A

Appraisal

A professional assessment of a property's market value, typically required by lenders before approving a mortgage.

APR (Annual Percentage Rate)

The total yearly cost of a loan including interest and fees, expressed as a percentage. APR is typically higher than the interest rate alone.

Amortization

The process of paying off a loan through regular payments over time. Early payments are mostly interest; later payments are mostly principal.

B

Key Insight: Texas luxury real estate encompasses properties

Real Estate Glossary

Understanding real estate terminology is essential for confident buying and selling. Use this glossary to learn the terms you'll encounter in your Texas real estate transaction.

A

Appraisal

A professional assessment of a property's market value, typically required by lenders before approving a mortgage.

APR (Annual Percentage Rate)

The total yearly cost of a loan including interest and fees, expressed as a percentage. APR is typically higher than the interest rate alone.

Amortization

The process of paying off a loan through regular payments over time. Early payments are mostly interest; later payments are mostly principal.

B

million and above, with ultra-luxury exceeding $5 million. Premier markets include Austin's Westlake Hills, Dallas's Highland Park, and Houston's River Oaks. These properties offer resort-style amenities, acreage, and architectural distinction.

Buyer's Agent

A real estate agent who represents the buyer's interests in a transaction. In Texas, buyer's agents are typically paid from the seller's proceeds.

Bridge Loan

A short-term loan used to "bridge" the gap when buying a new home before selling your current one.

C

Closing Costs

Fees and expenses paid at closing, including lender fees, title insurance, attorney fees, and prepaid items. Typically 2-5% of the loan amount.

Closing Disclosure

A document provided at least 3 days before closing that details all final loan terms and closing costs.

Contingency

A condition in a contract that must be met for the sale to proceed. Common contingencies include financing, inspection, and appraisal.

Comparable Sales (Comps)

Recently sold properties similar to the subject property, used to determine market value.

D

Down Payment

The portion of the purchase price paid upfront by the buyer. Can range from 0% (VA loans) to 20%+ for conventional loans.

DTI (Debt-to-Income Ratio)

Monthly debt payments divided by gross monthly income. Most lenders require DTI under 43%.

Due Diligence

The period when buyers investigate the property through inspections and research before committing to the purchase.

E

Earnest Money

A deposit made by the buyer to show serious intent. Typically 1-3% of the purchase price in Texas, held in escrow.

Escrow

A neutral third party that holds funds and documents during a transaction. Also refers to the account where property taxes and insurance are held.

Equity

The difference between your home's market value and what you owe on the mortgage. Your ownership stake in the property.

F

FHA Loan

A mortgage insured by the Federal Housing Administration, popular with first-time buyers due to low down payment (3.5%) requirements.

Fixed-Rate Mortgage

A mortgage with an interest rate that remains the same for the entire loan term.

FSBO (For Sale By Owner)

A property sold directly by the owner without a listing agent.

G

Good Faith Estimate

An estimate of closing costs provided by lenders. Now largely replaced by the Loan Estimate.

H

HOA (Homeowners Association)

An organization that manages a community and enforces rules. Members pay monthly or annual dues for maintenance and amenities.

Homestead Exemption

A Texas property tax exemption for your primary residence, reducing your taxable value by at least $100,000 for school district taxes.

I

Inspection

A professional examination of the property's condition, including structure, systems, and potential issues.

J

Jumbo Loan

A mortgage that exceeds conforming loan limits. Requires higher credit scores and larger down payments.

L

Listing Agent

The real estate agent representing the seller in a transaction.

Loan Estimate

A standardized form showing estimated loan costs, provided within 3 days of applying for a mortgage.

LTV (Loan-to-Value)

The loan amount divided by the property value. Higher LTV means smaller down payment but may require PMI.

M

MLS (Multiple Listing Service)

A database where real estate agents share property listings. The primary source for properties on sites like Zillow.

Mortgage Insurance (PMI/MIP)

Insurance protecting the lender if you default. Required for conventional loans under 20% down (PMI) or all FHA loans (MIP).

O

Option Period

A Texas-specific period (typically 7-10 days) when the buyer can terminate for any reason. The buyer pays a non-refundable option fee for this right.

P

Pre-Approval

A lender's commitment to lend up to a certain amount, based on verification of your finances. Stronger than pre-qualification.

Principal

The amount borrowed, not including interest. Also the portion of your payment that reduces the loan balance.

Property Taxes

Annual taxes based on property value. Texas has no state income tax but higher property taxes (typically 2-3%).

R

Refinance

Replacing your existing mortgage with a new one, typically to get a lower rate or access equity.

S

Seller's Disclosure

A document where sellers disclose known issues with the property. Required in Texas.

Survey

A map showing property boundaries, structures, and easements. Often required for purchases in Texas.

T

Title Insurance

Insurance protecting against defects in the property's title. Buyers typically pay for the lender's policy; sellers pay for the owner's policy in Texas.

TREC (Texas Real Estate Commission)

The state agency regulating real estate agents and providing standard contract forms used in Texas transactions.

U

Underwriting

The lender's process of verifying your application and determining final loan approval.

Related Resources: Home Buying Guide | Home Selling Guide | Investment Guide