Adjustable-Rate Mortgage (ARM).
A mortgage that has an interest rate that can go up or down
periodically, usually once or twice a year.
Annual Percentage Rate (APR). The
total yearly cost of a mortgage stated as a percentage of
the loan amount. This rate includes the interest rate plus
points and mortgage insurance.
Asking Price. The advertised amount
of money the seller wants for a home. Sometimes the seller
will accept an offer that is less than the asking price.
Budget. A plan that lists all your
monthly income and expenses.
Closing Costs. The expenses of
transfering ownership of a property above and beyond the
sales price. Closing costs can include the loan application
fee, title fee, points, and attorney fees.
Commission. The percentage of the
sales price that the real estate agent earns.
Common Areas. The areas in a condominium,
cooperative, or planned unit development that buyers own
together. These areas can include hallways, elevators, laundry
room, swimming pool, and recreation rooms.
Condominium. A type of property
ownership in which the buyers own their own homes, usually
single units in a multi-unit building. However, all the
buyers share the individual ownership of the common areas
and pay a monthly maintenance charge.
Contract. See Purchase and Sale
Cooperative. A type of property
ownership in which the buyers own a share of the corporation
that owns the building, giving the owner the right to occupy
the apartments in which they live. The share is equal to
the cost of a single apartment. The owner pays a monthly
maintenance charge and a portion of the mortgage payment
for the whole building.
Credit History. A list of your
debts and regular monthly expenses, including how much you
owe and how timely your payments are made.
Credit Report. A report of your
credit history. The mortgage lender gets this report from
a credit reporting agency when you apply for a loan.
Debts. The money you owe on long-term
loans, for example, car loans, student loans, and mortgage
loans. This may also include the payments you owe on credit
Down Payment. The part of the purchase
price of the house that the buyer pays in cash.
Down Payment Requirement. The minimum
down payment allowed by the lender.
Fixed-Rate Mortgage. A mortgage
in which the interest rate does not change during the entire
term of the loan.
Floor Plan. The plan for a home
showing the location and measurements of rooms, windows,
doors, and major appliances.
Gross Monthly Income. Your total
monthly income from all sources before taxes are taken out.
Home Shoppers Guides. Small
magazines that have pictures and descriptions of homes that
are for sale. You can usually find these free magazines
at the supermarket or newsstands.
Interest Rate. The charge for using
the lenders money.
Job History. A list of the places
you have worked, your job title, the dates of employment,
and your salary.
Loan. A method for borrowing money,
often from a bank or credit union. Loans are usually repaid
Maintenance. The work you must
do to keep your home in good condition.
Maintenance Costs. The expense
of keeping your home in good condition.
Market Value. The expected value
of the home for sale based on recent sale prices for similar
homes that are nearby.
Monthly Mortgage Payment. A monthly
payment that repays a part of the principal and the interest
on a mortgage loan.
Mortgage Insurance. Insurance that
protects lenders against loss if the borrower does not repay
Mortgage Lender. The financial
institution that makes the mortgage loan. Financial institutions
include mortgage companies, banks, credit unions, and savings
Mortgage Loan. The type of loan
you get to buy a home. You must repay the loan with interest
in a specific amount of time.
Net Monthly Income. Your total
monthly income after taxes are taken out.
Nontraditional Credit History.
A credit history you can prepare if you do not have credit
cards or have never had a loan. It can include receipts
and cancelled checks for your monthly payments for rent,
utilities, and other bills.
Offer. The amount of money the
buyer is willing to pay for a home. This may be lower or
higher than the asking price.
Planned Unit Development. A type
of property ownership in which homeowners own their own
homes and usually the land upon which they are built, but
pay a monthly charge for maintenance of the common areas.
Points. A type of fee that lenders
may charge at closing. Each point equals 1 percent of the
loan amount. The more points you pay, the lower your interest
rate will be.
Principal. The amount of money
that you actually borrow.
Purchase and Sale Agreement. A
written contract that the buyer and seller sign. It includes
all of the terms and conditions of the sale.
Real Estate Agent. A person who
helps you find a home to buy. The real estate agent receives
a commission from the sale of the home, usually paid by
Term. The amount of time you have
to repay the loan. The term for mortgage loans is often
15, 20, or 30 years.
Terms of a Mortgage Loan. The conditions
of a loan, including the type of mortgage, the size of the
down payment, the amount you can borrow, the interest rate,
and the length of time you have to repay.
Utilities. Public services such
as the supply of water, electricity, and gas. You usually
pay for using utilities at your home on a monthly basis.