When you’re buying or selling a home, it’s not uncommon to come into contact with terms you’ve never heard before. Sometimes, it can feel like you’re trying to learn a new language. And that’s especially true with acronyms, which are very popular in real estate. Here’s a list of ten of the most common real estate abbreviations you’re likely to encounter.
APR – Annual Percentage Rate
Shopping for a mortgage is a critical part of your home buying experience, and you’ll no doubt see the term APR used frequently. It stands for annual percentage rate and it’s the annual cost over the term of your loan. It includes interest costs and other fees.
CMA – Comparative Market Analysis
One of the most important aspects of selling your home is determining the listing price. A great way to do this is to request a CMA, or comparative market analysis, from your agent. They will evaluate several factors including local comps to help determine the right asking price for your home.
DTI – Debt-to-Income Ratio
Applying for a home loan means that your lender will be performing an in-depth evaluation of your finances. One of the things they’ll be looking at is your DTI or debt-to-income ratio. This is the ratio of how much debt you have compared to your income. The lower your DTI, the better the interest rate and terms you’ll get on your loan.
FHA – Federal Housing Administration
First-time home buyers should consider getting an FHA loan, which is backed by the Federal Housing Administration. Buyers who qualify can pay as little as 3.5 percent for a down payment.
FSBO – For Sale By Owner
If you’re interested in a home that is FSBO, it means that you’ll be dealing directly with a seller and not an agent.
HOA – Homeowners Association
Many homes and condos are part of an HOA or homeowners association. HOAs are the governing bodies for some communities and they deal with things such as maintenance and repairs of community spaces. HOAs will have rules that all homeowners must follow and if you buy in an HOA community then you’ll be paying a monthly fee.
MLS – Multiple Listing Service
The MLS or multiple listing service is the collection of homes that are for sale in your community. If you’re selling a home, then your agent will post your home to the MLS. If you’re buying a home, then your agent will search the MLS for homes that fit your criteria.
PMI – Private Mortgage Insurance
If you pay less than 20 percent down on your home, then you’ll be required to pay PMI or private mortgage insurance. This helps to ensure that your lender will be covered in the event that you are unable to pay back your loan.
ROI – Return on Investment
When you’re purchasing a home, you’ll want to consider the ROI or return on investment. This is how much you could profit over your original investment.
VA – Veterans Administration
Finally, members of the military can qualify for a VA loan which is backed by the Veterans Administration. In many cases, VA loans require no down payment.