Top Homebuying Phrases To Become Familiar With

Whether you’re an experienced home buyer or dipping your toes in the real estate market for the first time, the process can be overwhelming. There’s so much to see and to learn. One way to gain more confidence is to become a more informed buyer. Here are some top homebuying phrases to become familiar with as you search for homes for sale in Dallas.

Fixed-Rate Mortgage

As it sounds, a fixed-rate mortgage is one in which the interest rates remain fixed, or the same, for the entirety of the loan. A 30-year fixed mortgage is popular because it usually gives you the lowest possible monthly payments.

Adjustable-Rate Mortgage

On the contrary, an adjustable-rate mortgage is one in which the interest rate can change on a yearly basis. This type of loan can actually have its benefits, depending upon your circumstances. Talk to your mortgage broker to get the best advice for you.

Private Mortgage Insurance (PMI)

Unless you’re able to put 20 percent down, most Federal Housing Administration (FHA) loans will require you to purchase private mortgage insurance, or PMI. PMI will add an extra cost to your monthly mortgage payment in order to reimburse your lender should you default on the loan.

Escrow

Escrow is a term that can be confusing. It is different than an escrow account that is used to pay property taxes and insurance premiums. Escrow itself refers to funds that are held by a neutral third party when you place an offer on a home. These funds will be released to you upon closing. They essentially serve as earnest money to ensure you follow through with the home purchase.

Contingency

A contingency is a contract provision that can be put in place by either the buyer or the seller. It is meant to protect one’s interests and voids or alters the contract should a particular event occur. Contingency clauses are commonly used in real estate contracts. They are binding, so it’s imperative you understand the contingency before agreeing to its terms.

Closing Costs

Someone will need to pay certain fees at closing. These transactional costs can be taken on by either the buyer or the seller, depending upon the agreement you make. Your mortgage broker can advise you on this process. These costs must be paid by someone, however, in order for the property to be transferred. They usually total between two and five percent of the home’s sale price.

Now that you understand these terms, you can navigate the homebuying process with more confidence and ease. You don’t have to be an expert, but knowing common real estate terminology will help ensure you’re making informed decisions so that you’ll be a more satisfied homeowner in the end.