Real estate can be a complicated topic for many people, especially because it is loaded with jargon. However, real estate doesn’t have to be a difficult topic to grasp. Through learning and comprehending these terms, understanding real estate and its jargon can be a piece of cake. The following is a list of 25 real estate terms to know and are of the most common terms that you are likely to encounter in your journey with real estate.

Appraisal: An appraisal is an event that takes place before a buyer can get a loan from the bank to buy a home. The bank needs to be sure that they are lending the correct value of money and trust an appraiser to find that information for them. The appraiser will determine the value of the home based on an examination of the property itself as well as the sale price of other comparable homes in that area.

Assessed Value: The assessed value is how much a home is worth according to a public tax assessor. This amount is determined in order to figure out how much city or state tax the owner owes.

Buyer’s Agent: The buyer’s agent is the agent that represents the buyer in the home buying process.

Cash Reserves: The cash reserves is the amount of money left over for the buyer after the closing costs and the down payment.

Closing: Closing is an event that takes place where the sale of the property is finalized. At closing, the buyer makes the down payment and pays the closing costs and the buyers and sellers sign the final documents.

Closing Costs: Closing costs typically make up about two to five percent of the purchase price, not including the down payment. They are fees and expenses that you pay when you close on your home.

Comparative Market Analysis: A comparative market analysis or a CMA is a report on the comparable homes in the area that is used to bring about an accurate value of the home.

Contingencies: A contingency is a condition that has to be met in order for the purchase of a home to be finalized. For example, there may be a contingency that the purchase of the home is contingent on the sell of the buyer’s current home.

Dual Agency: A dual agency is when one agent represents both buyer and the seller rather than one agent representing the buyer and one agent representing the seller.

Equity: Equity refers to how much of the home that you actually own or how much of the principal that you’ve paid off. The more equity that you possess, the more financial flexibility you have.

Escrow: Escrow is the account that the lender sets up to receive monthly payments from the buyer.

Home Warranty: A home warranty is a warranty that protects from future problems such as plumbing and heating.

Inspection: A home inspection is required once a potential buyer makes an offer on a home. Home inspections typically cost a couple hundred dollars and are used to check the property’s plumbing, foundation, appliances and other features of the home to ensure that they are up to code. If issues are found, it could be a major factor in the negotiation on the final price of the property.

Interest: Interest is the cost of borrowing money for a home. The interest is combined with the principal to determine monthly mortgage payments. The longer the mortgage is, the more interest you will have to pay.

Listing: A listing is the home or property that is for sale. This term comes from the fact that these properties are often listed on a website or in a publication.

Listing Agent: The listing agent is the agent that represents the seller in the home buying process.

Mortgage Broker: The broker is an individual or company that is responsible for taking care of all aspects of the deal between borrowers and lenders.

Offer: An offer is the initial price offered by a prospective buyer to the seller. The seller may accept, reject or counter the offer.

Pre-approval Letter: A pre-approval letter is an estimate from the bank on how much the bank will lend that person. This helps determine what the buyer can afford.

Principal: The principal is the amount of money that is borrowed from the bank to purchase a home. By paying off the principal, the buyer is able to build equity in the home.

Private Mortgage Insurance: Private mortgage insurance or PMI is an insurance premium that the buyer pays to a lender in order to protect that lender from default on the mortgage. Insurance payments like these typically end once the buyer builds up to twenty percent of equity in the home.

Real Estate Agent: A real estate agent is a professional who holds a real estate license. This individual works under and assists both buyers and sellers in the home buying process.

Real Estate Broker: A real estate broker is a real estate agent who has passed the real estate broker’s exam and has met a minimum amount of transactions. Brokers such as these are able to work on their own or hire their own agents.

Refinancing: Refinancing is when an individual restructures their home loan and replaces their old loan with an entirely new loan that has different rates and payments structures. People normally refinance their home loan to get a lower interest rate on their mortgage and, therefore, lower their monthly payment and their overall debt owed.

Title Insurance: Title insurance is often required as part of the closing costs. It covers research into public records to ensure that the title is free and clear and ready for sale.