Real Estate Terms for the First Time Home Buyer

Real Estate Terms that are good to know

1. Association Fee / HOA fee – In addition to your mortgage, certain housing communities
such as condos and townhomes have a monthly fee associated with maintaining the
commons areas and amenities such as pools.

2. Payoff statement – It is a statement prepared by a lender providing a payoff quote for
prepayment on a mortgage or other loan. A payoff statement will typically show the
balance a borrower must pay to close their loan.

3. Closing Disclosure / CD –A Closing Disclosure is a five-page form that provides final
details about the mortgage loan you have selected. It includes the loan terms, your
projected monthly payments, and how much you will pay in fees and other costs to get
your mortgage (closing costs). The Lender must deliver the Closing Disclosure to the
consumer at least three business days prior to the date of closing of the transaction.

4. Contingencies – Conditions which must be met such as an inspection of the home or
the approval of the loan. Contingencies are typically tied to a date, referred to as a
deadline. If the contingency is not satisfied the contract may be canceled.

5. Earnest Money – The deposit made from the buyer to the seller when submitting an
offer. This deposit is typically held in trust by a third party and is intended to show the
seller you are serious about purchasing their home. Upon closing the money will
generally be applied to your down payment or closing costs.

6. Escrow – Your earnest money is typical held in “escrow” by a third party until the
transaction closes. It can also be referred to as the time period from when the contract is
written and accepted by the seller to when the home sale is completed.

7. Principal – The underlying amount of the loan which you actually borrowed separate
from any accrued interest charges.

8. Title/Warranty Deed. When you purchase your home, you receive a document most
often called a Warranty Deed, which shows the seller transferred their legal ownership,
or “title” to their home, to you.

9. Underwriting – For a mortgage, this is the process in which the potential home buyer is
evaluated for their financial ability to obtain and repay a loan, normally consisting of a
credit check and appraisal of the property. For title insurance, this is the process when
historic documents are reviewed to determine if a title insurance policy can be issued
and which conditions and exceptions will be included in that policy.

10. Title Insurance – Title insurance can protect you if someone later sues and says they
have a claim against the home from before you purchased it. Common claims come
from a previous owner’s failure to pay taxes or from contractors who say they were not
paid for work done on the home before you purchased it.

2019-05-23T18:55:48+00:00