Terms You Should Know
Buying or selling a home can be confusing enough without a language barrier. We have collected a few terms which you will likely encounter during the process.
- Adjustable Rate Loans: Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates.
- Agency: Any relationship in which one party (agent) acts for or represents another (principal) under the authority of the latter. Agency involving real property should be listed in writing.
- APR (annual percentage rate): The yearly interest percentage of a loan, as expressed by the actual rate of interest paid.
- Appraisal: An opinion of value based upon a factual analysis.
- Closing Costs: Expenses incidental to a sale of real estate such as loan fees, title fees, appraisal fees, etc.
- Conventional Loan: A mortgage or deed not obtained under a government insured program.
- Deed: A conveyancing instrument given to pass fee title to property upon sale.
- Earnest Money: Money given by the buyer with an offer to purchase which shows good faith.
- Escrow Account: Account held by a lender for payment of taxes, insurance or other periodic debts against real property. The mortgagor pays a portion of, for example, the yearly taxes, with each monthly payment. The lender pays the tax bill from the accumulated funds.
- Homeowner’s Insurance: Includes the coverage of hazard insurance plus added coverage such as personal liability and theft away from the home.
- PITI (principal, interest, taxes and insurance): Used to indicate what is included in a monthly payment on real property.
- Private Mortgage Insurance (PMI): Insurance against a loss by a lender in the event of default by a borrower. The insurance is similar to insurance by a governmental agency such as FHA, except that it is issued by a private insurance company. The premium is paid by the borrower and is included in the mortgage payment.
- Title: The evidence one has of right to possession of land.