Plain-English definitions of the terms you will meet while buying a home in Washington. If something you have been handed is not here, call us on 509-795-0367 and we will explain it.

Adjustable-rate mortgage (ARM)
A loan whose interest rate is fixed for an initial period, then adjusts periodically based on an index plus a set margin.
Amortization
The schedule by which a loan is paid off over time. Early payments are mostly interest; later ones are mostly principal.
Appraisal
An independent opinion of a property's market value, ordered by the lender to confirm the property is worth what they are lending against.
Closing Disclosure
The standardized form showing the final terms and costs of your loan. You must receive it at least three business days before closing.
Community property
Property owned equally by married persons or registered domestic partners. Washington is one of nine community property states.
Contingency
A condition in the purchase agreement that must be satisfied for the sale to proceed – commonly inspection, financing and appraisal contingencies.
Deed of trust
The security instrument used in Washington to secure a mortgage loan against the property, involving a neutral trustee.
Debt-to-income ratio (DTI)
Your monthly debt payments divided by your gross monthly income. Usually the binding constraint on how much you can borrow.
Earnest money
A deposit made with your offer showing you are serious. Held in trust and credited toward your purchase at closing.
Easement
A recorded right for someone else to use part of your property for a specific purpose, such as a utility line or shared driveway.
Escrow
The neutral third party that holds funds and documents and releases them only when every condition of the sale has been met.
Exclusive buyer's agent
An agent or office that represents only buyers and never takes listings, eliminating the conflict of interest in a purchase negotiation.
FICO score
The credit scoring model most mortgage lenders use. Mortgage versions differ from the free scores shown by consumer apps.
Joint tenancy with right of survivorship
Equal co-ownership where a deceased owner's share passes automatically to the surviving owners.
Loan Estimate
The standardized form a lender must provide within three business days of application, showing estimated rate, payment and costs.
Months of inventory
How long it would take to sell all current listings at the present pace. A common measure of whether a market favours buyers or sellers.
Preliminary title report
The title company's report on what the public record shows about a property, including easements, liens and restrictions.
Pre-approval
A conditional lending commitment based on verified documents and a credit check. Materially stronger than a pre-qualification.
Pre-qualification
An informal estimate of what you might borrow, based on unverified information you provided.
Principal, interest, taxes and insurance (PITI)
The four components of a typical monthly mortgage payment.
Private mortgage insurance (PMI)
Insurance protecting the lender, generally required on conventional loans with less than 20% down. Can usually be removed once you have sufficient equity.
Real estate excise tax (REET)
Washington's tax on the sale of real property, normally paid by the seller. State rates are graduated and local jurisdictions add their own.
REO
Real estate owned – a property the lender took back after foreclosure and is now selling.
Short sale
A sale for less than the mortgage balance, requiring lender approval. Attractively priced but often very slow.
Tenancy in common
Co-ownership with possibly unequal shares and no automatic survivorship. Each owner may sell or bequeath their share independently.
Title insurance
Insurance against defects in the ownership history that existed before you bought. The lender's policy protects the lender; the owner's policy protects you.
Underwriting
The lender's assessment of whether to make the loan, based on your credit, income, assets and the property itself.