20 Real Estate Terms Every Homebuyer in Wisconsin and Minnesota Should Know

Buying a home is exciting — but the jargon can feel like learning a new language. Between financing terms, contract clauses, and closing-day details, it’s easy to feel overwhelmed. To help you feel confident as you navigate the process, here’s a glossary of 20 essential real estate terms explained in plain English. Whether you’re buying in Wisconsin, Minnesota, or anywhere in the Driftless Region, this guide will give you the knowledge you need to make informed decisions.

Glossary of Real Estate Terms

1. Pre-Approval
   A lender’s written statement estimating how much they’re willing to loan you. It’s stronger than pre-qualification because it requires financial documents like pay stubs, W-2s, and credit checks.

2. Earnest Money
   A good-faith deposit you make after your offer is accepted. It shows the seller you’re serious and is applied toward your down payment or closing costs at closing.  For more information on the costs of buying a home, review our blog post, "The True Cost of Buying a Home in Wisconsin: What Every Buyer Should Know".

3. Contingency
   A condition that must be met for the sale to go through (for example: financing approval, appraisal, or home inspection).  For more information about the different contingencies involved in real estate transactions, review our blog post "Real Estate Contingencies Explained:  What Buyers and Sellers Need to Know".

4. Appraisal
   A professional estimate of a home’s value, usually ordered by your lender to ensure the loan amount isn’t higher than what the home is worth.

5. Inspection
   A licensed professional’s review of the property to check for issues like roof damage, foundation cracks, or faulty wiring.

6. Closing Costs
   All the fees and expenses you pay at the end of a transaction (besides the down payment). These may include lender fees, title insurance, recording fees, and attorney costs.  For more information on the costs of buying a home, review our blog post, "The True Cost of Buying a Home in Wisconsin: What Every Buyer Should Know"

7. Title Insurance
   Protection for buyers (and lenders) in case someone later claims ownership of the property or if a hidden lien is discovered.

8. Escrow
   A neutral third party that holds money and documents until all parts of the transaction are complete. You’ll often hear “escrow account” referring to funds for taxes and insurance.

9. Amortization
   The schedule showing how each mortgage payment is divided between interest and principal over time. Early payments are interest-heavy; later payments reduce principal more quickly.

10. Fixed-Rate Mortgage
    A home loan where the interest rate stays the same for the life of the loan, providing predictable monthly payments.  For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

11. Adjustable-Rate Mortgage (ARM)
    A loan with an interest rate that can change over time, often starting lower than a fixed-rate loan but potentially rising after a set period. For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

12. FHA Loan
    A loan backed by the Federal Housing Administration, popular with first-time buyers because of its lower down payment and credit requirements.  For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

13. VA Loan
    A mortgage option for veterans, active-duty military, and eligible family members. Offers no down payment and no private mortgage insurance (PMI).  For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

14. USDA Loan
    A government-backed loan for rural and suburban homebuyers. Often offers no down payment and reduced mortgage insurance. Common in parts of Wisconsin & Minnesota.  For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

15. Conventional Loan
    A standard mortgage not insured by the government. Usually requires higher credit scores and larger down payments, but often with more flexibility.  For more information on the types of financing options available, review our blog post "Understanding Your Mortgage Options: Cash Offers, Conventional, FHA, VA, and USDA Loans Explained"

16. PMI (Private Mortgage Insurance)
    An added monthly cost required when you put down less than 20% on a conventional loan. It protects the lender, not the buyer.  For more information on the costs of buying a home, review our blog post, "The True Cost of Buying a Home in Wisconsin: What Every Buyer Should Know"

17. Offer to Purchase
    The formal contract buyers submit to sellers, spelling out price, contingencies, closing date, and other terms. Known as a “Purchase Agreement” in Minnesota.

18. Underwriting
    The lender’s in-depth review of your loan file, verifying income, assets, debts, and creditworthiness before final approval.

19. Closing Disclosure (CD)
    A standardized five-page document your lender must provide at least three business days before closing. It outlines your loan terms, monthly payments, and all closing costs.

20. Recording Fees
    Fees paid to the county to officially record the deed and mortgage documents, making the sale part of the public record.

The homebuying process can feel complex, but understanding the language makes it far less intimidating. With this glossary in hand, you’ll feel more confident as you review contracts, talk with lenders, and move toward your closing day. And remember — you don’t have to figure it all out alone. Julie Delap is here to guide you step by step through your homebuying journey in Wisconsin and Minnesota.