Glossary of Homebuilding Terms
Embarking on the journey to a new home is an exciting milestone, but the world of homebuilding can sometimes feel like learning a new language. From types of mortgages to closing, understanding the specific terminology used throughout the process is essential for making confident and informed decisions.
At CB JENI Homes, we believe in providing our buyers with an experience defined by excellence and clarity. As Texas’ leading townhome builder, our expertise lies in simplifying the complexities of home construction. This guide is designed to empower you with the vocabulary you need, ensuring your path to ownership is smooth, transparent, and perfectly aligned with your vision for a stylish, flexible new home.
Adjustable Rate Mortgage (ARM):
An adjustable-rate mortgage features an interest rate that changes over time. It typically begins with a lower, fixed interest rate for an initial period. After this period, the rate adjusts at set intervals, which often results in a lower initial payment.
Closing:
This marks the end of the purchasing process. At this stage, the deed is transferred, funds are disbursed to the lender (if the purchase is financed), and you officially receive the keys to your new home.
Closing Costs:
These are fees paid by either the buyer or the seller for services rendered during the closing of a mortgage loan. Common closing costs include origination fees, discount points, appraisal fees, credit report charges, title insurance, attorney’s fees, survey costs, and various prepaid items like tax and insurance escrow payments.
Closing Documents:
These are the documents signed at the closing of the transaction. They include the Deed, Mortgage documents (if applicable), the Promissory Note, and other related paperwork.
Conventional Mortgage:
A mortgage that is not insured, guaranteed or insured by the federal government.
Credit Report:
This report, compiled by an independent credit bureau, details an applicant’s credit history and includes their credit rating as provided by the creditor.
Customer Walk Through:
Before closing, home buyers are invited to a “Customer Walk-Through.” This scheduled meeting is an opportunity for the buyer to view their new home and compile a list of any items that require correction.
Earnest Money:
This refers to the portion of a down payment that a home buyer gives to the seller or an escrow agency. It serves to secure the buyer’s commitment to purchasing the property.
Elevation or Exterior:
An elevation refers to the exterior appearance of a home, particularly its front-facing side. Many floorplans offer several elevation options, allowing for varied external looks despite having the same internal layout. These differences can include distinct rooflines, porch sizes, and window placements, which may lead to minor adjustments to the home’s interior.
Federal Housing Administration (FHA):
The Federal Housing Administration (FHA) offers mortgage insurance for loans issued by FHA-approved lenders across the United States and its territories. This insurance program covers mortgages for various property types, including single-family homes, multifamily residences, manufactured homes, and even hospitals.
FHA Mortgage:
An FHA mortgage is a home loan insured by the Federal Housing Administration. With this type of mortgage, the borrower pays a mortgage insurance premium, which protects the lender from financial loss if the borrower defaults. The main benefit of an FHA mortgage is its very low down payment requirement, but a key drawback is its low maximum loan limit.
Fixed Rate Mortgage:
With a fixed-rate mortgage, your interest rate is locked in for the entire loan term, ensuring your monthly payments never change.
Home Site:
A home site, also known as a lot, is the property where your new home will be built.
Included Features:
Included features are the standard home elements that come with the base price of your new house. These can include specific appliances, cabinet layouts, door heights, flooring, or window types. What’s included will vary depending on the community and home you choose.
Mortgage:
A mortgage is a loan used to purchase a property, which also serves as collateral for the loan itself. The borrower agrees to repay the loan over a set period through a series of predetermined payments.
Mortgage Insurance:
This type of insurance protects the lender against potential losses if a borrower defaults on their mortgage.
Options:
Homebuyers can personalize their new house with various options, such as flooring, paint, and cabinet colors. When these choices add to the home’s cost, they are often called “upgrades.” Otherwise, they are simply selections for the buyer to make. Available options can vary depending on the specific community and home collection.
Purchase and Sales Agreement:
This written agreement, often called a contract, outlines the terms for the purchase and sale of a specific home between a buyer and seller.
Title:
A legal document that serves as evidence of a person’s right to or ownership of a property, also known as a deed.
Title Company:
This company researches the property’s title and may issue a title insurance policy or facilitate the closing.
Quick Move-In Home:
These homes, started by the builder but not yet purchased, are often called quick move-in homes. Since construction is already underway, the move-in timeframe is much shorter than starting from scratch. These properties typically have a specific move-in date, which can sometimes be immediate.
Underwriting:
Underwriting, also known as qualification, is the process of analyzing a loan application and its supporting documents to determine whether to approve the loan and under what terms.
VA Mortgage:
A VA loan is a mortgage insured by the U.S. Department of Veterans Affairs, which protects the lender against financial loss. The key benefit for the borrower is the ability to purchase a home with little to no down payment. While VA loans often have higher maximum loan limits than FHA mortgages, borrowers are still required to pay a mortgage insurance premium. This type of mortgage is exclusively available to eligible veterans.