5 Common Mortgage Terms You Need To Know
Spring and summer are the prime seasons for house hunting. House hunters who have bought a home before may already be familiar with the real estate market and its terminology. But for first time home buyers, that may not be the case.
That said, it’s important that you understand all the terms that are in a mortgage before you even go to apply for one. Unfortunately, because a mortgage is a legal agreement, the words that are used in the document can be a little confusing.
To give you a better understanding, here are some of the most common mortgage terms you may come across and what they mean.
- Adjustable-rate mortgage: This is a mortgage that has a low interest rate for a set number of years. After three, five, seven, or 10 years, the interest rate will fluctuate based on pre-determined factors such as the real estate market.
- Closing costs: Closing costs are fees due when you close on a home, which range between 2% to % of the total home cost. These fees can include title insurance, document preparation fees, origination fees, underwriting fees, and more.
- Contingency: A contingency is a condition that’s built into an offer on a house. This allows the seller or buyer to get out of the purchasing agreement without penalty under specific conditions. A common condition is when a home inspection comes back with major issues with the home.
- Escrow: Escrow is a third-party account, which holds funds for the two parties in the financial transaction. A buyer will deposit money into an escrow account when they’re under contract to buy a home. Once the home has been closed on, the escrow account can hold the part of the buyer’s mortgage payments that will pay their homeowner’s insurance and property taxes.
- HELOC: HELOC refers to a Home Equity Line of Credit. This is considered a second mortgage that lets the borrower obtain cash against the equity of their home. Homeowners may use HELOC loans to pay for renovations to fix up their home.
Looking for a real estate agent in Los Gatos?
According to real estate website Zillow, up to 83% of potential homebuyers are looking for single-family homes. A professional real estate agent in Los Gatos can help you find the home you’re looking for. That’s where Stephanie Ligsay comes in.
Whether you’re looking for a new home or you need help understanding your mortgage, Stephanie Ligsay is an experienced real estate agent in Los Gatos who can help. If you need help buying a home or finding a home that fits your family and your lifestyle, contact the Rose Garden real estate office of Stephanie Ligsay today.