Buying a home can be intimidating if you are not familiar with the most common phrases used throughout the process. But not to fear: here’s a list of home-buying lingo to bring you up to speed.

• Fixed-Rate Mortgage
  

  Mortgage rates are discussed when you meet with a broker. A fixed-rate mortgage is a loan that has an interest rate that will remain the same for the life of the loan. The most popular is the 30-year loan because it usually makes your payments the lowest.

• Adjustable-Rate Mortgage
  

  On the contrary, the interest rate on an adjustable-rate mortgage can change from year to year. You’ll want to discuss the pros and cons of both a fixed mortgage and an adjustable mortgage with your broker.

• Private Mortgage Insurance (PMI)
  

  The good news is that you don’t need to put 20 percent down to purchase a home. However, if you choose to move forward with a Federal Housing Administration (FHA) loan, you’re required to purchase private mortgage insurance. PMI is a type of insurance that reimburses the lender if you default on the loan.

I am a local mortgage broker serving Omaha, Papillion, La Vista, Bellevue, and all of eastern Nebraska. If you have questions on the Omaha housing market I’m happy to have a conversation with you.

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• Escrow
  

  This term has a few meanings. It typically means money held by a neutral third party. However, in Nebraska many real estate professionals use it to mean the money paid at close for taxes and insurance. This is also known as ‘Impounds’. This is an often overlooked expense for first-time homebuyers when planning their purchase. In Douglas and Sarpy county a buyer can expect to set aside 14 months of insurance and 8 months of taxes at close.

• Contingency 

  “We will only move forward with the sale as long as x, y, and z happen.”
  A contingency can be placed by either the buyer or the seller. It’s a provision in the contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event.

• Closing Costs
  

  You’ve made it! It’s closing time. But with the closing comes costs. By definition, closing costs are all transaction charges that home buyers or sellers need to pay at the close of escrow when the property is transferred. Typically, closing costs range from 2 to 5 percent of the purchase price.

Brushing up on the most common phrases will help to make the buying process go off without a hitch!

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Other useful links

• How to improve your credit
• The 20% down rule on conventional
• What is Escrow?
• How is income calculated?
• Why your assets matter
• Mortgage Calculator
• Is Credit Karma accurate?
• FHA vs Conventional, which is better?

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