When your buying your first home, it’s a big, exciting step. But, it can also be overwhelming to try to understand the process and all the real estate terminology thrown your way. Buying your first home should be a great experience, and one way to make that happen is to educate yourself as to what some of the words your agent and mortgage broker will mention mean.
Adjustable Rate Mortgage
An Adjustable Rate Mortgage means that your interest rate will fluctuate throughout the life of your loan. Usually, this type of mortgage has a lower interest rate initially but can go up or down depending on different factors. Adjustable Rate Mortgages are typically meant for short term ownership.
Fixed Rate Mortgage
With a Fixed Rate Mortgage your interest rate will be locked in for the duration of the repayment period. If you plan on owning the home for longer than five years a Fixed Rate Mortgage can be your best option.
Also known as a “good faith” deposit, Earnest Money is a deposit made by the potential buyer to show they are serious about buying the house. These funds are held by a neutral party and typically put towards closing costs or your down payment at the time of closing.
A contingency is a condition that must be meant before a contract is legal. It is meant to protect the party from liability if certain conditions are not met. One example would be when a buyer specifies that a contract is not binding until a satisfactory home inspection is completed by a reputable home inspector.
Origination Points compensate a lender or loan officer for evaluating, processing and approving your mortgage loan. A point is 1% of your loan amount. Origination point fees are paid at closing.
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