When buying or
selling a home, you may feel confused about the different terms and
acronyms used in the real estate industry. To make the process a little easier, we have created a guide to help
explain some of the common abbreviations used in listings and conversations.
A:
APR: Annual Percentage Rate. Annual cost of a mortgage, which includes
interest, loan fees. This amount is stated as percentage of loan amount.
ARM: Adjustable Rate Mortgage. A loan that the monthly repayments will
increase or decrease based on changes in the ARM interest rate index.
B:
BPO: Broker’s Price Opinion (CMA).
C:
CMA: Comparative Market Analysis. A
report displaying the prices of homes recently sold, currently on the market or
homes that did not sell within the listing period.
C&R’s: Covenants and restrictions.
E:
EMD: Earnest money deposit.
F:
FDIC: Federal Deposit Insurance
Corporation. U.S. corporation that insures deposits against bank failure in the
U.S. and encourages public confidence in the bank system.
FHA: Federal Housing Administration. Part of the Department of Housing and Urban
Development that insures residential mortgage loans made by private lenders.
FRM: Fixed-Rate Mortgage. Loan that the interest rate and monthly payment
does not change.
FSBO: For Sale by Owner.
H:
HOA: Homeowners’ Association. An
organization in a community that creates and enforces the rules for the
jurisdiction. The association collects dues for the maintenance of common areas,
such as parks, elevators, pools, etc.
HUD: U.S. Department of Housing and Urban Development. U.S.
The agency works to provide housing and community development, ensuring all
have access to “fair and equal” housing.
I:
IDX: Internet Data Exchange. It is the
data downloaded from an MLS. It also makes it possible for the public to browse
listings in a market by using a real estate broker’s website.
J:
JV: Joint Venture. Business arrangement
when two or more parties come together and agree to contribute their economic
resources for a specific goal.
L:
L/O: Lease Option. Agreement giving a
renter the choice to purchase the property during or at the conclusion of
rental period.
M:
MIP: Mortgage Insurance Premium. Lender's insurance from the FHA to the
lender against a loss because the borrower defaulted.
MLS: Multiple Listing Service. This is
an organization that collects, combines and distributes homes on the market to
its members, who are brokers. Membership opportunities are not available to the
public, but the data may be sold to real estate websites. The service is either
regional or local.
O:
O/F: Owner Finance. The buyer finances
the purchase through the seller. This often occurs when the buyer cannot get
proper financing through a conventional mortgage lender or does not want to pay
the market interest rates.
OBO: Or Best Offer. When the owner has
specified a price for an item, but is willing to accept a lower offer,
depending on the other bids. The owner accepts the highest offer.
P:
PMI: Private Mortgage Insurance. Private insurance companies issue this
insurance that protect lenders from a loss if the borrower defaults on a
mortgage with a low down payment.
R:
RD Loan: USDA rural development loan.
REO: Real Estate Owned. Properties in
the portfolio of a bank or another financial institution (for example,
properties they have foreclosed on).
RESPA: Real Estate Settlement Procedures Act. Consumer
protection law requiring lenders give borrowers notice of closing costs.
ROI: Return on Investment. Amount of
return on an investment in relation to the investment’s cost.
RTO: Rent to Own. The agreement gives
the renter the right to purchase the property at a predetermined price and
time. However, the renter is not obligated to purchase.
S:
SFH: Single Family Home. A property
with only one unit and designated for only one family to live in it.
V:
VA: Department of Veteran Affairs/
Veterans Administration. Government agency that provides benefits and services
to veterans and their families. The administration also assists with home loans
and insurance for those who have served.
Real estate
industry lingo can be overwhelming for consumers purchasing or selling their
first home. Understanding these definitions can make the process less daunting
and more enjoyable. What acronyms have you seen or heard that you'd add to this list?