TAPF Articles

When you purchase a home, your head may begin to spin when you hear all of the lingo being thrown around by your Realtor. Realtors might occasionally use a word that you might not understand, though by and large they try to explain things in simple terms. Knowledge of real estate terms, well in advance, helps a lot. Here is a look at some of the most common terms you might hear as they relate to obtaining financing for your new home.

Adjustable Rate Mortgage (ARM)

A Adjustable Rate Mortgage is a special type of loan with an interest rate that changes on a periodic basis. Over here, the rate changes as the mortgage loan stay in sync with the current index, which is similar to the method used with one-year treasury bills. Adjustable Rate Mortgages can increase more than two percentage points each year and may raise as much as six points above the original rate.

Amortization

Amortization is a special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan.|A special type of payment plan that allows you to reduce the amount of your debt in a gradual way by making payments each month on the principal amount of the loan is referred to as Amortization.|A unique type of payment plan that permits you to reduce the amount of your debt in a gradual way by making payments every month on the main amount of the loan is referred to as Amortization.

Appraisal

Appraisal is the term used to describe the estimate of the value of or the quality of your home on a specific date An appraisal must be completed by an expert and is required by lenders prior to approval of a loan. The results of the appraisal will help the lender to determine if the home you wish to purchase is worthy of the investment required when loaning you the money.

Conventional Mortgage

The type of home loan that is not backed by the VA (Veterans’ Administration) or by HUD is known as conventional mortgage. Hence, a conventional loan adheres to the conditions that have been established by the lending institution as well as by the state of Texas. This means the mortgage rate may alter according to the lending institution and may even alter if you acquire the loan in a state that is not in Texas.

Earnest Money

The deposit that you make to the seller or to his or her agent is known as earnest money. This deposit goes to show your seriousness of your interest in purchasing the home and you need to make this deposit when you sign an agreement of sale. If you do purchase the home, the earnest money you paid will be adjusted with your down payment on the home. If the sale does not happen, you will lose the money unless the purchase offer dictates the money is refundable.