Buying your first home is such an exciting milestone, but let’s be real—the process can get a little overwhelming, especially with all the real estate jargon and acronyms thrown around. You don’t want to be caught asking, “Wait, what does that mean?” during your big transaction. We previously shared on our blog some of the common ones and now, we’ve rounded up more real estate terms first-time buyers should know to help you feel confident every step of the way!
CD / Closing Disclosure
This is a document that breaks down all the final details of your home loan—like the terms, monthly payments, and closing costs. It’s super important because it gives you a clear picture of what you’re signing up for, and you get it a few days before closing so you can double-check everything and avoid surprises.
CTC / Clear to close
“Clear to close” basically means you’re in the home stretch of buying your house—your lender has reviewed everything, and they’re giving the green light to move forward with closing. It’s like the final thumbs-up of the buyer’s bank before you sign the paperwork and officially get the keys!
FSBO / For Sale by Owner
For Sale by Owner, or FSBO, is when a homeowner decides to sell their house on their own without hiring a real estate agent. It can save them money on commissions, but it also means they have to handle all the pricing, marketing, and paperwork themselves.
LTV / Loan to Value
Loan-to-Value, or LTV, is basically a percentage that shows how much of the home’s value you’re borrowing compared to how much you’re putting down. For example, if you’re buying a $200,000 house with a $40,000 down payment, your LTV would be 80%—the lower the percentage, the less risky you look to lenders!
PMI / Private Mortgage Insurance
Private Mortgage Insurance, or PMI, is something you have to pay if you’re putting down less than 20% on your home. It’s basically a safety net for the lender in case you stop making payments—but the good news is, you can usually get rid of it once you’ve built enough equity in your home!
FRM / Fixed-Rate Mortgage
A fixed-rate mortgage means your interest rate stays the same for the entire life of your loan—no surprises or changes, no matter what the economy does. It’s great if you like predictable monthly payments and want to plan your budget long-term!
DTI / Debt-to-income
Debt-to-income, or DTI, is a ratio that shows how much of your monthly income goes toward paying off debt, including your potential mortgage. Lenders use it to figure out if you can afford a new loan—generally, the lower your DTI, the better your chances of getting approved!
P&I / Principal and Interest
Principal and Interest are the two main parts of your monthly mortgage payment. The principal is the amount of the loan you’re paying back, while the interest is what you’re paying the lender for borrowing the money.
FMV / Fair Market Value
Fair Market Value is basically what a property is worth based on what buyers are willing to pay and sellers are willing to accept, given current market conditions. It’s not just about the asking price—it’s the price that would be agreed upon in an open and competitive market.
HELOC / Home Equity Line of Credit
A Home Equity Line of Credit, or HELOC, lets you borrow against the value of your home, kind of like a credit card. You can use it for things like renovations or paying off high-interest debt, and you only pay interest on what you borrow, not the full credit limit.
Hope this helps make your home buying experience easier. If you have any questions and need further assistance in your home purchase in San Diego, reach out to our friendly agents at Broadpoint Properties.