A Few Real Estate Terms That You Should Know

If you are searching for a home, then you know that mortgages are a big piece of the pie. You can have your dream home, but if you don’t get a mortgage, in most cases, you won’t be able to.

So what are the most important mortgage terms you should know as you move through the mortgage world? Read on for some answers.

10% Down PaymentThis is the percentage percentage you must put down when getting a mortgage. In recent years, this has usually been 20%.

adjustable rate mortgageThis is a mortgage where the interest rate changes over time. These change based on the index a lender uses to adjust the interest rate.

closing costThis is the fee the lender charges you for the loan. This includes things like a loan origination fee, a home appraisal fee, a document preparation fee and a credit report fee.

depreciationIf you purchase a home in a newly developed community, you may be eligible for a tax credit in the amount of the property’s depreciation. This means that the government will tax the property’s value based on the tax year. This can be a bonus for you or a drawback.

EEM there is a mortgage term that goes along with the loan. It is an amount equal to the difference between your down payment and the total value of the loan. This amount is considered EEM. There is good and bad with this. The bad is that this amount is not tax deductible. In addition, if you decide to sell your home, the original amount you owe will be considered EEM, along with the capital gains you received.

fixed rate mortgageA fixed rate mortgage (FRM) is a mortgage that has a constant interest rate. Your interest rate will not change throughout the life of the loan. Many people like to get a fixed rate mortgage because it is predictable.

You are going to pay a higher interest rate on the fixed rate mortgage than you will in the variable rate mortgage. This means your monthly payment will be higher. A good thing to consider before you choose a fixed rate mortgage is to know how long you will want to pay your mortgage. A short term mortgage may not be a bad choice if you know you will be there for more than ten years.

Izze

Operations deductibleThis is an amount (usually out of pocket) you add to minimize your tax liability. This is a far more forgiving way to pay for repairs and other expenses that incur. You can deduct a great amount of things, such as depreciating assets, insurances, and repairs made while working.

Kitchen renovationThis is an easy “fix” for both the contractor and the homeowner. You buy a house with the intention of making the house YOURS, but you don’t get to actually do the work yourself. While you are in the house, you reduce what you spend on things by simply upgrading the things on the house. Fixing bathrooms, kitchens, and other rooms of the house is a good idea.

pointsThis is the fee you pay at the closing to lower your interest rate. And if you actually get a “one percent reduction in the interest rate” you will pay less than the one percent you paid to get the property.

TitleThis is the legal term for the property or legal owner of the property. It is the entity officially placed and vested with rights to the property.

Title companiesThese companies do the research and make sure the property is completely yours. Make sure you work with the top title companies, which should make it obvious that they are familiar with the neighborhood and doing a thorough title search is fraud intentional. Chances are, and you probably haven’t been charged with fraud, but it will make you harder if it comes up.

VA loansThis is a special loan that allows veterans to buy a house with no money down. This special loan doesn’t ensure you can afford the house, but it is a way to make the dream of home ownership a reality. The VA loan is available to veterans who have served in the military.

Leave a comment

Your email address will not be published.