17 Important Loan Terms That You Should Know
Buying a house? Here's an A-to-T glossary of financial terms that won't leave you in the dark.
So you’ve saved up for a down payment and you’re all ready to buy that condo unit or lot. But before you go to an Open House or real estate fair, brush up on important real estate lingo so you’ll be informed and empowered (and you won’t be lost) when speaking to a developer or broker. Here are some important terms:
1. Adjustable-Rate Mortgage
This is often confused with the Balloon Payment (see below). With this mortgage, the borrower receives an introductory rate for a specific amount of time—say, one to five years—and then the interest rate resets, and it may reset at certain periods until the loan is fully paid.
An analysis of the estimated value of a property, as prepared by a qualified appraiser.
3. Appraisal Fee
The charge in estimating the value of a property. This fee is usually charged because it is time-consuming.
An asset is anything that has monetary or exchange value that is owned by an individual, business, or institution. Assets include real estate and personal property, vehicles, and bank accounts, stocks, mutual funds, etc. A lender is interested in the assets you may have because these can be used as collateral against a loan.
5. Balloon Payment
This is an unpaid balance that is due at the end of a loan term. “Balloon” refers to a final payment that is large and has ballooned in comparison to the other payments.
One who receives funds in the form of a loan with the obligation of repaying in full and with interest.
Property offered that could be seized if you default a loan.
8. Compounded Interest
Interest computed on the principal balance of a mortgage and accrued interest.
9. Credit History
The record of how you’ve gotten or repaid debts.
10. Fixed Rate Mortgage
A mortgage’s interest rate that is set for the term of the loan.
11. Fixed Asset
This is a tangible asset like an existing property, valuable equipment, etc. that can be used as collateral.
These are a person’s or business’s debts or obligations that can be resolved in the form of payments or goods and services.
13. Market Value
The highest price a buyer would pay and the lowest price a seller would accept a property. Market value may differ from the price at which a property could be sold at a given time.
A long-term loan through a bank or other financial institution, or even through the seller of the property. The house and/or property serve as collateral for the loan.
The amount of debt left on a loan, not counting interest.
16. Real Estate Broker
A middleman or agent who buys and sells real estate for a company, firm, or individual on a commission basis. The broker doesn’t have a title of the property but represents the owner.
The period of time in between the beginning loan date on legal documents and the date the balance of the loan is due.
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