Real Estate Terms Glossary

Real estate comes with its own language. Here are the terms we hear questions about most, in plain English. Don’t see one? Ask us. These are general definitions, not legal or tax advice.

Abstract of title

A history of the recorded documents for a property. Some older Minnesota properties still use abstracts. Your title company or attorney reviews it.

Adjustable-rate mortgage (ARM)

A loan whose interest rate is fixed for a set time and then can change on a schedule. Ask how high the rate and payment could go.

Amortization

Paying off a loan with regular payments. Early payments are mostly interest; later ones are mostly principal.

Appraisal

An independent opinion of a home’s value, usually ordered by your lender.

Appreciation

An increase in a property’s value over time.

Assessed value

The value the county assessor puts on a property for property-tax purposes. It isn’t the same as market value.

Association (HOA) dues

Regular fees paid to a homeowners association for shared costs like snow removal, lawn care or common areas. What they cover varies a lot.

Buyer representation agreement

The written agreement between you and your buyer’s agent that spells out the agent’s duties and how they’re paid.

Cash to close

The total you need to bring to closing: down payment plus closing costs, minus earnest money and any credits.

Certificate of Real Estate Value (CRV)

A form filed with the county when most Minnesota property sells. It reports the sale price and other details.

Closing

The meeting, usually at a title company, where documents are signed, money changes hands and ownership transfers.

Closing costs

Fees and prepaid items paid at closing on top of the down payment. See What are closing costs?

Closing Disclosure

The form showing your final loan terms and costs. Your lender must give it to you at least 3 business days before closing.

Comparative market analysis (CMA)

An agent’s look at recent nearby sales and current competition to help set or judge a price.

Contingency

A condition in the purchase agreement that must be met for the sale to go forward, like a satisfactory inspection or loan approval.

Conventional loan

A mortgage that isn’t insured or guaranteed by a government agency.

Deed

The document that transfers ownership. A warranty deed carries the strongest promises from the seller about title.

Deed tax

A Minnesota tax on recording a deed, based on the sale price. It’s typically paid by the seller.

Down payment

The part of the purchase price you pay up front rather than borrow.

Earnest money

A deposit you make when your offer is accepted, usually held in a trust account and credited to you at closing.

Easement

A right for someone else to use part of a property for a specific purpose, like a utility line.

Encumbrance

Anything that affects or limits a property’s title, such as a lien or easement.

Equity

The difference between what your home is worth and what you owe on it.

Escrow account

An account your lender keeps to pay your property taxes and insurance from a portion of each monthly payment.

FHA loan

A mortgage insured by the Federal Housing Administration, often used by buyers with smaller down payments.

Fixed-rate mortgage

A loan with the same interest rate for the whole term.

Homestead

In Minnesota, a home you own and live in can be classified as your homestead, which can lower property taxes. You apply with your county assessor.

Home inspection

A professional look at a home’s condition and systems, usually done during the inspection contingency period.

Lien

A legal claim against a property for money owed, like a mortgage or unpaid taxes.

Loan Estimate

The form a lender gives you within 3 business days of applying, showing estimated rate, payment and costs.

Loan-to-value (LTV)

Your loan amount divided by the home’s value, shown as a percentage.

Mortgage

A loan secured by real estate.

Mortgage insurance

Insurance that protects the lender, often required when the down payment is small.

Mortgage registration tax

A Minnesota tax on recording a mortgage, based on the loan amount. It’s typically paid by the buyer.

MLS

Multiple Listing Service: the shared database of homes for sale used by real estate agents.

Owner’s title insurance

An optional policy that protects you, not just the lender, against covered title problems.

PITI

Principal, interest, taxes and insurance: the main parts of a monthly mortgage payment.

Points

Fees paid up front to the lender, often to lower your rate. One point equals 1% of the loan.

Pre-approval

A lender’s written statement, after reviewing your credit and documents, of how much it’s willing to lend you.

Pre-qualification

A lender’s quick estimate of what you might borrow, based on what you tell them.

Principal

The amount you borrowed, or the part of it you still owe.

Purchase agreement

The written contract between buyer and seller that sets the price and terms of the sale.

Radon disclosure

Minnesota sellers must tell buyers what they know about radon in the home and give them a radon publication from the Minnesota Department of Health.

Seller’s disclosure

The seller’s written statement about known facts that could significantly affect the property, such as past water problems.

Septic (SSTS) disclosure

Minnesota sellers must disclose what they know about the property’s sewage treatment system, such as a septic system.

Survey

A drawing by a licensed surveyor showing property lines, buildings and easements.

Title

Legal ownership of a property.

Title commitment

A title company’s report of what it found in the records and what it will insure.

Title company

In Minnesota, the company that usually researches title, prepares closing documents and runs the closing.

USDA loan

A government-backed mortgage for eligible buyers in qualifying rural areas.

VA loan

A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible service members, veterans and some surviving spouses.

Walk-through

The buyer’s final look at the home shortly before closing to confirm its condition.

Well disclosure

Minnesota sellers must disclose known wells on the property and their status.