12 Home Buying Terms Every First-Time Homebuyer Should Know

12 Home Buying Terms Every First-Time Homebuyer Should Know

Purchasing a home for the first time is exciting, but often overwhelming. To help simplify your experience, we compiled a list of common home buying terms you may encounter as you look for your first house.

Ready to get started? Explore our glossary of common first-time homebuyer terminology before you navigate the home buying process.

Adjustable-Rate Mortgage (ARM)

A type of mortgage that begins with a lower initial interest rate for a set number of years, then adjusts at specified intervals during the remainder of the loan term. Adjustments are based on a specified index rate — the value of which can change over time.


The estimated value of a house based on a qualified appraiser’s written analysis. Banks usually require appraisals before issuing loans to ensure the estimated value of the property exceeds the amount borrowed.

Buyer’s Agent

A real estate professional who represents the buyer and their interests in transactions. As a potential homebuyer, signing a contract with a dedicated buyer’s agent is the best way to ensure your interests are protected.

Closing Costs

Money paid by the buyer or seller that is associated with completing a real estate transaction. This may include fees for document preparation, deed recording and appraisals. Closing costs will often vary based on the property you buy, where you live and the type of loan you choose.


Conditions that must be met before closing a real estate transaction. This can range from a home inspection to a financing contingency. Typically, the fewer contingencies required of a seller means the stronger a buyer’s negotiating position.

Down Payment

A percentage of the total purchase price that you pay upfront. Traditionally, down payments are 20 percent of the purchase price. It is possible to put less than 20 percent down, but mortgage insurance would then be required. Keep in mind that there are many down payment assistance programs specifically designed to help first-time homebuyers.

Earnest Money

Funds, also called a “good faith” deposit, which are held by a neutral party to demonstrate the buyer has a serious interest in purchasing a property.


What the front of your house looks like. Sometimes, home plans come with a choice of several exteriors. This means that although they have the same floor plan, they will look different from the front. Variations include roof lines, porch sizes and placement of windows, for example.

Fixed-Rate Mortgage

A conventional loan with a pre-determined (or “locked-in”) interest rate for the duration of the loan repayment period. Fixed-rate mortgages usually last for 30 years but can be issued for 10 years, 15 years or another duration.

Home Inspection

An evaluation that occurs before a house is purchased. An inspector will evaluate the structural and mechanical condition of the property, which includes plumbing, foundation, electrical, HVAC systems and more. While a home inspection is optional, it is highly recommended to get one before you close on a property. If the inspector identifies any issues with the home, these can be fixed by the seller or builder before you proceed with the sale.

Private Mortgage Insurance (PMI)

A monthly insurance payment that might be required if a buyer’s down payment is less than 20 percent of a home’s purchase price. PMI protects lenders against loss if a borrower defaults on their loan.

Seller’s Agent

The real estate agent who represents the seller of a piece of property. Their job is to act in the best interest of the seller. This includes marketing the home to potential buyers and negotiating on the seller’s behalf.

Understanding the most common home buying terms can help first-time homebuyers navigate the process with ease. Are you ready to start your search? Explore and compare Perry Homes’ move-in ready properties to help you find your dream home today!

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12 Home Buying Terms Every First-Time Homebuyer Should Know

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