Terms Every Florida Homebuyer
Should Know
Understanding Mortgage & Real Estate Terms
Buying a home can come with a lot of unfamiliar terminology — especially when navigating financing, construction loans, inspections, and the Florida real estate process. This guide breaks down common mortgage and real estate terms buyers frequently hear throughout Tampa Bay, Hernando County, Pasco County, and surrounding Gulf Coast communities.
What Is a Rate Lock?
A mortgage rate lock helps protect buyers from interest rate increases for a specific period while their loan is being processed. Rate lock timelines and conditions can vary by lender, especially with construction-to-permanent loans and new construction financing.
What Is Earnest Money?
Earnest money is a deposit submitted by a buyer after a contract is accepted to show they are serious about purchasing the property. In Florida real estate transactions, earnest money is typically held in escrow by the title company or brokerage and may later be applied toward the buyer’s closing costs or down payment.
What Is PMI?
Private Mortgage Insurance (PMI) is insurance typically required on conventional loans when a buyer puts down less than 20% of the purchase price. PMI helps protect the lender if the borrower defaults on the loan. The cost of PMI can vary depending on the loan amount, down payment, and credit profile.
What Is Pre-Approval?
A mortgage pre-approval is a lender’s preliminary review of a buyer’s financial profile, including income, debt, credit, and assets, to estimate how much they may qualify to borrow. A pre-approval can help buyers better understand their budget and strengthen their offer when competing for homes throughout Tampa Bay and surrounding Florida markets.
What Is an Appraisal?
An appraisal is a professional evaluation used to estimate a property’s market value. Mortgage lenders generally require an appraisal during the home buying process to help confirm the property supports the loan amount being requested. Factors such as location, condition, upgrades, and comparable sales may influence the appraised value.
What Is a Survey?
A property survey is a professional drawing that identifies property boundaries, easements, encroachments, improvements, and legal descriptions of the land. Surveys are commonly used in Florida real estate transactions, especially for vacant land, waterfront properties, acreage, and properties with fences or boundary questions.
What Does Debt-to-Income Ratio Mean?
Debt-to-income ratio (DTI) compares a borrower’s monthly debt payments to their gross monthly income. Lenders use DTI to help determine whether a buyer can comfortably afford a mortgage payment.
Which Credit Score Do Mortgage Lenders Use?
Many mortgage lenders use specialized mortgage scoring models pulled from the major credit bureaus:
Experian
Equifax
TransUnion
In many cases, lenders use the middle score of the three credit reports when evaluating a mortgage application.
What Is Escrow?
Escrow refers to a neutral third party temporarily holding funds or documents during a real estate transaction. In Florida, escrow accounts are commonly used to hold earnest money deposits and may also be used by lenders to collect property taxes and homeowners insurance payments as part of the monthly mortgage payment.
What Is Underwriting?
Underwriting is the process lenders use to review and verify a borrower’s financial information before issuing final loan approval. During underwriting, lenders may review:
income
employment
credit history
debt obligations
bank statements
property details
Additional documentation may sometimes be requested before the loan receives final approval.
What Is Title Insurance?
Title insurance helps protect buyers and lenders against potential ownership disputes, liens, recording errors, or title defects connected to the property. Before closing, a title company performs a title search to help verify the property can legally transfer ownership to the buyer.