On the 10th day of tips, bits & lists, we take on the 10 words you'll want to brush up on if you're in the market to buy a home. When you know the real estate lingo, you can talk wisely and confidently about one of your most important investments.
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 rise with interest rates. Learn more about what mortgage is right for you.
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 credit charges you are required to pay. The APR is the bottom-line number you can use to shop and compare rates among lenders.
Appraisal – An analysis 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.
Closing – 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.
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 how you can improve your credit score.
Equity – 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.
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 what mortgage is right for you.
The Closing Disclosure – This form provides all of the actual fees, costs and credits associated with closing your loan. Your lender is required to provide you with the Closing Disclosure 3 business days before your scheduled closing to review and ensure that the loan terms and costs closely align with those provided in your Loan Estimate.
Points – 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.
Read other posts in this series and stay tuned for the next 2 days of tips, bits & lists.
Want to receive our weekly blog round up? Subscribe at the right – and each Friday we'll send you our latest blog posts.
Have a comment or question about this post? Email us to let us know what's on your mind.