REAIXO REAL ESTATE KNOWLEDGE CENTER

Real Estate Glossary

Learn it. See it. Calculate it. Compare it. Use it.

360+ real estate terms in plain English - with formulas, real examples, side-by-side comparisons and calculators. Search a word, an acronym, or just ask your question.

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Cash to Close
Cash to close is the total amount a buyer must bring to closing: the down payment plus closing costs and prepaid items, minus any earnest money already deposited and any seller or lender credits. It appears on the Closing Disclosure, and matters because it is the cash you must actually have ready.
Closing Costs
Closing costs are the fees and charges, beyond the down payment, needed to complete a real estate purchase or loan, such as lender fees, the appraisal, title insurance, settlement and recording fees, and transfer taxes. They are paid at closing and matter because they add substantial cash on top of the down payment.
Contingency
A contingency is a condition in a purchase contract that must be satisfied for the sale to proceed — if it isn't met, the buyer can typically cancel the contract and recover their earnest money.
Earnest Money
Earnest money is a good-faith deposit a buyer pays after an offer is accepted, held by a neutral third party such as a title or escrow company until closing. It is credited toward the buyer's costs at closing, and matters because the buyer can lose it by backing out for a reason the contract does not allow.
Escrow
Escrow is an arrangement in which a neutral third party holds money or documents on behalf of others. It is used during a purchase to hold earnest money until closing, and afterward in an escrow account that pays property taxes and insurance, which matters because those bills then become part of the monthly mortgage payment.
Appraisal
An appraisal is a licensed professional's independent opinion of a property's market value, ordered by a lender to confirm the home is worth at least the loan amount before approving financing.
APR
APR (annual percentage rate) is the yearly cost of a loan including the interest rate and certain lender charges, such as discount points and origination fees. It is used when comparing loan offers of the same type and term, and matters because two loans with the same rate can cost very different amounts.
PITI
PITI stands for principal, interest, taxes and insurance - the four parts of a typical monthly mortgage payment. Lenders use the full PITI amount, plus any mortgage insurance and HOA dues, to judge affordability, so property taxes and insurance can change how much home a buyer qualifies for.
Private Mortgage Insurance
Private mortgage insurance (PMI) is insurance most conventional lenders require when a borrower puts down less than 20%; it protects the lender, not the borrower, if the loan defaults. The borrower pays it, usually monthly, and it matters because it raises the payment until it is cancelled or ends.
Buyer Agent
A buyer's agent is a real estate agent who represents the buyer's interests in a transaction — helping find properties, negotiate price, and navigate the closing process.
Credit Score
A credit score is a three-digit number (typically 300-850) summarizing a borrower's credit history, which lenders use alongside DTI and LTV to set mortgage eligibility and interest rate.
Down Payment
A down payment is the portion of a home's purchase price a buyer pays upfront in cash, with the remainder financed through a mortgage.
Final Walk-Through
The final walk-through is a buyer's last inspection of a property, usually within 24 hours of closing, to confirm its condition hasn't changed and any agreed-upon repairs were completed.
Home Inspection
A home inspection is a professional evaluation of a property's condition - structure, roof, plumbing, electrical, heating and other major components - typically done after an offer is accepted and before closing. The buyer hires the inspector, and the findings drive repair requests, credits or cancellation under an inspection contingency.
Inspection Contingency
An inspection contingency lets a buyer back out of a purchase, or negotiate repairs or a price reduction, if a home inspection reveals significant issues.
Interest Rate
The interest rate is the yearly percentage a lender charges on the loan principal, before any fees. It is used to calculate the monthly principal and interest payment, and matters because even a small difference in rate changes the payment and the total interest paid over the life of the loan.
Pre-Approval
A pre-approval is a lender's conditional statement that it is willing to lend a specific amount, based on a review of your credit, income, assets and documents. It is stronger than a pre-qualification and often expected with an offer, but it is not a loan commitment.
Pre-Qualification
A pre-qualification is an informal, non-binding estimate of how much a buyer might be able to borrow, usually based on self-reported income, debts and assets rather than verified documents. It is useful for early budgeting, but sellers give it little weight and lenders use the term inconsistently.

Real estate, visually explained

The three numbers people ask about most - what a payment is made of, how equity builds, and how rent becomes cash flow.

Where Your Mortgage Payment Goes

Mortgage Payment
→
Principal
Pays down the amount you borrowed
→
Interest
The cost of borrowing the principal
→
Property Taxes
Collected monthly, paid to your local government
→
Homeowners Insurance
Protects the home against damage or loss
→
Mortgage Insurance, when applicable
PMI or MIP, required below certain down payment levels

PITI = Principal + Interest + Taxes + Insurance

Home Equity

Home Value$500,000
− Mortgage Balance$320,000
= Home Equity$180,000

Illustrative example only — your actual equity depends on your home's current market value and remaining loan balance.

Investment Property Example

Rental Income$30,000
− Operating Expenses$10,500
= Net Operating Income (NOI)$19,500
NOI$19,500
− Debt Service (mortgage payments)$14,400
≈ Approximate Cash Flow$5,100

NOI and cash flow are not the same: NOI is calculated before debt service, cash flow after. Illustrative example only.

The home buying journey, step by step

The terms you'll hear at each stage - from figuring out what you can afford to getting the keys.

  1. STEP 1

    Search & Affordability

  2. STEP 2

    Preapproval

  3. STEP 3

    Offer & Negotiation

  4. STEP 4

    Contract

  5. STEP 5

    Inspection

  6. STEP 6

    Appraisal

  7. STEP 7

    Underwriting

  8. STEP 8

    Title

  9. STEP 9

    Closing

  10. STEP 10

    Ownership

Terms people confuse

Side-by-side comparisons of terms that sound alike but mean very different things for your money.

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Calculate it

Fast, illustrative checks for the most-used formulas. For the full picture, open the linked calculator.

Loan-to-Value (LTV)

Loan Amount ÷ Property Value × 100

$
$
LTV
80.0%
Get the full picture: Mortgage Payment Calculator →

Debt-to-Income (DTI)

Monthly Debt Payments ÷ Gross Monthly Income × 100

$
$
DTI
17.1%
Get the full picture: Home Affordability Calculator →

Home Equity

Estimated Home Value − Mortgage Balance

$
$
Estimated Equity
180,000
Get the full picture: Net Proceeds Calculator →

Cap Rate

NOI ÷ Property Value × 100

$
$
Cap Rate
6.0%
Get the full picture: Cap Rate Calculator →

Cash-on-Cash Return

Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100

$
$
Cash-on-Cash Return
8.0%
Get the full picture: Cash-on-Cash Return Calculator →

Mortgage Balance Over Time

Illustrative example: $400,000 loan, 7% fixed rate, 30-year term — not a projection of any specific loan.

$400,000$300,000$200,000$100,000$0Year 1Year 5Year 10Year 20Year 30

On a standard fixed-rate mortgage, the loan balance declines slowly at first and faster in later years, since more of each early payment goes toward interest.

Advanced knowledge

Professional-level references for investors, agents, appraisers and anyone who wants the full detail.

All 365 terms, A to Z

Educational Information Only

Reaixo glossary definitions, examples, calculators, charts, and other information are provided for general educational purposes. Real estate, lending, tax, insurance, legal, and investment rules vary by transaction and location. Verify important decisions with appropriately qualified professionals.

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