House Buying Terms UPD
To assist you and other homebuyers, we created a comprehensive home buying guide that walks you through each step in the buying process, with personalized guidelines and worksheets that will help you find a home well-suited to your needs.
house buying terms
You're continuing to another website that Bank of America doesn't own or operate. Its owner is solely responsible for the website's content, offerings and level of security, so please refer to the website's posted privacy policy and terms of use. It's possible that the information provided in the website is available only in English.
How does your knowledge of mortgage terms stack up compared to the survey respondents? Brush up on these 27 common terms in mortgage lending prior to securing a loan to move through the process seamlessly and with confidence.
A Closing Disclosure is a document that tells you the final terms of your loan. This document includes your interest rate, loan principal and the closing costs you must pay. Your lender is legally required to give you at least 3 days to review your Closing Disclosure before you sign on your loan.
Your debt-to-income ratio is equal to your total fixed, recurring monthly debts divided by your total monthly gross household income. Mortgage lenders look at your DTI when they consider you for a loan to make sure that you have enough money coming in to make your payments. You may have trouble finding a loan if your DTI is too high. Most lenders cater to applicants who have a DTI of 50% or lower.
A real estate agent is a local property professional who can help you shop for a home more effectively. As the first step in the home buying process, 17% of people looked for an agent to help guide them. Real estate agents can show you homes in your price range, draw up offer letters and work with sellers to get you a great deal on a home.
Mortgages can be difficult to navigate and learning the common terminology is the first step to fully understanding your loan to complete the home buying process. When reading through hefty contracts, refer to our handy mortgage term glossary.
Rules established by a local or state jurisdiction that cover how a house can be built or modified. Newly built homes must meet the most recent codes but existing homes are not required to be brought up-to-date before they are sold.
A mortgage loan in which the interest rate remains the same for the entire length of the loan. Fixed-rate loans are generally available for 30, 20, 15, or 10 years, though some lenders will offer loans for unusual terms to meet borrower needs.
An estimate of the entire cost of buying a home, including the down payment, interest payments, and closing costs associated with a loan; to be provided by the lender within three days of a loan application. The estimate is divided into sections according to which fees can change at the settlement table and which cannot.
A legal obligation attached to a property that uses that property as collateral for a debt. The lien must be paid before a home can be sold unless the buyer is willing to pay the lien in order to buy the house. An unpaid subcontractor could ask a court to impose a lien on a newly built home to receive payment.
Here are some common real estate terms to know when getting ready to buy a home. For a more lighthearted look at real estate ad language, see What "As Is" and Other Real Estate Marketing Terms Really Mean.
A home mortgage that allows the buyer to take over the seller's mortgage; that is, to step into the seller's shoes, make mortgage payments, and comply with other terms of the existing loan. These are rare, and most lenders require the borrower to demonstrate that he or she qualifies for the mortgage in order to assume it.
A type of housing, composed of individually owned units, such as condominiums, townhouses, or single-family homes, that share ownership of common areas, such as swimming pools, landscaping, and parking. Common interest developments (also known as community interest developments or CIDs) are managed by homeowners' associations. Members typically pay monthly association dues.
A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event, usually by specific dates leading up to the closing. For example, a contingency in your home purchase contract might state that, if the buyer does not approve the inspection report of the physical condition of the property, the buyer does not have to complete the purchase. Or the seller might include a contingency asking for proof that the buyer is financially able to close the deal or for closing to be held off until the seller successfully finds another house to buy.
The rejection of an offer to enter into a contract, where the rejecting party includes a different offer that changes the terms of the original offer in some way. For example, if you offer $750,000 for a house, and the seller replies that he wants $775,000, the seller has rejected your offer and has made a counteroffer. The legal significance of a counteroffer is that it completely voids the original offer. (You're not in contract until someone actually signs on to an offer or counteroffer.)
The making known of a fact that had previously been hidden; a revelation. In many states, a home seller must disclose material physical and other defects in the house within his or her knowledge, such as a leaky roof or potential flooding problem; and, in all states, by federal law, sellers must disclose the presence of lead-based paint hazards in buildings constructed before 1978.
Land and things permanently attached to it, such as buildings, houses, stationary mobile homes, fences, and trees. Real estate is also called real property. Anything that isn't real estate is personal property.
A foot soldier of the real estate business who shows houses and does most of the other nitty-gritty tasks associated with selling real estate. An agent must have a state license and be supervised, in most U.S. states by someone called a real estate "broker" (or, if the agent is already referred to as a broker in his or her state, by a "managing broker"). Most agents are completely dependent upon commissions from sellers for their income.
Down payment: The lump sum in cash that you can afford to pay at the time of purchase. Traditionally, down payments are 20% of the purchase price, so if you are buying a home for $500,000, your typical down payment would be $100,000. It is possible to put less than 20% down, but mortgage insurance would then be required. No-down-payment loans exist for veterans and others, and there are also down payment assistance programs for first-time buyers.
Your lender must give you a Closing Disclosure at least 3 business days before closing. Be sure to read it carefully. It includes loan terms, fees, closing costs, and your estimated monthly mortgage payments. Your lender may also ask you to provide more information or documents at this time.
Line of creditA line of credit gives you a revolving credit account secured by the value of your house. This allows you to use the funds for any other purpose such as the purchase of a second property, or shares or other investments. The interest rate is generally higher than a standard variable rate and these accounts are not suitable for everyone.
Portable loans / Cross securisation A portable loan allows you to sell your house and move to a new one without having to refinance. The main benefits of portability apart from not having to refinance is utilisation of stamp duty and not having to pay break costs if you are on a fixed rate
Stamp dutyAt a basic level, stamp duty is a tax imposed on numerous purchases, including real estate, cars and assets belonging to a business. When buying real estate, it is paid by the purchaser.
Closing costs: Fees from buying a house from both the lender and third parties like inspectors, attorneys, surveyors and title insurance companies. These typically add up to 3%-6% of the total home price, though some of these charges are negotiable.
Down payment: When you're buying a home and financing it with a mortgage, most lenders require you to put down a certain amount of cash upfront, usually 5% to 20% of the total price. Your mortgage covers the amount remaining after the down payment.
An in depth investigation of a property that helps ensure you know as much about a property as you can before buying it. Due diligence officially starts once an offer has been accepted, and typically involves a home inspection, review of property records to ensure improvements received the necessary permits, etc. within a period of time agreed to by the buyer and seller. Buyers can renegotiate their offer if they uncover problems, or they can cancel the offer without paying a penalty.
A three-page document sent to an applicant three days after they apply for a home loan. The document includes loan terms, monthly payment and closing costs. A loan estimate can help borrowers shop and compare costs of loans with lenders. You are not obligated to accept the loan just because you received a loan estimate. Smart mortgage shoppers apply for at least two loans and use the loan estimates to determine which lender they want to use.
When you buy mortgage points, you pre-pay the interest rate by making an upfront payment to the lender at closing in exchange for a lower interest rate. Pre-paying interest is also known as buying down your interest rate. The points or prepaid interest is usually paid during closing. Learn more about mortgage discount points.
Ally Financial Inc. (NYSE: ALLY) is a leading digital financial services company, NMLS ID 3015 . Ally Bank, the company's direct banking subsidiary, offers an array of deposit, personal lending and mortgage products and services. Ally Bank is a Member FDIC and Equal Housing Lender , NMLS ID 181005 . Credit products and any applicable Mortgage credit and collateral are subject to approval and additional terms and conditions apply. Programs, rates and terms and conditions are subject to change at any time without notice. 041b061a72