Buying a home can be hectic, especially if it’s your first time. Listening to your realtor discuss assumable mortgage, closing costs, and title insurance can be overwhelming because you may not even know what anything means. To save you a headache, here’s Ryan Homes at Brunswick Crossing’s ultimate guide to realtor lingo:
Adjustable-rate mortgage: A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index
Appraisal: A written justification of the price paid for a property, primarily based on an analysis of comparable sales of similar nearby homes
Assumable mortgage: A loan that allows a buyer to take over a seller’s current loan, typically without change to the terms or interest rate
Broker: A company or individual who lends to larger investors; anyone who acts as an agent or realtor, bringing two parties together for any type of transaction
Comparative market analysis (CMA): A report that shows the price of one home comparable to others in the area that were recently sold, are on the market, and were sold but not within the listing period
Closing costs: Miscellaneous expenses paid by the buyer and realtor when a home is sold, including brokerage commission, mortgage-related fees, escrow, transfer taxes, recording fees, and title insurance
Cloud on title: Any condition revealed by a title search that adversely affects the title to real estate, which usually cannot be removed except by deed, release, or court action
Contingency: A provision of an agreement between the buyer and the broker that keeps the agreement from being fully legally binding until a certain condition is met
Deed: A legal document conveying title to a property
Down payment: A part of the purchase that a buyer pays in cash and doesn’t finance with a mortgage
Escrow: An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition
Equity: A homeowner’s financial interest in a property; the difference between the fair market value of the property and the amount owed on its mortgage
Expansion potential: Extra space on the lot or in the home, subject to local zoning restrictions
Fair market value: The highest price that a buyer would pay and the lowest a seller would accept
Fixture: Anything valuable that’s permanently attached to a home, including wall-to-wall carpeting, lights, window coverings, and landscaping
Listing: An agreement between a realtor and a homeowner that allows the seller to market and arrange for the sale of the home
Loan: A sum of borrowed money that’s generally repaid with interest
Mortgage: A legal document that pledges a property to the lender as security for payment of a debt
Mortgage note: A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified amount of time
PITI: If a homeowner has an “impounded” loan, then the monthly payment of the lender includes principal, interest, taxes, and insurance (PITI); if a homeowner doesn’t have an “impounded” loan, then the lender calculates the PITI to determine the debt-to-income ratio
(Original) Principal balance: The total amount of principal owed on a mortgage before any payments are made
Recording fees: A payment made to the registrar’s office after a properly executed legal document is made part of public record, such as a deed, mortgage note, satisfaction of mortgage, or extension of mortgage
Security: The property that will be pledged as collateral for a loan
Title insurance: An insurance policy typically paid for by the buyer that protects a lender or owner’s interest in property from any unexpected or fraudulent claims of ownership
Transfer taxes: The state of local tax payable when a title passes from one owner to another
These textbook terms will come in handy when you're negotiating closing costs, looking for a mortgage payment plan, or determining which home is best in your area.
