The terminology involved in the real estate market can be vexing for the newcomer, but if you’re getting prepared to buy a home, there are a few choice words you should take some time to learn. While it’s hard to learn the ins and outs in one article, here’s a place to begin with five terms you may be hearing a lot of in the future.
It may sound like a very fancy term, but the amortization period or mortgage term is simply the length of time it will take you to pay off your mortgage loan by monthly mortgage payments. While 25 years is the standard amortization period, it can vary.
Fixed Rate Mortgage
A fixed rate mortgage is one of the interest rate options you’ll have, and this involves a stable interest rate that remains unchanged. While this means your monthly payment will stay the same each month, it can also mean a higher amount paid overall since your fixed rate may be higher than the market rate over time.
Adjustable Rate Mortgage
The other option when it comes to mortgage interest rates is an adjustable rate, which means that your monthly payment will fluctuate along with the prime market rate. While this can provide a sense of insecurity since your mortgage payment will shift each month, it can end up being more economical than a fixed rate.
Buying a home can cost enough with the loan, the down payment, and the interest, but closing costs will also be a part of the housing costs. While closing costs generally range anywhere from 2-5%, they include items like loan administration costs and title insurance costs that come part and parcel with the mortgage.
There are many terms out there involved in real estate, but by making yourself aware of a few and doing your research, you can begin to understand what they mean for you. If you’re almost ready to invest in a home, you may want to contact one of our real estate professionals for more information.