When talking about buying or selling a home the staggering amount of terminology may make you feel like you’re speaking a foreign language. You will want to do your homework and brush up on your real estate terminology. Whether it is navigating the process of getting pre-qualified or evaluating prospective buyers for your home you will likely come across some terms, jargon and acronyms that will have you scratching your head.
While you may never have all of the lingo down – here ere are some of the most common phrases you may encounter.
Adjustable-Rate Mortgage (ARM): An alternative to the 30-year fixed-rate mortgages where the interest rate remains the same for the life of the loan—the interest rate and monthly payments on an ARM change. ARM interest rates are typically fixed for a period between three and 10 years before they change.
Debt-to-Income Ratio (DTI): The ratio based on what percentage of a homebuyer’s income goes to paying monthly bills.
FHA Loans (Federal Housing Administration Loans): make buying a home more accessible by providing mortgage help and letting borrowers qualify for a loan with a down payment of just 3.5% (instead of the recommended 20% down payment).
Home Equity Line of Credit: A line of credit you may take out based on the equity in your home.
Private Mortgage Insurance: An additional, monthly fee paid when the down payment is less than 20%.
Paid Outside of Closing: POC fees are paid upfront with the loan application and include items such as the appraisal or inspection fees.
Real Estate Settlement Procedures Act: RESPA outlines the disclosures about closing costs and settlement procedures throughout mortgage process.
Don’t be timid about asking for a definition or explanation of any term or concept that you are not familiar with. Opportunity Home Solutions speaks the language of real estate and are here to help you with your home sale or purchase.