August 24th, 2018 12:57 PM by Jackie A. Graves, President
If you're in the market to buy your first home,
one of the best things you can do is get your real estate vocabulary in gear.
Why? Because words matter, and soon you'll need to know your real estate lingo
to talk wisely, and with confidence, about one of the most important
investments you'll ever make.
need to panic. We're here to get you started with some of the more important
Ready, Set, Go:
Adjustable-Rate Mortgage (ARM) –
A type of mortgage with an interest rate that adjusts after an initial period
of time — typically 3, 5, or 7 years — and resets periodically. ARMs
usually give you lower monthly payments at the outset, but over time your
payments will change with interest rates. Learn more about ARMs.
Amortization Schedule - This is a very important
table that outlines every monthly payment you'll make and its contribution
toward equity. Equally important, it will show the real cost of the home
at the end of your loan term. Learn how
Annual Percentage Rate (APR) –
The annual rate it costs you to borrow over the term of the loan, including the
interest rate, points, fees and certain other charges you are required to
pay. The APR is the bottom-line number you can use to shop and compare
rates among lenders. Be sure you understand the difference between APR and Interest Rate.
An analysis usually performed by a qualified appraisal professional who
estimates the value of a property by taking current market values of similar
homes and the quality of the home into account. Understand the importance of home
The last step of the real estate transaction when you sign the final mortgage
documents, receive title to the house, and pay all closing costs. After a
successful closing, you have a new house to call home. Check out our infographic.
Credit Score –
A three-digit number — ranging from 350 to 850 — that represents and summarizes
information from your credit report, indicating your likeliness to repay your
debt. Your credit score plays a significant role in getting approved for
a loan and the interest rate you are charged — the higher your score the
better. Learn more about your credit score and
how you can improve it.
The difference between how much your home is worth and how much you owe on your
home. If you owe $100,000 on your house but it is worth $130,000, you have
$30,000 of equity. See how equity adds up.
Fixed-Rate Mortgage –
A mortgage with an interest rate that does not change during the entire term of
your loan. This is the most common type of mortgage, giving you certainty
and stability over the life of the loan. Learn more about fixed-rate mortgages.
Sometimes called discount points, these are up-front payments typically used to
reduce your mortgage interest rate on the loan and obtain a lower monthly
payment. A point is 1% of your loan amount, or $1,000 on a $100,000 loan. Is
there a “point” in paying points? Find out here.
Private Mortgage Insurance (PMI) – A monthly premium required by
your lender if your down payment is less than 20%, protecting the lender if you
are unable to pay your mortgage. Get the low down on PMI.
list just scratches the surface of housing market terminology. For a complete
list of important terms from A-Z, visit our Glossary where
you'll find it all.
Source: To view the original article click here