Your home-buying journey can be much easier if you become familiar with some of the most common real estate terms. In today’s post, we’ll look at seven items of real estate terminology and what they mean so that you can feel better informed and more comfortable on your journey to finding your dream home.

At Lido Real Estate in Orange County, we strive to provide all of our clients with superior service and savings. If you are interested in buying or selling your home, then please contact our team of Realtors® today to learn how we can help you achieve your goals.

Adjustable-Rate Mortgage

An adjustable-rate mortgage (ARM) will have interest rates that can change periodically over the life of the loan. Depending on the type of ARM that you have, you may find that your interest rate increases every few years until it hits a preset ceiling.

Annual Percentage Rate

The annual percentage rate (APR) is the yearly rate of interest that includes upfront fees and costs that were paid in order to acquire the loan. Mortgage lenders must disclose the APR, and this factor will help you to determine which loan is the most beneficial for your needs.


An appraisal is an estimate of the value of your home that is determined by examining the property, the initial purchase price, and comparing it with recent sales of similar properties in your area. The appraisal is necessary for banks to determine the worth of your home for lending purposes.


An increase in the value of your property due to economic factors that have occurred over the course of your homeownership. This increase in value is not related to any improvements or additions you may have made to your home.

Balloon Mortgage

If your loan is not paid in full by the end of your mortgage term, which could be five, seven, or ten years, then you will have to either pay the remaining balance in full or refinance the loan.

Closing Costs

Closing costs are the fees that are paid at the end of a real estate transaction and are paid by either the buyer or the seller. Closing costs typically include any expenses that are over the price of the property.


Contingencies are an important part of a real estate transaction and dictate what terms need to be met for the sale of a home to be completed. Whether you are a buyer or a seller, you can have your Realtor® create a provision to the terms of the contract so that you are protected.


The opposite of appreciation, depreciation means that your home has suffered a loss of property value due to external economic factors, including the age of the property, wear and tear, or deterioration.


Escrow was created to protect both buyers and sellers. A neutral third party will hold all of the funds and documents for both sides prior to the closing of the real estate transaction.

Fixed-Rate Mortgage

A fixed-rate mortgage is one of the most common types of mortgages, as it maintains the same interest rate throughout the life of the loan, which is usually either 15 or 30 years.

Private Mortgage Insurance

Private mortgage insurance (PMI) is generally an option that buyers must take when they make less than 20% of a down payment. This insurance will be used to reimburse the lender if the buyer defaults on the loan.

While there are many other terms that are commonly used in the world of real estate, we hope that this brief overview has helped to provide some easy-to-understand definitions of common home-buying terms. At Lido Real Estate, we are proud to provide top-tier service to all of our clients in Orange County. Whether you are interested in selling your home or buying a home, we can help. Call today for more information about our real estate services.