Buying a home comes with a lot of new language. Some terms show up before you ever tour a home; others appear in an offer, a lender email, or the closing paperwork. This glossary explains the words buyers are most likely to encounter in plain English, organized in the order they tend to matter.
Use it as a starting point, not a substitute for advice on your own contract, loan, title work, or taxes. When a term applies to your purchase, your agent, lender, title professional, or attorney can explain how it works in your specific situation.
Before you tour: financing and representation
Preapproval
A lender's preliminary review of your financial information to estimate the loan amount and terms you may qualify for. It is not a final loan approval — see our guide on preapproval vs. prequalification for the difference.
Prequalification
An early estimate of borrowing potential, often based on information you provide to a lender. The exact review process varies by lender.
Buyer's agent
A real estate professional who represents a buyer under the terms of their agreement. Ask about the scope of representation, compensation, and any paperwork before you begin.
Loan estimate
A standardized estimate from a lender that outlines proposed loan terms and projected costs.
When you make an offer
Offer
A buyer's written proposal to purchase a property. Price is one part of an offer; timing, contingencies, and financing can matter too.
Earnest money
A deposit that may accompany an offer to show good-faith intent. Where it is held and what happens to it depend on the agreement.
Contingency
A condition in a purchase agreement that must be met, waived, or otherwise addressed under the contract's terms.
Purchase agreement
The contract that sets out the agreed terms of the sale.
Seller concession
A negotiated contribution from the seller toward eligible buyer costs, subject to lender and contract limits.
Under contract
A status commonly used after a seller accepts an offer, while the transaction continues toward closing.
Due diligence and value
Home inspection
An examination of a home's visible condition by a qualified inspector. It is different from an appraisal.
Appraisal
An opinion of value prepared by a qualified appraiser, commonly for a lender.
Appraisal gap
The difference between an agreed purchase price and an appraised value when the value is lower.
Final walkthrough
A last visit before closing to check the property's condition and agreed items. It is not a second inspection.
Mortgage and payment terms
Down payment
The cash a buyer puts toward the purchase price at closing, separate from closing costs. Minimum amounts vary by loan program — see our guide on how much house you can afford for how this fits into your budget.
Private mortgage insurance (PMI)
Insurance that may be required on certain conventional loans, depending on your down payment and current lender requirements.
Interest rate
The percentage charged for borrowing money. Fees, loan type, term, and APR can also matter.
Rate lock
An agreement with a lender to hold a stated interest rate and terms for a defined period.
Debt-to-income ratio (DTI)
A lender calculation that compares certain monthly debt obligations with income; ask your lender how it's calculated for your file.
Loan-to-value ratio (LTV)
A comparison of the loan amount to a property value used in lending decisions; ask your lender how it applies to your loan program.
Title and closing terms
Title
The legal rights connected to property ownership.
Title insurance
An insurance policy designed to protect against certain covered title issues.
Deed
A legal document used to transfer an ownership interest in real property; a title professional handles the specifics of Ohio's process.
Escrow
A neutral arrangement for holding money, documents, or instructions until agreed conditions are met.
Closing costs
Costs paid to complete a transaction beyond the purchase price. Review your disclosures for the actual items and amounts.
Closing disclosure
A form that presents final loan terms and closing costs for certain mortgage transactions, provided before closing under current timing rules.
Recording
The process of placing certain real-estate documents into public records, handled through the county's process at closing.
Closing
The stage when the transaction's required documents, funds, and conditions are completed and ownership is transferred.
Terms worth asking about in your own transaction
No glossary can tell you what a clause, cost, or deadline means for your purchase. A clear question is always useful: "How does this apply to my offer, loan, or closing?" If you'd like to talk through any of these terms as they apply to your search, contact HappyNest.
HappyNest Homes provides general real-estate education. For legal, tax, lending, title, insurance, or contract questions, consult the appropriate qualified professional for your transaction.
