Real Estate Lingo 101

Congratulations! So you've decided to buy a home for sale. If you were in Chandler, Arizona and I could speak to you directly, I would let you know that there are an abundance of new terms & jargon that you might want to become familiar with should you be able to grasp what certain words mean in the real estate world. While this is not an exhaustive list, these are some of the more important ones, at least in your eyes as the buyer. Here are commonly used real estate terms and their definitions:

ARM (adjustable rate mortgage): mortgage obtained that has an interest rate that can change over time, i.e. 3 years, 5 years, 7 years, that will affect your monthly payment

APR (annual percentage rate): total finance charge (including interest,loan fees,etc) expressed as a percentage of the loan amount)

Appraisal: opinion of value based on factual analysis

Balloon payment: Final payment on a mortgage loan that is higher than any singular monthly payment. Generally best to avoid these.

CC&R's (Covenants,Conditions, and Restrictions): applies in areas where an HOA (homeowner's association) exists. document that controls the us, requirements, and restrictions of a property, aka, what you can and cannot do with the home.

Chain of title: history of conveyences and encumbrances (liens) affecting a property

Close of escrow: when title transfers from seller to buyer and documents are recorded

Closing statement: financial disclosure statement that shows all funds being received and disbursed by title. this is the money statement that shows everything $ wise involved with the real estate sale

Disclosure: to make known to another party. all disclosures must be in writing with dealing with real estate

Earnest money: deposit made by buyer to the title company (3rd party entity) as a sign of good faith

Escrow: deposit of funds and documents with a neutral third party (usually title company but can be an attorney). that third party carries out the instructions of the contract

Impounds: trust-type account set up by lenders for the accumulation of borrower funds to meet periodic payments, such as property taxes, hazard insurance, and/or mortgage insurance premiums

Loan Origination Fee: Percentage of the loan amount (usually 1%) charge by lender to the buyer

Owner's title policy: insurance for the property owner that insures the buyer againstloss due to title defects (aka missed liens) not excluded from the policy

PITI: Total monthly house payment including Principal, Interest, Taxes, and Insurance

With any luck you're be a real estate term guru in no time and impress the socks off your real estate agent! Get familiar with these real estate terms when buying a home and you'll have more peace of mind during your next homebuying experience.

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