As you are at any stage of the process of buying a home, you will hear a lot of jargon that you may not understand. So today I will help explain some of the lingo. These are just some of the many things you may hear when buying a home.
o Appraisal – This is to determine the value of something. In this case, the home or land.
o Appreciation and Depreciation – Long story short, appreciation is good, and depreciation is bad. Appreciation means the home will increase in value while depreciation mean it will most likely decrease in value.
o Closing Cost – These are the cost that comes with your purchase of a new home. These fees are for the credit report, appraisal, inspection, your lovely realtor, etc.
o Escrow – It is an arrangement when a 3rd party holds documents and funds before closing on the home, this 3rd party is usually an attorney or a title agent who helps the make sure the transaction is secure.
o EMD (Earnest Money Deposit) – It is a down payment or deposit to show a seller that you are committed to purchasing a property.
o Fixed Rate Mortgage – This locks your interest rate on the mortgage throughout the entirety of the loan.
o HOA (Homeowners’ Association) – This association collects fees from the neighborhood or community to help maintain the upkeep and services of the community. The fee may cover trash pickup, security, swimming pool, etc.
o MLS (Multiple Listing Service) – This is a large computer database that holds details of current listing on the market, this is used by real estate agents and such to provide the best information possible.
o PITI: Principal (the amount borrowed), Interest, Property Taxes, and Insurance (Homeowner’s). These items are what make up the mortgage payment. What a PITI we have to pay such things in our mortgage.
o PMI (Private Mortgage Insurance) – According to Consumer Financial Protection Bureau, “[it] is a type of mortgage insurance used with conventional loans. Like other kinds of mortgage insurance, PMI protects the lender—not you—if you stop making payments on your loan.”
o Short Sale – This is when the mortgage of the house is worth more than the house itself. The bank accepts to a payoff for less than the balance of the loan.
Is there any Real Estate lingo that seems confusing to you? Let us know in the comments down below!
Reference:
“What is private mortgage insurance?” Consumer Financial Protection Bureau. https://www.consumerfinance.gov/askcfpb/122/what-is-private-mortgage-insurance.html (February 20, 2017).
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