The real estate industry has it’s own terminology.
Real Estate Terminology
If you’re not familiar with the terms, purchasing a home can be very intimidating. To make your life a little easier, here are some of the terms you may hear, but not know the meaning of.
Annual Percentage Rate (APR)>
The cost of borrowing money. It includes the interest rate, points (if applicable), broker fees and some expenses. The APR is usually a bit higher than your interest rate.
Appraisal>
This is the value assigned to the property by an independent third party.
Closing Costs>
These are the costs incurred to get the real estate transaction closed. It includes attorney fees, points, taxes, your title insurance, bank fees and more.
Credit Score>
This is your credit rating according to the three main credit bureaus. Lenders use this as a tool to gauge whether you will pay your future debts.
Discount Points>
This is an upfront interest payment which will reduce your monthly payments. One point is equal to one percent of the loan value. By paying points, you can reduce the interest rate on your mortgage.
Down Payment>
This is the payment you make up front when you purchase real estate. A typical buyer will make a down payment between 3% and 20% of the purchase price.
Escrow>
The down payment is typically held by an attorney in an Escrow Fund, until it get given to the seller at closing.
Fixed Rate Mortgage>
This type of mortgage remains at the same interest rate throughout the life of the mortgage.
Home Inspection>
A professional inspector is hired to determine the overall condition of the property. A proper inspection will evaluate the plumbing, HVAC, and electrical systems. Also the roof, foundation, windows, doors included appliances, among others items.
Interest Rate>
The percentage you pay to borrow the funds to purchase the property.
For more information about Real Estate Terminology, contact us.
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