Key Vocabulary You Need to Know When Buying a Home
Real estate jargon, like any other, can be confusing. Since buying a house is a very serious investment, it’s important to be aware of as many terms as possible, since it could impact the rest of your life. Here are some key words to know.
ARM
Adjustable-Rate Mortgage. A mortgage loan with a fluctuating interest rate.
APR
Annual Percentage Rate. APR is a broader measure of the cost of borrowing money. It reflects not only the interest rate but also points, fees and other charges paid to obtain a loan.
Appraisal
An estimate of the market value of a property based on comparable recent sales of homes nearby. It is done by a licensed appraiser for a lender.
Assessment
An estimate of the home’s value for property tax purposes.
Closing Costs
The expenses and fees associated with the purchase and sale of a home, such as taxes, title insurance, appraisal fees and lender fees.
Closing Disclosure
A final statement of loan terms and closing costs. The buyer must receive it three business days before closing. Replaced the old HUD-1 form.
Commission
A fee charged by a real estate agent for his services. In many cases, the seller pays the commission to his agent as well as the buyer’s agent.
Contingency
A condition that must be met before a sale can close. Common contingencies include home inspection, financing and home appraisal.
DTI
Debt-to-Income. The total percent of a borrower’s income that is paid toward debt each month calculated as a ratio of a borrower’s gross monthly income over his debts including car payments, student loans and credit card bills. A borrower’s DTI affects his credit rating.
Deed
A legal document filed with the county that records homeownership.
Down Payment
The amount of money a buyer pays at closing toward a home purchase.
Earnest Money Deposit
A partial payment by a buyer when submitting a contract that demonstrates the buyer’s commitment to the deal. The money, which is held in an escrow account, goes toward closing costs.
Equity
The amount remaining after subtracting the amount of a mortgage loan from the sale price of the home.
eXp Realty—The Results Team—is ready to help you buy or sell your home! Stop on by our location at 2623 N. Walnut St, Bloomington, IN 47404. Or call us at: (812)822-2746.