Buying a home comes with its own language, and no one should expect you to understand all of it before you begin. From preapproval and due diligence to underwriting and closing, even a straightforward transaction can sound like alphabet soup.

This plain-English glossary explains many of the real estate and mortgage terms you may hear while buying a home in South Carolina.

Remember: Your contract, loan program and individual circumstances control the details. When something is unclear, ask your real estate agent, lender or closing attorney before making a decision.

Getting Ready to Buy

🏠 Prequalification: An early estimate of what you may be able to borrow based largely on information you provide. It is helpful for planning, but it usually is not reviewed as thoroughly as a preapproval.

🏠 Preapproval: A lender reviews your income, assets, credit and debts to determine how much you may qualify to borrow. It is not final loan approval, but it shows sellers that you have completed important financial homework.

🏠 Trusted Team: The real estate agent, lender, attorney, inspector and other professionals whose job is to explain the process before you make important decisions. “I don’t understand this yet” is always a perfectly acceptable place to start.

Understanding the Mortgage

🏠 Interest Rate: The percentage charged for borrowing money. It has a major effect on the principal-and-interest portion of your payment, but it does not represent every cost associated with the loan.

🏠 APR—Annual Percentage Rate: A broader measurement that combines the interest rate with certain loan costs and expresses them as an annual percentage. APR can help compare loans, but only when the loan amounts, terms and assumptions are comparable.

🏠 Rate Lock: An agreement protecting a particular interest rate for a set period while the loan is completed. If the lock expires before closing, extending it may come with a cost.

🏠 Discount Points—or Buying the Rate Down: Money paid upfront to permanently lower a loan’s interest rate. One point equals 1% of the loan amount, but one point does not reduce every rate by the same amount. The key question is how long the monthly savings will take to recover the upfront cost. The Consumer Financial Protection Bureau explains discount points and lender credits here.

🏠 2-1 Seller-Paid Buydown: A temporary payment reduction generally funded by the seller. Payments are calculated as though the rate were two percentage points lower during the first year and one point lower during the second. In year three, the borrower begins making the full payment based on the actual note rate. The note rate itself does not change.

🏠 LTV—Loan-to-Value Ratio: The loan amount compared with the property’s value. A $270,000 loan on a $300,000 home equals a 90% LTV. LTV can affect loan options, interest rates and mortgage-insurance requirements.

🏠 DTI—Debt-to-Income Ratio: Required monthly debt payments divided by gross monthly income. It may include the proposed housing payment, car loans, student loans, credit-card minimums and other required debts. It generally does not include everyday expenses such as groceries, utilities or streaming services.

🏠 PITI: Principal, interest, property taxes and homeowners insurance—the major components commonly included in a monthly housing payment. Mortgage insurance, HOA dues and flood insurance may also need to be considered.

🏠 PMI—Private Mortgage Insurance: Insurance generally associated with certain conventional loans when the buyer has less than 20% equity. It protects the lender—not the buyer—if the borrower defaults. FHA and USDA loans use different forms of mortgage insurance.

🏠 Escrow Account: An account maintained by the mortgage servicer to collect and later pay expenses such as property taxes and homeowners insurance. The monthly payment can change when those expenses change, even with a fixed-rate mortgage.

The Offer and Contract

🏠 Earnest Money: A deposit showing that the buyer is making a serious offer. It is normally held in a trust or escrow account and credited toward the buyer’s closing expenses. Whether it is refundable depends on the contract, applicable deadlines and the reason for termination.

🏠 Due Diligence Period: A contractually defined window during which the buyer investigates the property, reviews available information and decides whether to proceed. In South Carolina, the exact deadline and termination requirements matter. Missing a deadline can change the buyer’s options.

🏠 Contingency: A condition that must be satisfied for the transaction to move forward as written. Common examples involve financing, appraisal, inspections or the sale of another property. The specific rights involved depend on the contract language.

🏠 Seller Concessions: Money the seller agrees to contribute toward allowable buyer expenses, such as closing costs, prepaid expenses or a rate buydown. Loan programs limit how much a seller may contribute, and unused concessions generally cannot simply become cash back to the buyer.

Inspections, Repairs and Appraisal

🏠 Home Inspection: A visual evaluation of the home’s accessible components by a professional inspector. It may identify defects, safety concerns and items needing further evaluation. An inspection is not a warranty, guarantee or pass/fail test.

🏠 Specialized Inspection: An additional evaluation performed by an appropriate specialist. Depending on the property, this might involve HVAC, plumbing, electrical, roofing, structural components, sewer lines, septic systems, wells, mold, pools or wood-infestation concerns.

🏠 Repair Request: A buyer’s request that the seller address certain inspection findings, provide a credit or make another accommodation. Unless the contract provides otherwise, the seller may agree, decline or negotiate.

🏠 Appraisal: An independent opinion of the property’s value completed for the lender. It helps determine whether the property provides adequate security for the loan. An appraisal is not a substitute for a home inspection.

Loan Approval and Underwriting

🏠 Underwriting: The lender’s detailed review of the borrower, loan and property. The underwriter verifies income, assets, credit, debts, appraisal information and loan-program requirements before issuing final approval.

🏠 Conditional Approval: The loan has passed an important underwriting review, but additional documents, explanations or other requirements remain. It is meaningful progress, but it is not yet permission to close.

🏠 Clear to Close: The lender has completed its major underwriting requirements and authorized the loan to move toward closing. Final employment, credit or other verification may still occur, so this is not the time to finance furniture, buy a vehicle or make another major financial change.

Understanding the Money Needed at Closing

🏠 Closing Costs: Expenses associated with obtaining the loan and transferring the property. They may include lender charges, attorney and title expenses, appraisal fees, recording fees, insurance, taxes and other costs.

🏠 Prepaids: Expenses collected at closing for costs that will come due later, such as homeowners insurance, property taxes and prepaid mortgage interest. Prepaids are not necessarily lender fees, even though they increase the total amount needed at closing.

🏠 Cash to Close: The final amount the buyer must bring to closing after accounting for the down payment, closing costs, prepaids, deposits, credits and other adjustments. It is not the same thing as the down payment.

🏠 Loan Estimate: A standardized document showing the loan’s estimated interest rate, monthly payment and closing costs. Buyers should review it carefully and ask questions before moving forward.

🏠 Closing Disclosure: The final loan document showing the interest rate, payment, closing costs and cash needed to close. Buyers should compare it with the Loan Estimate and ask about anything that changed.

Title and Closing

🏠 Title Search: A review of public records to determine ownership of the property and identify liens, judgments, easements or other issues that may affect title.

🏠 Closing—or Settlement: The process in which final documents are signed, funds are transferred and the transaction is completed. South Carolina real estate closings are conducted under the supervision of a licensed attorney.

🏠 Closing Date: The date everyone is working toward, but it should not be treated as guaranteed until the lender, attorney, title work and other requirements are ready. Keep some flexibility when scheduling movers, deliveries or utility changes.

You Don’t Need to Memorize All of This

The most important part of the homebuying process is not knowing every definition before you begin. It is having a team willing to slow down, answer questions and translate the process into plain English.

You are never wasting our time by asking a question. Buying a home is a major decision, and you deserve to understand what you are signing, why it matters and what comes next.

Have a term you’ve heard that still doesn’t make sense? Contact Rainbow Row Real Estate for a local, no-pressure conversation about buying, selling or financing a home along the South Carolina coast.