Some Real Estate terms with which every buyer, seller or investor should be familiar:
Adjustable Rate Mortgage (ARM) :The interest rate is tied to a financial index, and the monthly payment
can go up or down over time.
APR: Annual percentage fee (interest and fees you’ll be charged).
Appraisal: A report made by a qualified person setting forth an opinion or estimate
of property value. (Appraisal also refers to the process through which a
conclusion on property value is derived.)
Balloon Payment: A long-term mortgage that has a large payment due at maturity.
Closing: The final meeting, usually with your real estate agent, sellers and a
closing agent or attorney (although the sellers may complete paperwork
separately) where you sign the necessary paperwork, make the monetary
transaction and take possession of the house immediately, or in a
designated time period shortly thereafter.
Closing Costs: The fees associated with processing the paperwork necessary to
complete the transaction.
Comparables: Homes with similar square footage that recently sold in the area.
Contingencies: Conditions which must be met for the purchase contract to be executed.
Counteroffer: The counteroffer is the seller’s response to your offer.
Credit Report: A document completed by a credit-reporting agency providing information
about the buyer’s credit cards, previous mortgage history, bank loans and
public records dealing with financial matters.
Debt to Income Ratio: Compares the amount of monthly income to the amount the borrower will
owe each month in house payment (PITI) plus other debts. The other debts
may include but not limited to car payment, credit cards, alimony, child
support, and personal loans. This ratio is commonly used to see if the
borrower has the capacity to repay the debt.