Real Estate Terms, Explained

Money and financing

Principal: The amount borrowed or the unpaid loan balance, depending on the context. Interest is the charge for borrowing that money. A monthly housing budget should also account for expenses beyond principal and interest.

Annual percentage rate (APR): A measure that includes the interest rate and certain additional borrowing charges. Compare loans using consistent assumptions and review the underlying fees rather than choosing by APR alone.

Equity: The difference between a home’s value and outstanding mortgage debt. Estimated equity is not the same as cash available after a sale because selling expenses and other obligations can reduce proceeds.

Deposits, payments, and closing costs

Earnest money: A deposit made under the purchase agreement. The contract governs its timing, handling, and what happens if the transaction ends. Do not assume a deposit is refundable in every situation.

Escrow account: In mortgage servicing, an account used to collect and pay certain expenses such as property taxes and insurance. Those expenses can change, which may change the escrow portion of your payment.

Cash to close: The amount needed to complete settlement after accounting for the transaction’s charges, credits, and amounts already paid. Ask which estimate is current and what could still change.

Value, condition, and contract terms

Appraisal: An opinion of property value used in the lending process. It answers a different question from an inspection, which examines condition within the inspector’s agreed scope.

Contingency: A contract provision that makes specified rights or obligations depend on an event or condition. Financing and inspection provisions deserve careful review for deadlines and required notices.

Concession or credit: An agreed contribution toward specified costs or another negotiated benefit. Ask your lender and settlement professional how a proposed credit can be used in your transaction.

Ownership and the finish line

Title and deed: Title refers to ownership rights; a deed is a legal instrument used to transfer an interest in property. The settlement team investigates and documents the transfer as appropriate to the transaction.

Closing or settlement: The stage when the required transaction documents are signed and the purchase and financing are completed. Confirm the actual sequence with your closing professional.

Possession: The right to occupy the property at the time agreed in the contract. Never assume keys and access are available merely because a moving truck has been scheduled.

Ask the question before signing

When an unfamiliar term appears, ask what it means for your money, your deadline, and your choices if something changes. Your NSR agent can explain the transaction process and direct lender, legal, or title questions to the appropriate professional.