The Language of Home buying

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 which 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.
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 over looked expense for first time home buyers 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, closings costs range from 2 to 5 percent of the purchase price.