Common terms, acronyms, and buzzwords used in the Real Estate industry that will help you understand detailed Real Estate conversations as you move towards your real estate goals.

Mortgage Pre-Qualification – A conversation (usually over the phone) with a mortgage lender to establish the next steps towards a mortgage Pre-Approval. Usually involves a credit check, verbal account of income, employment and assets.

Mortgage Pre-Approval – The result of the borrower’s delivery of detailed documentation that support the claims of: Income, Employment and Assets as Credit was established during the Pre-Qualification phase.

Down Payment Requirements – Down payments vary per the purchasers resources and preferred financing methods. Some loan programs do not require a down payment at all. Always speak with a local mortgage lender to determine which route is best suited for your unique financing and personal budget.

DTI – (Debt to Income) How mortgage lenders calculate/determine the amount or price range that a specific borrower will be approved for. This is a precise calculation that varies across different types of mortgage loan products and lending programs.

Closing Costs – In addition to the down payment (if any and based on the approved loan program) closing costs could include but are not limited to: attorney fees, title search, title insurance, closing fees, prorated property taxes, lender costs and some upfront housing expenses such as homeowners insurance. Some of those costs are nonnegotiable, such as recording or transfer taxes charged by the state and/or city. Others, such as your lender’s fee, can be negotiated. You may also be able to negotiate with the home seller or your lender to cover SOME or ALL of your closing costs.

FHA Home Loans – Primarily used for 1st time home purchases an FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate income borrowers, FHA loans require lower minimum down payments and credit scores than many conventional loans which makes them in some cases easier to attain than other loan products or programs. Consult a local mortgage lender to determine if the terms of this loan option is best for you.

FHA 203k Home Loans – Home Rehabilitation Loans that assist with acquisition and repair/rehab of a home that wouldn’t typically meet the FHA appraisal standard for safety and/or condition. Consult a local mortgage lender to determine if the terms of this loan option is best for you.

Appraisal – In short, an appraiser (in a purchase/resale transaction) exist to establish that the contract purchase price is of accurate market value and provides adequate security for the bank/lender that is funding the purchase. It is not intended to show value above and beyond the purchase price as there no need to do so. “Is it worth what the borrower is paying?” is what’s being determined by traditional purchase and resale appraisals.

FHA Appraisals – Not to be confused with “Home Inspections” the FHA Appraisal process is a bit different from a tradition appraisal as it not only determines “market value” of the home being purchased…it also includes a “safety” component that must be met before the loan will be funded. FHA Appraiser’s pull double duty to establish both safety and value for 1st time home buyers.

MSHDA Home Loans – Michigan State Housing Development Authority primarily works in conjunction FHA to deliver home purchase solutions to qualified borrowers in the State of Michigan that meet the standard requirements. Meeting those requirements could provide: Down Payment Assistance, funds towards closing costs or both. Consult a local MSHDA certified mortgage lender to determine if the terms of this loan option is best for you. *MSHDA Down Payment and Closing Cost Assistance requires completion of a certified Home Buyer Course (See Lender for details).

USDA Home Loans – Also known as “Rural Development Home Loans”. A USDA home loan is a zero down payment mortgage in “RD” eligible rural and suburban locations for local homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture. Consult a local mortgage lender to determine if the terms of this loan option is best for you.

VA Home Loans – The Department of Veteran Affairs helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of that mission to serve, they provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms which might include no down payment, more favorable interest rates and no mortgage insurance. Percentage of disability might even provide favorable reductions are total elimination of property taxes. Potential Military/VA borrower’s should certainly consult a local mortgage lender to determine if the terms and benefits of this loan option is best for you.

Conventional Home Loans – Are not typically backed by any government agency and could provide some financing flexibility for qualified borrowers. Since fully “qualified” conventional mortgage borrowers are considered to be credit strong it’s important to understand the additional mortgage options could be a better financial fit for their personal/unique Real Estate goals and monthly budget goals. Consult a local mortgage lender to determine if the terms of this loan option is best for you in comparison to other options that might be a better fit for your circumstances.

Pre-paids – Prorated up-front charges usually included as a portion of the total closing costs. Ex. Taxes, insurance, closing fees etc.

