10 TERMS YOU NEED TO KNOW WHEN BUYING A HOME

The lingo real estate professionals use can sound like a foreign language. Here are the top terms decoded so you, too, can keep up with the pros:

Adjustable-Rate Mortgage (ARM)
A program with interest rates and payments that change over the life of the loan.

Annual Percentage Rate (APR)
The annual rate charged (including fees) for borrowing expressed as a percentage.

Assessment
How the government determines the amount of property taxes to be paid.

Closing Costs
The costs of getting a mortgage paid at closing including origination fees, points, insurance, etc.

Earnest Money
The deposit paid to the seller demonstrating the buyer’s commitment to purchasing the home.

Equity
The difference between a home’s value and how much is still owed. (Value – Balance = Equity).

Escrow
A portion of each mortgage payment held in an account to pay the property’s taxes and insurance.

Lien
Legal claim by a lender or creditor holding the property as security for a debt.

PITI
Acronym for principal, interest, taxes, and insurance. Everything your mortgage payment covers.

Pre-Approval
A preliminary agreement from a lender granting a mortgage loan which speeds up the buying process.