All industries have their own specific lingo. This is true with home buying. Today, we’ll clarify some key terms, that way as you do research and look for financing, you’ll have a better understanding of the language.
Adjustable Mortgage- A loan whose interest rate adjusts based on the movement of the market. This is contrary to a fixed interest rate which keeps you at one locked interest throughout the life of the loan. Each has their pros and cons, talking to a financial consultant can give you a better understanding of what’s best for you.
Appraisal- The value placed on a property after it has been evaluated by an appraiser.
Cap- The limit interest can raise on an adjustable mortgage.
Closing- The meeting where you sign documents in order to transfer the title to the home. This comes with some closing costs, which are fees for obtaining the mortgage loan, as well as the transfer of the title.
Down payment- This is the difference between the selling price and the amount on the mortgage. Usually this is paid at closing.
Escrow- A period when funds and documents being handled through a third party on behalf of the buyer or seller.
Index- The standard of adjustment which determines an increase on the interest of an adjustable mortgage.
Mortgage Broker- Represents numerous lending institutions. They help consumers find an affordable mortgage and charge a fee upon verification of the loan.
Note- An official document which states debt and terms of repayment.
Principal- The amount borrowed on a loan, principal balance is the amount owed on a loan, excluding interest.
Title- Evidence of legal ownership of property.
Now, these are only a few of the important terms used during the home buying process. There are others, and some are a bit more complex. Your real estate agent, broker and lawyer are able to help clarify any information on a document you may not understand.
For those looking to purchase a home in the Encinitas, California, I’d be happy to help you during this process. There are many great properties for sale in Encinitas that could be great for you and your family. Send me an email or give me a call and we can discuss what you want in a home in Encinitas.