The real estate dictionary.

A

Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that changes periodically.

Agent (Real Estate): A licensed professional who represents buyers or sellers in real estate transactions.

Amortization: The process of paying off a loan over time through regular payments.

Appraisal: A professional’s estimate of a property’s market value.

Appraisal Gap: When a home appraises for less than the offer price. Buyers may cover the difference in cash, renegotiate, or walk away, depending on contract contingencies.

APR (Annual Percentage Rate): The total yearly cost of a loan — interest rate plus lender fees — expressed as a percentage. Compare APRs, not just rates, when shopping lenders.

Assessed Value: The value placed on a property by a public tax assessor for taxation purposes.

B

Bridge Loan: A short-term loan used to bridge the gap between buying a new home and selling an existing one.

Broker: A licensed real estate professional who has passed additional training and licensing requirements beyond those of an agent.

Buyer Representation Agreement: A written contract between a buyer and their agent defining services and compensation. Under 2024 industry rules, it’s required before touring homes.

Buyer’s Agent: A real estate agent who represents the buyer in a transaction.

C

CDD (Community Development District): A special taxing district common in Florida’s newer master-planned communities that funds infrastructure and amenities. CDD fees appear on your property tax bill in addition to any HOA dues.

Closing: The final step in a real estate transaction where ownership is transferred.

Closing Costs: Fees and expenses paid by the buyer and seller to finalize a real estate transaction.

Closing Disclosure (CD): The final statement of your loan terms and closing costs. Lenders must provide it at least three business days before closing — review it carefully.

Comparative Market Analysis (CMA): An estimate of a property’s value based on recent sales of similar properties in the area.

Contingency: A condition that must be met before a real estate contract is binding.

Contract: A legally binding agreement between two or more parties.

Conventional Loan: A mortgage loan not insured or guaranteed by a government agency.

D

Deed: A legal document that transfers ownership of real property.

Down Payment: The portion of the purchase price paid upfront by the buyer.

DTI (Debt-to-Income Ratio): Your monthly debt payments divided by your gross monthly income. Lenders use this number to decide how much you can borrow.

Due Diligence: The process of investigating and verifying information about a property before purchasing it.

E

Earnest Money: A deposit made by a buyer to show their serious intent to purchase a property.

Equity: The difference between a property’s market value and the amount owed on the mortgage.

Escrow: A neutral third party that holds funds and documents related to a real estate transaction.

F

FHA Loan: A government-backed mortgage with down payments as low as 3.5% and flexible credit requirements — popular with first-time buyers.

Fixed-Rate Mortgage: A mortgage with an interest rate that remains constant throughout the loan term.

Flood Zone / Flood Insurance: FEMA-mapped areas that define a property’s flood risk. In much of coastal Florida, flood insurance is required or strongly recommended — and priced by zone.

Foreclosure: The legal process by which a lender repossesses a property due to the borrower’s failure to make mortgage payments.1

Four-Point Inspection: A Florida insurance inspection covering the roof, electrical, plumbing, and HVAC. Insurers often require it on homes 20 or more years old.

FSBO (For Sale By Owner): A property being sold directly by the owner without the assistance of a real estate agent.

H

Home Inspection: A professional examination of a property’s condition.

Homeowners Association (HOA): An organization that governs a community and enforces rules and regulations.

Homestead Exemption: Florida’s property tax break for primary residences — up to $50,000 off assessed value, plus the Save Our Homes cap that limits annual assessment increases to 3%.

I

Interest Rate: The percentage charged by a lender for borrowing money.

L

Lien: A legal claim against a property as security for a debt.

Listing: A property that is for sale, typically marketed by a real estate agent.

Loan-to-Value Ratio (LTV): The ratio of a loan amount to the appraised value of a property.

M

Market Value: The estimated price a willing buyer would pay and a willing seller would accept for a property.

MLS (Multiple Listing Service): The shared database where agents list homes for sale. Zillow, Realtor.com, and Homes.com pull most of their listings from it.

Mortgage: A loan used to finance the purchase of real estate.

O

Offer: A proposal to purchase a property, including the proposed purchase price and terms.

Open House: A scheduled time when a property is available for potential buyers to view.

P

PMI (Private Mortgage Insurance): Insurance that protects the lender, typically required on conventional loans with less than 20% down. It can usually be removed once you reach 20% equity.

Pre-Approval: A lender’s preliminary approval for a mortgage loan, based on the borrower’s financial information.

Pre-Qualification: An estimate of how much a borrower might be able to borrow, based on self-reported financial information.

Principal: The original amount of a loan, separate from interest.

Property Tax: Taxes levied on real estate by local governments.

Purchase Agreement: A legally binding contract between a buyer and seller that outlines the terms of a real estate transaction.

R

Real Estate Owned (REO): Property owned by a lender due to foreclosure.

Realtor: A real estate agent who is a member of the National Association of Realtors.

S

Seller Concessions: Costs the seller agrees to pay on the buyer’s behalf — closing costs, rate buydowns, or repairs — negotiated as part of the contract.

Seller’s Agent: A real estate agent who represents the seller in a transaction.

Settlement: Another term for closing.

Short Sale: The sale of a property for less than the outstanding mortgage balance, with the lender’s approval.

T

Title: Legal ownership of a property.

Title Insurance: Insurance that protects against defects in a property’s title.

U

Underwriting: The process by which a lender assesses the risk of lending money to a borrower.

V

VA Loan: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs.

W

Wind Mitigation Inspection: A Florida inspection that documents wind-resistant features like roof shape, straps, and shutters — and can earn significant homeowners insurance discounts.

Z

Zero Lot Line: A type of property development in which the dwelling unit comes up to or very near the property line.

Zoning: Local regulations that determine how land can be used.