REAIXO REAL ESTATE KNOWLEDGE CENTER

Real Estate Glossary

Learn it. See it. Calculate it. Compare it. Use it.

360+ real estate terms in plain English - with formulas, real examples, side-by-side comparisons and calculators. Search a word, an acronym, or just ask your question.

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Cash to Close
Cash to close is the total amount a buyer must bring to closing: the down payment plus closing costs and prepaid items, minus any earnest money already deposited and any seller or lender credits.
Closing Costs
Closing costs are the fees and expenses — beyond the down payment — required to finalize a real estate transaction, including lender fees, title insurance, taxes, and recording fees.
Contingency
A contingency is a condition in a purchase contract that must be satisfied for the sale to proceed — if it isn't met, the buyer can typically cancel the contract and recover their earnest money.
Earnest Money
Earnest money is a deposit a buyer puts down when making an offer, showing the seller they're serious — it's held in escrow and typically applied toward the down payment or closing costs at closing.
Escrow
Escrow refers to funds held by a neutral third party on behalf of a buyer, seller, or lender — during a purchase, to hold earnest money until closing, and afterward, to collect and pay property taxes and insurance on the homeowner's behalf.
Appraisal
An appraisal is a licensed professional's independent opinion of a property's market value, ordered by a lender to confirm the home is worth at least the loan amount before approving financing.
APR
APR is the annualized cost of a mortgage expressed as a percentage, combining the interest rate with certain lender fees and closing costs — making it useful for comparing the total cost of different loan offers.
PITI
PITI stands for Principal, Interest, Taxes, and Insurance — the four components that typically make up a full monthly mortgage payment.
Private Mortgage Insurance
PMI is insurance required on most conventional loans with a down payment below 20%, protecting the lender — not the borrower — if the loan defaults.
Buyer Agent
A buyer's agent is a real estate agent who represents the buyer's interests in a transaction — helping find properties, negotiate price, and navigate the closing process.
Credit Score
A credit score is a three-digit number (typically 300-850) summarizing a borrower's credit history, which lenders use alongside DTI and LTV to set mortgage eligibility and interest rate.
Down Payment
A down payment is the portion of a home's purchase price a buyer pays upfront in cash, with the remainder financed through a mortgage.
Final Walk-Through
The final walk-through is a buyer's last inspection of a property, usually within 24 hours of closing, to confirm its condition hasn't changed and any agreed-upon repairs were completed.
Home Inspection
A home inspection is a professional evaluation of a property's condition — structure, systems, and major components — typically performed after an offer is accepted and before closing.
Inspection Contingency
An inspection contingency lets a buyer back out of a purchase, or negotiate repairs or a price reduction, if a home inspection reveals significant issues.
Interest Rate
The interest rate is the percentage a lender charges annually to borrow the loan principal, before factoring in any additional fees.
Pre-Approval
A pre-approval is a lender's conditional commitment to lend a specific amount, based on a review of the borrower's credit, income, and financial documents — stronger than a pre-qualification.
Pre-Qualification
A pre-qualification is an informal, non-binding estimate of how much a buyer might be able to borrow, based on self-reported financial information rather than verified documents.

Real estate, visually explained

The three numbers people ask about most - what a payment is made of, how equity builds, and how rent becomes cash flow.

Where Your Mortgage Payment Goes

Mortgage Payment
→
Principal
Pays down the amount you borrowed
→
Interest
The cost of borrowing the principal
→
Property Taxes
Collected monthly, paid to your local government
→
Homeowners Insurance
Protects the home against damage or loss
→
Mortgage Insurance, when applicable
PMI or MIP, required below certain down payment levels

PITI = Principal + Interest + Taxes + Insurance

Home Equity

Home Value$500,000
− Mortgage Balance$320,000
= Home Equity$180,000

Illustrative example only — your actual equity depends on your home's current market value and remaining loan balance.

Investment Property Example

Rental Income$30,000
− Operating Expenses$10,500
= Net Operating Income (NOI)$19,500
NOI$19,500
− Debt Service (mortgage payments)$14,400
≈ Approximate Cash Flow$5,100

NOI and cash flow are not the same: NOI is calculated before debt service, cash flow after. Illustrative example only.

The home buying journey, step by step

The terms you'll hear at each stage - from figuring out what you can afford to getting the keys.

  1. STEP 1

    Search & Affordability

  2. STEP 2

    Preapproval

  3. STEP 3

    Offer & Negotiation

  4. STEP 4

    Contract

  5. STEP 5

    Inspection

  6. STEP 6

    Appraisal

  7. STEP 7

    Underwriting

  8. STEP 8

    Title

  9. STEP 9

    Closing

  10. STEP 10

    Ownership

Terms people confuse

Side-by-side comparisons of terms that sound alike but mean very different things for your money.

See all 28 comparisons →

Calculate it

Fast, illustrative checks for the most-used formulas. For the full picture, open the linked calculator.

Loan-to-Value (LTV)

Loan Amount ÷ Property Value × 100

$
$
LTV
80.0%
Get the full picture: Mortgage Payment Calculator →

Debt-to-Income (DTI)

Monthly Debt Payments ÷ Gross Monthly Income × 100

$
$
DTI
17.1%
Get the full picture: Home Affordability Calculator →

Home Equity

Estimated Home Value − Mortgage Balance

$
$
Estimated Equity
180000
Get the full picture: Net Proceeds Calculator →

Cap Rate

NOI ÷ Property Value × 100

$
$
Cap Rate
6.0%
Get the full picture: Cap Rate Calculator →

Cash-on-Cash Return

Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100

$
$
Cash-on-Cash Return
8.0%
Get the full picture: Cash-on-Cash Return Calculator →

Mortgage Balance Over Time

Illustrative example: $400,000 loan, 7% fixed rate, 30-year term — not a projection of any specific loan.

$400,000$300,000$200,000$100,000$0Year 1Year 5Year 10Year 20Year 30

On a standard fixed-rate mortgage, the loan balance declines slowly at first and faster in later years, since more of each early payment goes toward interest.

Advanced knowledge

Professional-level references for investors, agents, appraisers and anyone who wants the full detail.

All 361 terms, A to Z

Educational Information Only

Reaixo glossary definitions, examples, calculators, charts, and other information are provided for general educational purposes. Real estate, lending, tax, insurance, legal, and investment rules vary by transaction and location. Verify important decisions with appropriately qualified professionals.

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