First Time Homebuyer Vocabulary
Let’s face it, when you’re a first time homebuyer, real estate agents, lenders and mortgage brokers alike throw a lot of vocabulary out there that you may not understand. That is why Cesi Pagano & Associates has created a first time homebuyer cheat sheet to assist you in learning the most common terms used in real estate transactions.
An evaluation by a lender that determines whether the borrower qualifies for a loan and the maximum amount they qualify for.
Adjustable Rate Mortgage (ARM)
Interest rates are periodically updated to coincide with the current market interest rates.
Fixed Rate Loan
A loan whose interest rate never changes during the life of the loan
Annual Percentage Rate (APR)
The cost of a mortgage stated as a yearly rate with all financial cost, including interest, mortgage, insurance, and loan origination fee.
Back End Ratio
The ratio of all fixed debt, including housing expenses to gross income.
The mortgage company establishes an escrow account to pay property taxes and insurance during the term of the mortgage.
Private Mortgage Insurance (PMI)
If you have a down payment of less than 20%, the lender requires PMI. This protects the lender from losing money if you end up in foreclosure.
Combined property and liability insurance designed for residential property owners.
A form of encumbrance that hold property as security for the payment of debt.
The amount for which something can be sold during the current market.