Below are commonly used terms when purchasing a new home. Be sure to take note of these so to understand your agent or lender during your buying process.
CREDIT REPORT- A tri-bureau report is generated that merges data from three national credit repositories and provides up-to-date details of consumer credit information including outstanding debt, monthly payments, timeliness of payments and a summary of trade lines, public records and inquiries. (To see if you qualify for mortgage financing, we will review your credit report.)
FICO / CREDIT SCORE- A number generated by each of the three national credit repositories based on information provided to them from creditors.
DISCOUNT POINTS (OR POINTS)- A fee paid to a lender representing one percent of the loan amount. Points may be required to secure a certain interest rate, and can be used as a form of pre-paid interest on your morgage.
EQUITY- The value of a piece of property over and above any mortgage or other debt against the property. You build equity in your home as you make payments on your mortgage.
FIXED-RATE FINANCING- The Annual Percentage Rate (APR) and monthly payments throughout the term of the transaction remain the same until paid in full. This will allow you to pay the same amount of interest, no matter what the financial market is going through.
GROSS MONTHLY INCOME- Total income earned in one month before taxes are paid. (When reviewing your credit application, we will consider your gross monthly income.)
HOMEOWNERS INSURANCE- Insurance covering damages that may affect the value of a home, plus personal liability and theft coverage. (Most lenders require that you carry homeowner’s insurance to protect your home.)
MORTGAGE- A lien or claim against property given as security for money an extension of credit.
PRIVATE MORTGAGE INSURANCE (PMI)- If your down payment on a home is less than 20 percent of the value of the home, you must obtain PMI.
TITLE- A document, generally a deed, that proves legal ownership of real property.