Real Estate Terms You Need to Know

Is 2014 going to be the year when you plan on becoming a homeowner? That is great, but before you step into the market, you should familiarize yourself with the terms that are so often used. Fail to understand these, and you will not be able to maneuver any of the technicalities of the deal, and you might even miss out on a great offer just because you did not grasp all the details.  We know you would not want this, so we decided to give you a quick review of the most important terms that you need to know.

Adjustable Rate Mortgage or ARM

When you sign up for mortgage, you can either go for an adjustable rate mortgage or a fixed rate mortgage. An adjustable mortgage is one on which the interest rates are fixed for a certain amount of time, and then they fluctuate with the market conditions. Most often, there is a limit on the maximum interest rate.

Amortization Schedule

The word amortize refers to reducing a debt. An amortization schedule is a document that provides you with information on the amount of interest and loan that has already been paid and the amounts that remain.

Escrow

This is referred to as a situation in which a third party other than the buyer and the seller hold the property, cash and title until all the conditions of the deals are fulfilled. This third party, often a lawyer, then hands over all the assets to the concerned individuals.

Flipping

Flipping is a real estate investment strategy in which you purchase a property and then resell the property to gain a profit. This is usually done by increasing the market value of the home through repairs, remolding or price appreciation.

Good Faith Estimate

A good faith estimate is an estimated amount of the total costs that will be incurred in buying a property. You will be given this value before you sign up for a mortgage loan so as to compare the deals offered by different lenders.

Points

These are upfront charges that can be added to a mortgage. A single point equals one percent of the loan amount.

Pre-Approval

This is the term used for the situation in which you get to lock-in a rate with a mortgage loan for a certain time period.

For a full list of real estate terms click here.

Source: www.finance.yahoo.com

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