35 Common Terms Every Homebuyer Should Know
- Amortization: The process of paying off a mortgage over time through regular payments.
- Annual Percentage Rate (APR): The total cost of borrowing money, including the interest rate and any additional fees.
- Appraisal: An evaluation of a property’s value conducted by a licensed appraiser.
- Closing Costs: The fees and expenses associated with closing a mortgage, including appraisal fees, legal fees, and title insurance.
- Collateral: Property pledged as security for a loan.
- Credit Score: A number used by lenders to assess a borrower’s creditworthiness.
- Debt-to-Income Ratio (DTI): A measure of a borrower’s ability to pay off their debts, calculated by dividing monthly debt payments by monthly income.
- Default: Failure to make mortgage payments as agreed upon in the loan contract.
- Down Payment: The initial payment made by a borrower when purchasing a property.
- Equity: The difference between a property’s value and the outstanding mortgage balance.
- Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same throughout the term of the loan.
- Variable-Rate Mortgage: A mortgage with an interest rate that fluctuates throughout the term of the loan.
- Foreclosure: The legal process by which a lender takes possession of a property due to a borrower’s default on mortgage payments.
- Home Equity Line of Credit (HELOC): A line of credit based on the equity in a home that can be used for home improvements, debt consolidation, or other expenses.
- Home Inspection: A thorough examination of a property’s condition conducted by a professional inspector.
- Interest: The cost of borrowing money, expressed as a percentage of the loan amount.
35 Common Terms Every Homebuyer Should Know
- Amortization: The process of paying off a mortgage over time through regular payments.
- Annual Percentage Rate (APR): The total cost of borrowing money, including the interest rate and any additional fees.
- Appraisal: An evaluation of a property’s value conducted by a licensed appraiser.
- Closing Costs: The fees and expenses associated with closing a mortgage, including appraisal fees, legal fees, and title insurance.
- Collateral: Property pledged as security for a loan.
- Credit Score: A number used by lenders to assess a borrower’s creditworthiness.
- Debt-to-Income Ratio (DTI): A measure of a borrower’s ability to pay off their debts, calculated by dividing monthly debt payments by monthly income.
- Default: Failure to make mortgage payments as agreed upon in the loan contract.
- Down Payment: The initial payment made by a borrower when purchasing a property.
- Equity: The difference between a property’s value and the outstanding mortgage balance.
- Fixed-Rate Mortgage: A mortgage with an interest rate that remains the same throughout the term of the loan.
- Variable-Rate Mortgage: A mortgage with an interest rate that fluctuates throughout the term of the loan.
- Foreclosure: The legal process by which a lender takes possession of a property due to a borrower’s default on mortgage payments.
- Home Equity Line of Credit (HELOC): A line of credit based on the equity in a home that can be used for home improvements, debt consolidation, or other expenses.
- Home Inspection: A thorough examination of a property’s condition conducted by a professional inspector.
- Interest: The cost of borrowing money, expressed as a percentage of the loan amount.
