What Does That Mean?

Have you ever met with a real estate agent or gone through the entire buying or selling process and heard terms or acronyms that you did not understand? We try to be as clear as possible in our communication throughout the buying and selling process. However, we may use some terms that we use all the time and don’t realize it may not be as clear as we think. Here is a list of common real estate terms and acronyms that you might hear:

“MLS” – Multiple Listing Service. Agents who belong to a real estate association have agreed to cooperate and upload all of their listings to this database.

“Contingency” – In a contract to purchase real estate, a contingency is something that must happen for the sale to continue. For example, a home inspection, financing, or well and septic tests.

“Feasibility” – This is a contingency in a contract that allows the prospective buyer to conduct due diligence on the property and verify its usability for the buyer’s intended use.

“CC&R” – Covenants, Conditions, and Restrictions are legally binding rules found in planned communities and subdivisions. They govern how homeowners may use and maintain their homes and properties and often coincide with homeowners associations.

“HOA” – Homeowners Association. A private organization that creates and enforces rules (CC&Rs) in a planned community, maintains common areas, and may collect dues and fees from residents for these purposes.

“PMI” – Private Mortgage Insurance is an insurance policy lenders require when a borrower makes a down payment of less than 20%. It protects the lender (not the borrower) against losses and increases the borrower’s monthly mortgage payment. With some loan types, PMI can be canceled once home equity reaches 20% of the home’s value.

“FHA Loan” – A mortgage insured by the Federal Housing Administration. This government-insured loan protects the lender from losses, allowing loans with lower down payments, lower credit score requirements, and lower closing costs. FHA loans require mortgage insurance.

“Seller Financing” – A property seller can act as the lender, providing a loan directly to the buyer instead of the buyer obtaining a traditional mortgage from a bank. This is typically done using a real estate contract or a note and deed of trust. Seller financing allows the seller to earn interest on the loaned funds and, in some cases, provides fewer barriers and lower costs for the buyer.

If you don’t understand something your agent says, ask them what they mean!