Your head may being to spin when you hear all the different terms being thrown around by your Realtor, when purchasing a home. Realtors might occasionally use a word that you might not understand, though by and large they try to explain things in simple terms. Therefore, it is a good idea to learn as much as you can about common real estate terms ahead of time. Here is a look at some of the most common terms you might hear as they relate to obtaining financing for your new home.
Adjustable Rate Mortgage (ARM)
A special type of loan with an interest rate that changes on a periodic basis is known as an Adjustable Rate Mortgage. Over here, the rate changes as the mortgage loan stay in sync with the current index, which is similar to the method used with one-year treasury bills. Adjustable Rate Mortgages can go up by more than 2 percentage points per year and may raise as much as 6 points above the original rate.
Amortization
Amortization is a special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan.|A special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan is referred to as Amortization.|A unique type of payment plan that permits you to reduce the amount of your debt in a gradual way by making payments every month on the main amount of the loan is referred to as Amortization.
Appraisal
Appraisal is the term used to describe the estimate of the value of or the quality of your home on a specific date An expert must complete the appraisal which is required by lenders prior to approval of a loan. The lender will determine if the home you wish to purchase is worthy of the investment required when loaning you the money based upon the results of the appraisal.
Conventional Mortgage
The type of home loan that is not backed by the VA (Veterans' Administration) or by HUD is known as conventional mortgage. As such, a conventional loan adheres to the conditions that have been established by the state of Texas as well as by the lending institution. This means the mortgage rate may alter according to the lending institution and may even alter if you acquire the loan in a state that is not in Texas.
Earnest Money
The deposit that you make to the seller or to his or her agent is known as earnest money. You need to make this deposit when you sign an agreement of sale and the seriousness of your interest in purchasing the home is demonstrated by this deposit. The earnest money you paid will be adjusted with your down payment on the home when you purchase the home. If the sale does not take place, you will lose this earnest money unless the purchase offer dictates the money is to be refunded.
Adjustable Rate Mortgage (ARM)
A special type of loan with an interest rate that changes on a periodic basis is known as an Adjustable Rate Mortgage. Over here, the rate changes as the mortgage loan stay in sync with the current index, which is similar to the method used with one-year treasury bills. Adjustable Rate Mortgages can go up by more than 2 percentage points per year and may raise as much as 6 points above the original rate.
Amortization
Amortization is a special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan.|A special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan is referred to as Amortization.|A unique type of payment plan that permits you to reduce the amount of your debt in a gradual way by making payments every month on the main amount of the loan is referred to as Amortization.
Appraisal
Appraisal is the term used to describe the estimate of the value of or the quality of your home on a specific date An expert must complete the appraisal which is required by lenders prior to approval of a loan. The lender will determine if the home you wish to purchase is worthy of the investment required when loaning you the money based upon the results of the appraisal.
Conventional Mortgage
The type of home loan that is not backed by the VA (Veterans' Administration) or by HUD is known as conventional mortgage. As such, a conventional loan adheres to the conditions that have been established by the state of Texas as well as by the lending institution. This means the mortgage rate may alter according to the lending institution and may even alter if you acquire the loan in a state that is not in Texas.
Earnest Money
The deposit that you make to the seller or to his or her agent is known as earnest money. You need to make this deposit when you sign an agreement of sale and the seriousness of your interest in purchasing the home is demonstrated by this deposit. The earnest money you paid will be adjusted with your down payment on the home when you purchase the home. If the sale does not take place, you will lose this earnest money unless the purchase offer dictates the money is to be refunded.
About the Author:
Jim Olenbush has been active in the Austin real estate industry since 1997. His team of experienced real estate agents specialize in Costa Bella Lake Travis and other luxury neighborhoods around Austin, Texas.
