If you are considering buying a home in Stockton, you need to understand the terminology being used. Check out our guide to buyers lingo, so you can feel like a pro… even if you’re a first-time buyer!
Buyers Lingo 101
Abstract of Title – This will basically give you a full paper trail of the property’s ownership. It will include property transfers, inheritances, liens, encumbrances, and conveyances.
Adjustable Rate Mortgage – Usually comes at a lower cost, however, the interest rate will vary depending on the market. Considered less stable than a fixed-rate mortgage.
Amortization Schedule – A table that shows your mortgage payment schedule, outlining your principal and interest payments.
Appraisal – Done by a professional to help determine the value of your house.
Assessed Value – This is the value of your home as determined by the county for tax purposes.
Balloon Mortgage – A mortgage in which the final balance is due in one large payment at the end of the loan term.
Bridge Loan – A loan to cover a period of time in between two transactions. Typically the period between buying and selling a home.
Caveat Emptor – Latin for: “Let the Buyer Beware.” Basically, at the end of the day, you are assuming any risk involved in the transaction.
Chain of Title – A list of successive owners of a specific property.
Closing Costs – Miscellaneous charges you will need to pay in addition to your downpayment. This might include loan origination fees, title fees, fees from the city to record the deed, surveyors, etc.
Closing Statement – This is a legally required document that itemizes credits and debits to both the buyer and seller.
Comps – A list of comparable sales in your area. Considered one of the best ways to determine a home’s actual value and used by agents to create a Comparative Market Analysis.
Contingency – A provision in the contract canceling the sale should a certain event occur. For example, a house not appraising high enough to satisfy a lender.
Conventional Mortgage – This type of mortgage is not guaranteed by the federal government. They can be fixed or adjustable rate.
Conveyance – The transfer of property from one person to another.
Debt-To-Income Ratio – A comparison of what you owe each month to what you earn.
Earnest Money Deposit – Often used when a buyer needs more time to secure financing. It shows good faith and is typically help in a joint escrow account by the buyer and seller.
Equity – The market value of a property, minus any liens. (Including your mortgage balance.)
Escrow – When an impartial 3rd party holds the deed or funds.
FHA Loan – Issued by a federally qualified lender, and backed up by the Federal Housing Administration. Requires a lower down payment in comparison to a conventional mortgage.
Good Faith Estimate – Also called a GFE, is provided by your lender when you are shopping for a loan. It breaks down the loan terms and fees.
Inspection – A service provided by a licensed inspector during the sale of a home. They inspect the foundation, plumbing systems, electrical work, sewage system, heating/cooling systems and the roof.
Loan-to-Value Ratio – A term commonly used by banks and lenders to show the value of the loan vs. the value of the home.
Negative Amortization – This is an increase to the principal balance of the loan caused by making payments that do not cover the loan’s interest.
Origination – The process of applying for a loan, all the way to the disbursement of funds.
Refinancing – Getting a new mortgage to replace an old one. Usually done to provide a better interest rate to the buyer.
Seller Contribution – Instead of discounting the price of the home, a seller will directly contribute to your costs or downpayment.
Title Insurance – This protects property owners and lenders from damage and loss. It is required if you have a mortgage on the home.
Underwriting – Determines the amount of risk a lender is taking on.