Homebuying Acronyms You Need to Know

Dated: April 21 2020

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Sometimes when it comes to buying a home, you feel like you are in the middle of alphabet soup!  There are multiple acronyms in the real estate industry that are beneficial to help communicate the matters at hand.  But what if you don’t know what the acronym means?  Don’t worry, we are here to help.

First of all, before I start my list, I would like to stress that it is completely acceptable, as well as good practice, to speak up and ask if you don’t understand what is being communicated to you.  Realtors are in the business to help you with your home buying or selling process.  It is our job to make a smooth transaction, as well as make sure you fully understand the terminology.

To give you a little head-start, below are some of the common real estate acronyms and their meaning.

APR – Annual Percentage Rate

Annual cost of borrowing money based on the loan amount, interest rate, and certain other fees.

ABR – Accredited Buyer Representative

A certificate of National Association of Realtors for buyer representation

CD – Closing Disclosure

This five-page document spells out all the terms of the loan: the amount, the interest rate, the monthly payment, mortgage insurance, the monthly escrow amount and all closing costs.  It is given to the buyer three days before closing.

CMA – Comparative Market Analysis

Comparative market analysis is the process of determining an investment property’s value by comparing it to other properties similar in size, amenities, etc. Comparative market analysis takes both the property itself into consideration, as well as the market in general. 

DTI – Debt-to-Income

Percentage of your monthly income that goes toward your monthly debt payments.

FHA – Federal Housing Administration

A government agency created by the National Housing Act of 1934 that insures loans made by private lenders.

FRM – Fixed-Rate Mortgage

Interest rate that does not change during the entire term of your loan.

FSBO – For Sale by Owner

Properties that are not listed on the MLS.

HOA – Homeowners Association

The governing body of a housing development, condo or townhome complex that sets rules and regulations and charges dues and special assessments used to maintain common areas and cover unexpected expenses respectively.

LTV – Loan-to-Value Ratio

The amount of the loan divided by the price of the house. Lenders reward lower LTV ratios.

MLS – Multiple Listing Service

A database where real estate agents list properties for sale.

PMI – Private Mortgage Insurance

Insurance that protects lenders from losses if a homeowner is unable to pay their mortgage.  It is required for homebuyers who make down payments less than 20% of the home purchase price.

P & I – Principal and Interest

Principal and interest are the portions of your monthly mortgage payment that go toward paying off the money you borrowed to buy your home.

If you ever have questions about the lingo of the real estate industry, I would be happy to help!  Give me a call at 928-458-9815 or dbaum1956@gmail.com.


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