Understanding Real Estate Terminology

Stepping into the world of real estate can feel like learning a new language. You might see terms like FSBO, DTI, or CMA and wonder what they all mean. This alphabet soup of real estate acronyms can be confusing, but understanding them is key to navigating your property journey with confidence. Whether you are buying your first home, selling a property, or just exploring the market, getting a handle on this terminology helps you make informed decisions and communicate effectively with agents, lenders, and lawyers. This guide will decode the most common acronyms, turning complex jargon into simple, everyday language so you can feel empowered in every real estate conversation.

Before starting my list, I would like to stress that it is entirely acceptable and good practice to speak up and ask if you don’t understand the terminology. As realtors, we are in the business of helping you with your home-buying or selling process. Our job is to make a smooth transaction and ensure you fully understand the industry jargon.

Below are some common real estate acronyms and their meanings.

APR – Annual Percentage Rate: Annual cost of borrowing money based on the loan amount, interest rate, and specific other fees.

ABR – Accredited Buyer Representative: A certificate of the National Association of Realtors for buyer representation

CD – Closing Disclosure:  Buyers receive this three days before closing. 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
  • All closing costs

CMA – Comparative Market Analysis:  A comparative market analysis is a process of determining an investment property’s value by comparing it to other properties similar in size, amenities, etc. Comparative market analysis considers both the property itself and 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:  An Interest rate that does not change during the entire term of your loan.

FSBO – For Sale by Owner:  Properties 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 against losses if a homeowner cannot pay their mortgage.  It is required for homebuyers who make down payments of 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.

We would love to answer any questions you may have regarding this list and the home-buying process. Call the Plane Team at 928-830-6976 – we would love to help!