Buying a Home? Do You Know the Lingo?
Buying a home can be intimidating if you are not familiar with the terms used during the process. To start you on your path with confidence, we have compiled a list of some of the most common terms used when buying a home.
Freddie Mac has compiled a more exhaustive glossary of terms in their “My Home” section of their website.
Annual Percentage Rate (APR) – This is a broader measure of your cost for borrowing money or a “mortgage“. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay. Because these costs are rolled in, the APR is usually higher than your interest rate.
Appraisal – A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties. It is a necessary step in getting your financing secured as it validates the home’s worth to you and your lender.
Closing Costs – The costs to complete the real estate transaction. Costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs. Ask your lender for a complete list of closing cost items.
Credit Score – A number ranging from 300-850, that is based on an analysis of your credit history. Your credit score plays a significant role when securing a mortgage as it helps lenders determine the likelihood that you’ll repay future debts. The higher your score, the better, but many buyers believe they need at least a 780 score to qualify when, in actuality, over 55% of approved loans had a score below 750.
Buying a Home? Do You Know the Lingo?
Discount Points – A point equals 1% of your loan (1 point on a $200,000 loan = $2,000). You can pay points to buy down your mortgage interest rate. It’s essentially an upfront interest payment to lock in a lower rate for your mortgage.
Down Payment – This is a portion of the cost of your home that you pay upfront to secure the purchase of the property. Down payments are typically 3 to 20% of the purchase price of the home. There are zero-down programs available through VA loans for Veterans, as well as USDA loans for rural areas of the country. Eighty percent of first-time buyers put less than 20% down last month.
Escrow – The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
Fixed-Rate Mortgages – A mortgage with an interest rate that does not change for the entire term of the loan. Fixed-rate mortgages are typically 15 or 30 years.
Home Inspection – A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
Mortgage Rate – The interest rate you pay to borrow money to buy your house. The lower the rate, the better. Interest rates for a 30-year fixed rate mortgage have hovered between 4 and 4.25% for most of 2017.
Pre-Approval Letter – A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer. Having a pre-approval letter in hand while shopping for homes can help you move faster, and with greater confidence, in competitive markets.
Buying a Home? Do You Know the Lingo?
Primary Mortgage Insurance (PMI) – If you make a down payment lower than 20% on your conventional loan, your lender will require PMI, typically at a rate of .51%. PMI serves as an added insurance policy that protects the lender if you are unable to pay your mortgage and can be cancelled from your payment once you reach 20% equity in your home. For more information on how PMI can impact your monthly housing cost, click here.
Real Estate Professional – An individual who provides services in buying and selling homes. Real estate professionals are there to help you through the confusing paperwork, to help you find your dream home, to negotiate any of the details that come up, and to help make sure that you know exactly what’s going on in the housing market. Real estate professionals can refer you to local lenders or mortgage brokers along with other specialists that you will need throughout the home-buying process.
The best way to ensure that your home-buying process is a confident one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher,’ and who puts your family’s needs first.
Spring is traditionally the busiest season for real estate. Buyers, experiencing cabin fever all winter, emerge like flowers through the snow in search of their dream home.
The outlook for 2017 remains positive as well, as an additional 600 thousand properties will regain equity if home prices rise another 5% this year.
Selling your home is a matter of competition in today’s real estate. You’re competing with other like minded sellers all fighting for the right offer at the right from an eager buyer.
Do Your Future Plans Include a Move? What’s Stopping You from Selling Now? Are you an empty-nester? Do you want to retire where you are, or does a vacation
California Prop 60 and Prop 90 Property Tax Transfer Rates
Home Buyer Demand Continues To Outpace Homes For Sale. The price of any item is determined by the supply of that item, as well as the market demand.
Inventory Drops Again, Sales Slow. Inventory of existing homes for sale dropped to a 4.3-month supply, marking the 25th month in a row of declines.
Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.
11 Tips Sellers Need When The For Sale Sign Goes Up 11 Tips Sellers Need When The For Sale Sign Goes Up. The sellers have decluttered, painted, made repairs and spiffed up the landscaping. The curb appeal is at its best. After the long process of getting...
3 Tips to Succeed in Today's Real Estate Market Here are 3 Tips to Succeed in Today's Real Estate Market. In today’s highly competitive real estate market, where inventory levels are not keeping up with the constant stream of buyer demand, there are steps...
Thinking of Selling? You Should Act NOW While Inventory Is Low If you thought about selling your house this year, now more than ever may be the time to do it! The inventory of homes for sale is well below historic norms and buyer demand is skyrocketing. We...
3 Questions to Ask Before You Buy Your Dream Home If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interests at heart, they may not be fully aware of your needs...
5 Benefits To Homeownership That Should Be At The Top Of Your List 5 Benefits To Homeownership That Should Be At The Top Of Your List. Recently, Freddie Mac reported on the benefits of homeownership. According to their report, here are the five benefits...
Homeowners: Your Home Must Be Sold TWICE - Price To Sell In today’s housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 5%+ over the...
How Record Low Interest Rates Impact Your Home Purchasing Power According to Freddie Mac’s latest Primary Mortgage Market Survey, interest rates for a 30-year fixed rate mortgage are currently at 3.96%. This is still near record lows in comparison to...
5 Reasons Why You Should Not For Sale By Owner In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several...
Check This Out - Median Days on the Market Drops to 27 Some Highlights: The National Association of REALTORS® surveyed their members for their monthly Confidence Index. The REALTORS® Confidence Index is a key indicator of housing market strength based on a...
Harvard Study: Epic Housing Shortage Being Reported A Harvard study shows an epic housing shortage being reported. The Joint Center of Housing Studies (JCHS) at Harvard University recently released their 2017 State of the Nation’s Housing Study, and a...