Savvy home buyers and sellers alike should know basic real estate lingo. If you´re preparing to buy or sell Central Indiana real estate, brushing up on the following terms can help you understand exactly what you´re getting into. Vocab quiz to follow!
Adjustable Rate Mortgage
A mortgage that allows the lender to periodically adjust the interest rate of the loan. The adjustments are generally based on changes in a specified index.
A professional who is trained and licensed to conduct real estate transactions.
A written estimate of the quality or value of your property based on sales of comparable homes in the area.
Expenses separate from the price of the property that buyers and sellers should expect to incur during a real estate transaction. These include a loan origination fee, title examination and insurance, survey, attorney's fee, and prepaid items such as escrow deposits for taxes and insurance.
The payment your real estate agent receives for his or her services. Commission is usually a pre-agreed upon percentage of the selling price of the property to be paid by the seller.
Comparables are recently sold properties similar to the property you are selling in terms of size, location and features. Comparables are used to help the appraiser determine the value of your property.
The failure to make a mortgage payment when it is due. Loan payments more than 30 overdue are likely to be reported to a credit bureau.
A cash payment made toward the purchase price of a property. The amount of down payment varies according to the type of loan used and how much cash a buyer is willing to invest in a property.
A deposit submitted with a purchase offer to show that your offer is serious. Earnest money is forfeited if you decide not to complete the purchase, and is applied to the purchase price if the sale is closed.
An account set up through your lender to pay property taxes, homeowners insurance and other services. The amount you pay into escrow each month is beyond what would be required if you were only paying principal and interest on a loan.
A mortgage in which the interest rate does not change during the entire term of the loan.
An examination of the construction, condition and internal systems of a home prior to purchase; a satisfactory home inspection may be a condition of purchase.
Insurance that covers certain home repairs, appliances and fixtures for a specified amount of time. The buyer can request this coverage as a condition of the sale.
Loan origination fee
A fee charged to the borrower by the lender to pay for the administrative costs of processing a mortgage loan. The fee is usually figured as a percentage of the loan amount.
An agreement in which the lender guarantees a specified interest rate for a certain amount of time at a certain cost.
Principal, Interest, Taxes and Insurance (PITI)
These four components comprise a monthly mortgage payment. Principal is the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance. The combined sums make up your total monthly payment
A real estate professional who is a member of the National Association of REALTORS® and is bound to abide by the organization´s strict code of ethics.
The buyer´s final examination of the property being purchased; generally held at a specified time immediately before the closing.