Terms for buying a home you should know about!

1. Pre-Approval

A lender reviews your financial information and gives you an estimate of what you may qualify to borrow. It’s one of the best places to start before buying a house.

2. Down Payment

The portion of the purchase price you pay upfront. It doesn’t automatically have to be 20%.

3. Zero Down Payment

Some buyers may qualify for loan programs requiring little or no down payment. But zero down doesn’t mean zero cash needed. Closing costs and other expenses may still apply.

4. Closing Costs

The various expenses associated with completing the purchase. These can include lender, title, recording, prepaid, and other transaction-related costs.

5. Earnest Money

A deposit submitted according to the purchase contract to demonstrate the buyer’s commitment. In the current Kentucky REALTORS® residential contract, the earnest money deposit is delivered within the specified timeframe and held in escrow.

6. Offer

Your proposal to purchase a property. Price is only one part of an offer—financing, closing date, contingencies, and other terms can matter too.

7. Contingency

A contractual condition that must be satisfied according to the agreement. Financing, appraisal, and inspections are common examples.

8. Home Inspection

An examination of the property’s condition. It gives buyers information they can use when making decisions about the purchase.

9. Appraisal

An opinion of the property’s value, generally prepared by a qualified appraiser. For financed purchases, the lender may require an appraisal.

10. Comparable Sales

Also called “comps.” These are recently sold properties that can help buyers and Realtors evaluate pricing and market value.

11. Market Value

An estimate of what a property may reasonably sell for based on factors such as location, condition, comparable sales, and current market conditions.

12. MLS

The Multiple Listing Service used by real estate professionals to share property information. It’s one reason your “buying house near me” search can turn up so many listings online.

13. Buyer’s Agent

A Realtor representing a buyer under an established agency relationship. In Kentucky, agency relationships and required disclosures are governed by state rules.

For a first-time buyer, a local agent can be especially valuable because they can help explain the market—not just show houses.

14. Seller’s Agent

The Realtor representing the seller. Buyers should understand who represents whom before entering into a transaction.

15. FSBO

For Sale By Owner. This is when the property owner markets the property without a traditional listing agent.

If you’re buying a house for sale by owner, don’t assume the absence of a listing agent means the transaction is simpler. Contracts, inspections, financing, title, and other details still matter.

16. Cash Purchase

A buyer purchases the property without mortgage financing. Cash can make an offer attractive in some situations, but cash buyers should still perform appropriate due diligence.

17. Due Diligence

The process of investigating the property before completing the purchase. Inspections, title matters, insurance, financing, and property information may all be part of the buyer’s evaluation.

18. Principal & Interest

Principal is the amount borrowed. Interest is the cost of borrowing it.

Together, they make up a major part of a typical mortgage payment.

19. PMI

Private Mortgage Insurance may be required with certain conventional loans, particularly when the buyer makes a smaller down payment. Your lender can explain whether it applies to your loan.

20. Closing

The final stage of the transaction when the required documents and funds are handled and ownership is transferred according to the transaction documents.

And yes, it’s also the point where first-time buyers finally get to say, “I own a house.”