Escrow, PMI and more terms defined for first-time homebuyers

Appraisal: Ordered by your lender, an appraiser evaluates what your home is worth. That amount is ultimately how much the lender will give you.

• If you agree to a $500,000 sales price but the appraiser says the house is worth $400,000, you'll have to come up with the difference. You might be able to renegotiate with the sellers, or you'd have to make up that $100,000 difference in cash.

Earnest money: Also called a good faith deposit, this is what the buyer gives the seller before the deal closes. If the buyer backs out, they risk losing this money.

Escrow: This is often an account that holds your earnest money while the sale is pending. If it's held by your mortgage lender, you could use it to pay your taxes and insurance on the house.

Inspection: A major buyer safeguard that assesses the safety and stability of the home. If there’s a termite infestation below the floors, an inspection report flags it.

• During the pandemic, buyers waived inspections to get the house. Now that the market is softer, they're back.

Lender: The financial entity that loans you the money for the mortgage to buy a house.

P.M.I.: If you don't put down 20%, Private Mortgage Insurance is tacked onto your mortgage payment. Typically, you'll make that monthly payment until you've reached 20% down.

Pre-approval: A letter from your lender showing you’re good for the money you’re offering.