Real estate transactions come with their own vocabulary, and encountering unfamiliar terms during one of the biggest financial decisions of your life is stressful. This glossary covers the essential terms you will encounter when buying or selling a home in El Paso, with explanations in plain language and El Paso-specific context where applicable. Bookmark this page and refer to it throughout your transaction.
Property and Transaction Terms
- Appraisal: a professional assessment of a property's market value, required by lenders before approving a mortgage. In El Paso, appraisals typically cost $400 to $600 and are ordered by the lender.
- Assessed Value: the value assigned to a property by the El Paso Central Appraisal District for property tax purposes. This is not the same as market value and is often lower.
- Closing Costs: fees and expenses beyond the purchase price that are paid at closing. In El Paso, buyer closing costs typically run 2 to 4 percent of the purchase price.
- Closing Disclosure: a document provided by the lender at least three business days before closing that details all final loan terms, closing costs, and cash required.
- Comparative Market Analysis (CMA): an analysis of recently sold comparable properties used to determine a home's market value. Your agent prepares this to guide pricing or offer strategy.
- Contingency: a condition in the purchase contract that must be met for the sale to proceed. Common contingencies include financing, inspection, and appraisal.
- Deed: the legal document that transfers property ownership from seller to buyer. Recorded with the El Paso County Clerk after closing.
- Due Diligence: the investigation period during which the buyer evaluates the property, reviews inspections, and verifies information before committing to the purchase.
Financing Terms
- Pre-Approval: a lender's conditional commitment to lend a specific amount based on your financial profile. Stronger than pre-qualification and expected by sellers in El Paso's competitive market.
- Conventional Loan: a mortgage not backed by a government agency. Typically requires 5 to 20 percent down payment and good credit.
- FHA Loan: a government-backed mortgage through the Federal Housing Administration that allows lower down payments (3.5 percent) and more flexible credit requirements. Popular with first-time buyers in El Paso.
- VA Loan: a zero-down-payment mortgage available to eligible veterans, active duty, and military spouses. Widely used near Fort Bliss.
- USDA Loan: a zero-down-payment mortgage for properties in eligible rural areas. Parts of Horizon City, Clint, and the Upper Valley may qualify.
- PMI (Private Mortgage Insurance): insurance required on conventional loans with less than 20 percent down. Adds $50 to $200 per month depending on loan amount and credit score.
- Escrow: an account held by a third party (typically the title company or lender) to manage funds during the transaction and, post-closing, for property taxes and insurance payments.
- Points: upfront fees paid to the lender to reduce the interest rate. One point equals 1 percent of the loan amount.
- DTI (Debt-to-Income Ratio): the percentage of your gross monthly income that goes toward debt payments. Lenders typically want this below 43 percent.
Inspection and Condition Terms
- Home Inspection: a professional examination of the property's condition, covering structure, roof, HVAC, plumbing, electrical, and more. In El Paso, inspections cost $300 to $600.
- Termite Inspection (WDI Report): an inspection for wood-destroying insects. While termites are less common in El Paso's arid climate than in humid areas, they do exist and the inspection is often required by lenders.
- Survey: a professional measurement of property boundaries. Required by most lenders and title companies in Texas. Costs $400 to $800 in El Paso.
- As-Is: a property sold in its current condition, with the seller making no repairs. Common with REO (bank-owned) properties and estate sales.
- Evaporative Cooler (Swamp Cooler): a cooling system that uses water evaporation to cool air. Common in older El Paso homes and significantly cheaper to operate than refrigerated air but less effective during humid monsoon season.
- Refrigerated Air: standard air conditioning that uses a compressor and refrigerant. Preferred by most El Paso buyers over swamp coolers.
- Caliche: a hard, calcium carbonate layer in El Paso's desert soil that affects foundation construction, excavation costs, and drainage.
Title and Legal Terms
- Title Search: an examination of public records to verify the property's ownership history and identify any liens, easements, or claims against the property.
- Title Insurance: insurance that protects the buyer (owner's policy) and lender (lender's policy) against title defects discovered after closing. Standard in Texas transactions.
- Lien: a legal claim against a property, usually for unpaid debts. Mortgages, tax liens, mechanic's liens, and HOA liens must be resolved before clear title can be conveyed.
- Easement: a legal right for someone other than the property owner to use a portion of the property for a specific purpose, such as utility access or shared driveway.
- Abstract of Title: a summary of all recorded documents affecting a property's title. In El Paso, the title company uses this to identify potential issues.
- Deed of Trust: in Texas, the security instrument used in place of a mortgage. It involves three parties: the borrower (trustor), the lender (beneficiary), and the trustee who holds the power of sale in case of default.
TREC and Texas-Specific Terms
- TREC (Texas Real Estate Commission): the state agency that regulates real estate agents, brokers, and transactions in Texas. TREC publishes standardized contract forms used in most residential transactions.
- Option Period: a negotiated period (typically 7 to 10 days in El Paso) during which the buyer can terminate the contract for any reason, in exchange for a non-refundable option fee paid to the seller. This is Texas-specific and replaces the inspection contingency used in most other states.
- Option Fee: the fee paid for the option period, typically $100 to $500 in El Paso. Non-refundable to the seller but credited to the buyer at closing if the transaction proceeds.
- Earnest Money: a deposit demonstrating the buyer's good faith, typically 1 to 2 percent of the purchase price in El Paso. Held in escrow and applied to closing costs or down payment.
- Seller's Disclosure: a form required by Texas law in which the seller discloses known defects and conditions of the property.
- HOA Addendum: an addendum to the TREC contract used when the property is in a homeowners association. Provides the buyer with HOA documents and a review period.
Market and Valuation Terms
- Buyer's Market: market conditions where supply exceeds demand, giving buyers negotiating leverage. Characterized by high inventory and longer days on market.
- Seller's Market: market conditions where demand exceeds supply, giving sellers leverage. Characterized by low inventory, multiple offers, and quick sales.
- Days on Market (DOM): the number of days a property has been listed for sale. In El Paso, the average DOM for properly priced homes is 30 to 50 days.
- MLS (Multiple Listing Service): the database where agents list properties for sale. In El Paso, the Greater El Paso Association of Realtors (GEPAR) operates the local MLS.
- Comps (Comparables): recently sold properties similar to the subject property in size, condition, location, and features. Used to determine market value.
- Equity: the difference between a property's market value and the outstanding mortgage balance. Equity builds as you pay down the mortgage and as the property appreciates.
Questions About Real Estate Terms?
Real estate terminology does not need to be intimidating. ProGen Real Estate, led by broker Josue R. Jimenez (TREC #619091), explains every document, term, and step of the process in plain language so you understand exactly what you are signing and why. No question is too basic — our job is to make sure you are informed and confident throughout your transaction. Call (915) 691-1082 to work with a broker who communicates clearly.