When you purchase a home, your head may begin to spin when you hear all of the lingo being thrown around by your Realtor. Generally Realtors try to talk in laymen's terms, but there might be occasions when he or she might use a word that you do not understand. Hence you should know as much as possible about real estate terms well in advance. Find below some of the common terms related to obtaining financing for your new home which you might come across.
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 increase more than two percentage points each year and may raise as much as six 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 appraisal is required by lenders prior to approval of a loan and must be completed by an expert. 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. Therefore, a conventional loan sticks 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 vary according to the lending institution and may even vary if you acquire the loan in a state outside of Texas.
Earnest Money
Earnest money is a term given to the deposit that you make to the seller or to his or her agent. This deposit goes to show your seriousness of your interest in purchasing the home and you need to make this deposit when you sign an agreement of sale. If you do purchase the home, the earnest money you paid will be adjusted with your down payment on the home. If the sale does not happen, you will lose the money unless the purchase offer dictates the money is refundable.
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 increase more than two percentage points each year and may raise as much as six 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 appraisal is required by lenders prior to approval of a loan and must be completed by an expert. 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. Therefore, a conventional loan sticks 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 vary according to the lending institution and may even vary if you acquire the loan in a state outside of Texas.
Earnest Money
Earnest money is a term given to the deposit that you make to the seller or to his or her agent. This deposit goes to show your seriousness of your interest in purchasing the home and you need to make this deposit when you sign an agreement of sale. If you do purchase the home, the earnest money you paid will be adjusted with your down payment on the home. If the sale does not happen, you will lose the money unless the purchase offer dictates the money is refundable.
About the Author:
Jim Olenbush has been active in the Texas real estate industry since 1997. His team of experienced real estate agents specialize in Vineyard Bay Lake Travis and other luxury neighborhoods around Austin, Texas.
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