. Allowable densities are usually determined by local jurisdictions.

Down Payment. The difference between the sales price and the mortgage amount on a home. The downpayment is usually paid at closing.

Due-on-Sale. A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property. A mortgage with a due-on-sale clause is not assumable.

Earnest Money. A sum paid to the seller to show that a potential purchaser is serious about buying.

Easement. Right-of-way granted to a person or company authorizing access to the owner’s land; for example, a utility company may be grated an easement to install pipes or wires. An owner may voluntarily grant an easement, or in some cases, be compelled to grant one by a local jurisdiction.

Equity. The difference between the value of a home and what is owed on it.

Escrow. The handling of funds or documents by a third party on behalf of the buyer and/or seller.

Federal Housing Administration (FHA). A federal agency which insures mortgages that have lower downpayment requirements than conventional loans.

FHA loan–this is a loan that is backed by a Federal Housing Administration mortgage insurance, which is provided by a FHA-approved lender. This loan program has been instrumental in allowing lower and middle income individuals to purchase homes. There are many different types of these loans, such as the 203k–which is a rehab loan (i.e. an individual can take out money to buy the house, and then a bit more to fix it up).

Fixed Rate Mortgage–A mortgage whose interest rate remains constant over the life of the loan. The payments are not necessarily level. (See Graduated Payment Mortgage and Growing Equity Mortgage).

Hazard Insurance–Protection against damage caused by fire, windstorm, or other common hazards. Many lenders require borrowers to carry it in an amount at least equal to the mortgage.

HUD-1 Settlement Statement–an itemized list of the fees and services that are being charged to the buyer when a loan is taken out.  These forms also shows who’s paying for what in a real estate transaction (the fees paid by the seller and the buyer). The person handling the closing (typically the title company/escrow officer) usually sends these out a few days before the transaction/closing for your review.  They are required to send it out at least one day in advance. These documents can be confusing for first-time home buyers, so you should not hesitate to ask your agent about any of the charges that appear.

Housing Finance Agency. A state agency which offers a limited amount of below-market-rate home financing for low-and moderate-income households. Interest. The cost paid to a lender for the use of borrowed money.

Mortgage Broker. A broker who represents numerous lenders and helps consumers find affordable mortgages; the broker charges a fee only if the consumer fins a loan.

Mortgage Company (Mortgage Banker). A company that borrows money from a bank, lends it to consumers who want to buy homes, then sells the loans to investors.

Mortgagee. The lender who makes a mortgage loan.

Mortgage Loan. A contract in which the borrower’s property is pledged a s collateral and which can be repaid in installments over a long period. The mortgagor (buyer) promises to repay principal and interest, to keep the home insured, to pay all taxes, and to keep the property in good condition.

Mortgage Origination Fee. A charge by a lender for the work involved in preparing and servicing a mortgage application (usually 1 percent of the loan amount).

Note. A formal document showing the existence of a debt and stating the terms of repayment.

PITI. Principal, interest, taxes, and insurance (the 4 major components of monthly housing payments).

PMI–Private Mortgage Insurance.  This insurance guarantees  home mortgage loans that are not backed by the government (so it protects the lender against default). In most instances, the lender decides whether PMI will be required and how much you will need to pay, so as you shop around for loans you want to also compare the PMI that each loan product will require (and you should shop around). NOTE:  if you put less than 20% down, you are required by law to have a PMI. PMI charges can vary on account of numerous factors (the size of the down payment and amount of the loan, for example).  According to the Mortgage Bankers Association of America, the average is about about one-half of 1 percent of the loan.
Principal. The amount borrowed in a loan, excluding interest and other charges.

Property Survey. A survey to determine the boundaries of your property. The cost will depend on the complexity of the survey.

Recording Fee. A charge for recording the transfer of a property, paid to a city, county, or other appropriate branch of government.

Real Estate Settlement Procedures Act (RESPA). A federal law requiring lenders to provide home buyers with information about known or estimated settlement costs. The act also regulates other aspects of settlement procedures.

The SD –for some reason, I always tell my clients I’ll be sending them the SD, and they have no idea what I’m talking about. It’s the seller’s disclosure.  It is a document filled out by the seller in which the seller declares all known defects that the property has.

There are, literally, hundreds of acronyms and words you’ve never heard of before that are thrown around in the real estate world on a daily basis.  However, these are the ones that home buyers most frequently ask me about.  Got something to add to the list?  Please don’t hesitate to leave a comment.