4 Key Homebuying Terms Every Buyer Should Know in 2025
When you’re ready to buy a home, understanding the language of real estate is just as important as choosing the right property. The homebuying process comes with several industry terms that you’ll hear from your lender, agent, and escrow team. Knowing what they mean can help you make confident, informed decisions.
Below are four of the most common homebuying terms every buyer should know—especially if you’re preparing to purchase a home in 2025.
1. Down Payment
A down payment is the portion of the home’s purchase price that you pay upfront at closing.
Depending on the loan program, down payments can range anywhere from 3% to 20% or more. Your down payment amount can also impact your monthly payments and whether you’ll need mortgage insurance.
2. Mortgage Rate
Your mortgage rate is the interest rate you pay to borrow money for your home.
Mortgage rates fluctuate based on economic conditions, your credit score, and the type of loan you choose. Even a small difference in rates can significantly change your monthly payment over time, making it an important factor to watch when buying a home.
3. Contingency
A contingency is a provision in a real estate contract that requires certain conditions to be met before the agreement becomes legally binding.
Common contingencies include inspections, appraisals, and loan approval. Contingencies protect you as the buyer, ensuring you have the chance to fully evaluate the home before finalizing the purchase.
4. Appraisal
An appraisal is a professional report prepared by a licensed third party that estimates the value of the property.
Lenders use appraisals to confirm that the home’s value supports the amount you’re borrowing. Appraisals are a standard—and essential—part of the homebuying process.
If you’re starting your homebuying journey and want to feel confident every step of the way, DM me today. I’m here to answer your questions and make sure you have the information you need to navigate the process with ease.
