Navigating the world of home buying and house planning can be like learning a new language. To help you understand the process and make informed decisions, we've compiled a comprehensive glossary of essential terms. This guide will not only define key concepts but also provide you with the knowledge to confidently engage in real estate discussions and transactions.
An ARM is a loan with an interest rate that changes over time based on a financial index. It often starts with a lower rate than fixed-rate mortgages but can vary after the initial fixed period, potentially leading to higher payments. According to the Consumer Financial Protection Bureau, ARMs can be complicated, and it's crucial for borrowers to understand the terms and risks involved.
This refers to the process of paying off a loan through scheduled, periodic payments of both principal and interest. Over time, the interest portion decreases while the principal portion increases, eventually leading to full repayment of the loan.
The APR represents the yearly cost of a loan, including interest and additional fees, providing a comprehensive view of the loan's cost. The Truth in Lending Act requires lenders to disclose the APR to facilitate comparisons between loans.
Often required when the downpayment is less than 20%, this insurance protects the lender in case the borrower defaults on the loan. The Federal Reserve reports that mortgage insurance can be either private (PMI) or government-backed, such as through the FHA or VA.
An appraisal is a professional assessment of a property's market value, typically required during the mortgage process. The Appraisal Institute states that appraisals are conducted by licensed professionals who follow specific standards and guidelines.
This is the increase in a property's value over time, influenced by factors such as market conditions, home improvements, and changes in the surrounding area.
Equity is the portion of the property's value that the owner actually owns, calculated by subtracting the remaining mortgage balance from the property's current market value.
Also known as settlement, this is the final step in the home buying process where the property's title is transferred from the seller to the buyer, and all necessary payments and documents are exchanged.
These are rules set by a homeowners association (HOA) or developer that dictate how properties within a community can be used and maintained.
Local government regulations that dictate land use, building size, placement, and other property aspects. Zoning laws aim to ensure orderly development and are crucial for both home buyers and developers to understand.
A condo is a private residence within a larger building or complex. Owners have title to their individual units and share ownership of common areas.
In a co-op, residents don't own their units outright. Instead, they own shares in a corporation that owns the building, and those shares entitle them to a lease on their home.
A form of co-ownership where parties have equal shares of the property. Upon the death of one owner, their share automatically passes to the surviving co-owners.
Another form of co-ownership where each party owns a specified share of the property, which can be passed on to heirs or other designated individuals upon death.
An easement grants the right to use another person's land for a specific purpose, such as utility access or a driveway.
A neutral third party holds funds or documents until specific conditions are met, commonly used in real estate transactions to ensure fair and secure exchanges.
A mortgage with a constant interest rate throughout the loan term, resulting in predictable monthly payments.
The legal document proving ownership of a property. A clear title is free of liens or legal questions about ownership.
For a more detailed exploration of these and other terms, visit authoritative sources like the Consumer Financial Protection Bureau or the U.S. Department of Housing and Urban Development. Understanding these terms is crucial for anyone involved in buying a home or planning a house, ensuring a smoother and more informed journey through the complex world of real estate.
Why buy stock house plans vs. custom? - Part I
When a person begins the process of building a new house, there are many different aspects that need to be addressed including: where to build, what size home to build, what features to include, what items are the most important to have in the home, what costs should be included in the budget, what are the design/build timeframes, who will build the home, and a host of other issues.
Why buy stock house plans vs. custom? - Part II
Why buy stock house plans vs. custom? - Part II
Part IV- Different Types of Home Foundations and When to Use Each
The foundation is the first piece of a home to be constructed and creates a base for the rest of a home's components. There are three types of foundations that are commonly used in the U.S.: slab, crawlspace, and basement.
