Don’t know your LTV from your DTI? Here are key terms you’re likely to hear during your homebuying journey—defined.
With ARM loans, interest rates can change after an initial fixed-rate period as they adjust based on the interest rate index the ARM is tied to (e.g., LIBOR, COFI, etc.). This loan type is less predictable than a traditional fixed-rate mortgage, but it can potentially yield lower interest rates during certain periods.
Money you receive over the course of a year, whether it’s from wages or salary, alimony or child support, rental payments, commissions, investments, or other sources.
A property marketed in “as is” condition usually indicates that the seller is unwilling to perform most if not all repairs. It could also mean that it is priced “as is,” which is typically lower than market pricing in the area.
Finally, “as is” is in the condition at the time the offer was written, and should something happen to the property from the time the offer was written to the closing time which alters that condition, then that property is no longer “as is,” as it was, and should be brought back to its original “as is” condition at the time of offer, at the cost of the seller. Or in the alternative, the seller should release the buyer from their obligation to purchase and refund the monies spent by the buyer, such as earnest money.
A buyer’s agent, also known as a selling agent, is a licensed real estate professional whose job is to locate a buyer’s next property and represent their interests by negotiating on behalf of that buyer to obtain the best price and purchasing scenario for that buyer as possible. This agent is a fiduciary for the buyer. The listing agent, also known as the seller’s agent, is a licensed real estate professional whose job is to market the seller’s property and to represent the seller’s best interest by negotiating on behalf of the seller to secure the best price and selling scenario as possible. This agent is a fiduciary for the seller.
Buyer and listing agent commissions are typically around 2- 3% of the contract price on each sale.
A conventional sale is when the property is owned outright (has no mortgage remaining) or the owner owes less on their mortgage than what the market indicates the owner could sell their property for. Such conventional sales are often smoother transactions than non-conventional sales, such as foreclosures, probate-related sales, and short sales.
Closing is when the home sale is considered final, which typically includes all parties’ signatures on all required documents, all monies conveyed, and when a lender is involved, with full lender’s approval. For some markets across the nation, recording the deed with the county clerk’s office is the ultimate and final step of closing. Once all of these items are completed, then a buyer’s access to the property is then provided, and the buyer is considered the new homeowner.
Closing costs are an assortment of fees, including fees charged by: a lender, the title company, attorneys, insurance companies, taxing authorities, homeowner’s associations, real estate agents, and other closing settlement-related companies. They are typically 2 to 5 percent of your loan amount and are typically paid at the time of closing a real estate transaction.
A document that provides key information about your loan, such as the interest rate, monthly payments, and closing costs. The lender must give you this document at least three business days before you close on the loan, and the information should match the Loan Estimate you received when you applied. You can find out more about what’s on a closing disclosure from the Consumer Financial Protection Bureau.
A mortgage loan that meets guidelines established by Fannie Mae and Freddie Mac and falls below a loan amount specified by the Federal Housing Finance Agency.