| Anyone interested in real estate should be able to talk | | | | down payment orclosing costs. |
| thetalk. Here is a list of common phrases and words | | | | Escrow. A procedure in which documents or transfers |
| with ashort explanation. Use it as a reference: | | | | ofcash and property are put in the care of a qualified |
| Adjustable Rate Mortgage (ARM). A type of | | | | thirdparty, other than the buyer or seller. |
| mortgage loanwhose interest rate changes periodically | | | | FHA Financing. Financing for a loan which will be |
| up or down, usuallyonce or twice a year. They are tied | | | | insuredagainst loss by the Federal Housing |
| to an interest rateindex like 11th District Cost of Funds. | | | | Administration. Suchfinancing allows for a lower down |
| Annual Percentage Rate (APR). Everything financed in | | | | payment than requiredby most lenders. |
| yourmortgage loan package (interest, loan fees, points | | | | Homeowners Insurance. Insurance that protects the |
| or othercharges) expressed as a percentage of the | | | | homeownerfrom casualty (losses or damage to the |
| loan amount | | | | home or personalproperty) and from liability (damages |
| (usually slightly above the actual interest rate alone). | | | | to other people orproperty). Required by the lender |
| Assumable Loan. A loan in which the lender is willing to | | | | and usually included inthe monthly mortgage payment. |
| "transfer" from the previous owner of the home to the | | | | Loan Origination Fee. A fee charged by the lender |
| newowner, sometimes at the same interest rate, | | | | forevaluating, preparing, and submitting a proposed |
| sometimes ata new rate. An assumable loan can | | | | mortgageloan. |
| make your home moreattractive to buyers when you | | | | Mortgage Insurance Premium (MIP). A charge paid by |
| want to sell. Often thenew buyer has to qualify for the | | | | theborrower (usually as part of the closing costs) to |
| assumption just as he/shewould for a new loan. | | | | obtainfinancing, especially when making a down |
| Closing Costs. Costs the buyer must pay at the time | | | | payment of lessthan 20 percent of the purchase price, |
| ofclosing in addition to the down payment: including | | | | for example on an |
| points,mortgage insurance premium, homeowners | | | | FHA-insured loan. |
| insurance,prepayments for property taxes, etc. Closing | | | | Point. An amount equal to one percent of the |
| costs average | | | | principalamount being borrowed. The lender may |
| 3% to 4% of the loan amount. | | | | charge the borrowerseveral points in order to provide |
| Contingency. A condition put on an offer to buy a | | | | the loan. |
| home;such as the prospective buyer making an offer | | | | Property Taxes. Taxes (based on the assessed value |
| contingenton his or her successful sale of a present | | | | of thehome) paid by the homeowner for community |
| home. | | | | services suchas schools, public works, and other costs |
| Conventional Mortgage. A type of mortgage not | | | | of local government. |
| insured byeither the Federal Housing Administration | | | | Paid as a part of the monthly mortgage payment. |
| (FHA) or the | | | | Title Insurance. Protects lenders and homeowners |
| Department of Veterans Affairs (VA), and thus | | | | against lossof their interest in property due to legal |
| usuallyrequiring a 10% to 20% down payment. | | | | defects in the title. |
| Earnest Money. Funds submitted with an offer to | | | | VA Loan. A loan guaranteed by the Department of |
| show | | | | Veterans Affairsagainst loss to the lender, and made |
| "good faith" to follow through with the purchase. | | | | through a private lender. |
| Earnestmoney is placed by the buyer into an escrow | | | | When it comes to real estate, now you can sling the |
| trust accountuntil closing, when it becomes part of the | | | | lingo withthe best of them. |