There are a bunch of terms that Realtors use that make perfect sense to us, but if you are getting ready to buy your first home, or haven't bought or sold in several years, then they may be very unfamiliar. Also, in this buyer's market and tough economy we are using terms that are new, or haven't been used frequently. Here are my favorite:
Escrow: A neutral third party holds the item of value until all terms have been met by both parties; the earnest money goes into escrow and it and the deed are delivered at closing.
Fair Market Value: The highest a buyer would pay, and the lowest the seller would accept, on a property. Not what the seller bought the property for, plus how much money they invested into the property.
PITI: Principal, Interest, Taxes, and Insurance; the monthly mortgage payment
PITI reserves: several months of PITI payments in cash that a borrower must have on hand after they make the down payment. This assures the lender that the borrower can at least make the first several PITI payments when they buy a new property.
Pre-Approval: the borrower has completed the application process for the mortgage on a new home purchase, much more important than simple pre-qualification because income and debt have been proved.
Short Sale: The seller is going to make less money off the sale of the home than what they owe on it.
Underwater: The homeowner owes more on the house that what it's worth in the current market.
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