Do you speak Real Estate?
Anyone interested in real estate should be able to speak the
talk. Here is a list of common phrases and words with a
brief explanation Use it as a reference:
Adjustable Rate Mortgage (ARM). A type of home loan.
whose interest rate changes periodically up or down, usually
Once or twice a year. They are tied to an interest rate.
index as the District 11 Cost of Funds.
Annual Percentage Rate (APR). All financed in your
mortgage loan package (interest, loan installments, points or other
fees) expressed as a percentage of the loan amount
(usually slightly above the real interest rate).
Assumable Loan. A loan that the lender is willing to
“transfer” from the previous owner of the dwelling to the new one
owner, sometimes at the same interest rate, sometimes at
a new rate. An assumable loan can make your home more
attractive to buyers when you want to sell. Often the
the new buyer has to qualify for the assumption just as he/she
It would be for a new loan.
Closing costs. Expenses to be paid by the buyer at the time of the
closing plus down payment: including points,
mortgage insurance premium, homeowners insurance,
advance payments of property taxes, etc. Average Closing Costs
3% to 4% of the loan amount.
Contingency. Subject to submitting an offer to purchase a home;
as the prospective buyer making a contingent offer
in the successful sale of a current home.
Conventional Mortgage. A type of mortgage not insured by
either the Federal Housing Administration (FHA) or the
Department of Veterans Affairs (VA) and therefore generally
requires a 10% to 20% down payment.
serious money. Funds sent with an offer to display
“good faith” to go ahead with the purchase. Serious
money is placed by the buyer in an escrow/escrow account
until closing, when it becomes part of the down payment or
closing costs.
Deposit. A procedure in which documents or transfers of
cash and property are placed in the care of a qualified third party
party other than the buyer or seller.
FHA financing. Financing for a loan that will be secured
against loss by the Federal Housing Administration. Similar
financing allows for a lower down payment than required
by most lenders.
Homeowners insurance. Insurance that protects the owner
due to acts of God (loss or damage to the home or
property) and liability (injury to other people or
property). Required by the lender and usually included in
the monthly mortgage payment.
Loan origination fee. A fee charged by the lender for
evaluate, prepare and submit a mortgage proposal
loan.
Mortgage Insurance Premium (MIP). A fee paid by the
borrow (usually as part of closing costs) to obtain
financing, especially when making a down payment of less
20 percent of the purchase price, for example in a
FHA insured loan.
Spot. An amount equal to one percent of the principal
amount borrowed. The lender may charge the borrower
several points in order to provide the loan.
property taxes. Taxes (based on the cadastral value of the
household) paid by the homeowner for community services such as
such as schools, public works and other local government costs.
It is paid in addition to the monthly mortgage payment.
Title insurance. Protects lenders and homeowners against loss
of your interest in the property due to legal defects in the title.
VA loan. A loan guaranteed by the Department of Veterans Affairs
against loss to the lender, and done through a private lender.
When it comes to real estate, you can now throw the lingo around with
the best of them.