Escrows accounts – Some home loans require (and some purchasers request) that taxes and insurance are included in the payment. This is done via an escrow account. The initial funding of these accounts is a “pre-paid” closing cost collected at the time of closing. As the borrower makes future payments portions are sent to the escrow to automatically to cover the payment of future taxes and the renewal of insurance on the borrowers behalf.

MI – Mortgage Insurance.

PMI – Private Mortgage Insurance

PI – Principal and Interest payment

PITI – Principal, Interest, Taxes and Insurance Payments

PITI + MI – Principal, Interest, Taxes and Insurance + Mortgage Insurance Payments

PITI + PMI – Principal, Interest, Taxes and Insurance + Mortgage Insurance Payments

Property Taxes – Property Taxable Value x Millage Rate = Total Property Taxes

HOI – Home Owners Insurance

EMD – Earnest Money Deposit (Good Faith Money) Comes from the purchaser and is usually due within 48hrs of an accepted offer. Amounts vary but it’s become common to see $500-1000 on most purchase agreements. These amounts are a credit to the purchaser at the time of closing.

Contingency – A term/condition of the contact that must be met prior to closing.

PA – Purchase Agreement

Addendums – Document legally attached to the Purchase Agreement that changes the terms, conditions or timing in some way that both parties agree to.

Seller’s Disclosure – Home owner’s best account as to the condition of a property.

Lead-Based Paint Disclosure – Home owner’s best account as to the presence of Lead-Based Paint in homes built prior to 1979.

Home Inspections – Usually paid for by the purchaser within 10 days of an accepted offer. Inspections are detailed close examinations of the property by a licensed contractor.

Closing – Performed on a specific day and time the closing/signing is the event and instruments required for legal transfer of ownership to the next purchaser.

Recording – Official notice to Registrar of Deeds of the legal change of ownership.

Possession at Close – Receiving access and all keys at the time closing.

Possession Period – Receiving access and keys on previously agreed upon day and time after the closing.

Showing – Being accompanied by a Realtor to privately tour a home that is listed For Sale either privately (For Sale By Owner) or publicly by a Realtor.

Open House – A home “For Sale” that is held open for public view on a specified day and time.

Real Estate Search Portals – Automated delivery of homes “For Sale” that meet general or very specific search criteria. The most accurate Real Estate Search Portals are provided directly from Realtors and Real Estate Brokers.

Buyer Agency Agreement – A contractual agreement between Realtors and purchasers to work together exclusively.

State of MI Agency Disclosure (not a contract) – Simple breakdown of the different types of agency possibilities that are recognized in the State of MI.

Breach of contract – When a party in a contract fails to deliver on a contractual term or condition they may be at risk of a “breach”.

Title Commitment – A title companies promise to issue a title insurance policy on a property after the closing.

Title Insurance – Title Insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property.

Types of ownership – There’s more than one way to take ownership of property. Consult with Realtors and title companies to make sure you’re taking the proper form of ownership.

Buyer’s Agent – A Realtor that has been contracted to exclusively represent a purchaser for some period of time or in a specific transaction.

Listing/Seller’s Agent – A Realtor that has been contracted to exclusively represent a homeowner in the sale of Real property for some period of time.

Dual Agent – A Realtor that has been contracted to represent BOTH purchaser and owner/seller for some period of time or in a specific transaction.

Good Faith Estimate – A GFE, also referred to as a good faith estimate, is a document that includes the breakdown of approximate payments due upon the closing of a mortgage loan. A GFE helps borrowers shop and compare costs of loans with lenders.

TRID – Or, TILA-RESPA Intergrated Disclosure (TILA = Truth in Lending Act) (RESPA = Real Estate Settlement Procedures Act) combined to produce the “Know Before You Owe” mortgage act, a 3 day period to review mortgage terms, costs and payment information prior to closing.

Closing Disclosure/ CD – A Closing Disclosure is a five-page form that provides final details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (closing costs).

DOM – Days on the market

MLS – (Multiple Listing Service) is where ALL Real Estate and property listed by Realtors and Brokers is posted. Consumers can only access the MLS via an invitation from a licensee member of the local Real Estate Board.