Thinking about buying your first home in Harnett, Johnston or Wake County? You’re bound to run into real estate terms that sound like a different language.
As real estate agents, we see it all the time when we use terms like “PMI,” “escrow,” or “rate lock”. We know “that look”! It’s that “puppy dog” look.
Take heart. We’ve created a glossary of what we really mean and how these terms affect your purchase.
This guide breaks down the most confusing real estate terms, in plain English, so you can feel confident every step of the way.
Escrow
A neutral third-party holds and distributes funds or documents until all purchase conditions are met, preventing either side from accessing resources prematurely.
PMI (Private Mortgage Insurance)
Extra insurance you pay when your down payment is under 20%. It protects the lender if you default—not you—and can be removed once you’ve built enough equity.
Amortization
The breakdown of your monthly mortgage payment over time—early on, most goes to interest; later, more reduces your loan balance.
Underwriting
The lender’s behind-the-scenes review of your finances, credit, and the home’s appraisal to determine loan approval and terms.
Contingency
A condition in the contract (like passing inspection or getting financing) that must be met before the sale can be finalized.
Earnest Money
A good-faith deposit—typically 1–3% of the purchase price—held in escrow. If the deal collapses under contingency terms, you usually get it back.
Appraisal Gap
When the appraisal comes in below your offer. You’ll either need to pay the difference, renegotiate, or rely on a contingency to exit without losing deposits.
Title Insurance
A one-time policy that protects you (and the lender) in case someone else claims ownership or hidden liens arise after closing.
Points / Discount Points
You can pay an upfront fee (usually 1% of the loan) at closing to permanently reduce your interest rate—each point often lowers it by 0.125–0.25%
Rate Lock
An agreement with your lender that guarantees your interest rate for a set period—protecting you during closing in case market rates rise.
But There’s More…
Still running into head-scratching real estate lingo? Explore our full glossary of real estate terms for deeper definitions, examples, and tips: