Glossary of Terms
Adjustable Rate Mortgage (ARM):
This mortgage adjusts its rate over time. They usually start with a lower interest rate (fixed for a specific amount of time), before adjusting at specified intervals. This usually results in an initial payment that is lower.
Closing:
This signifies the conclusion of the purchase transaction, including transfer of the deed, and the disbursement of funds (funding of the loan if financed) to the lender. You receive your keys to the home after closing.
Closing Costs:
This is money that is paid by the Buyer or the Seller for various services provided in connection with the closing of the mortgage loan. Typically, these are origination fees, discount points, appraisal costs, cost of credit report, title insurance, attorney’s fees, survey and miscellaneous prepaid items such as taxes and insurance escrow payments.
Closing Documents:
These are the documents signed at closing the closing. These will include: the Deed, Mortgage documents (if applicable), Promissory Note, and other documents related to the transaction.
Conventional Mortgage:
A mortgage that is not insured or guaranteed or insured by the federal government.
Credit Report:
A report by an independent credit bureau that lists the applicant’s credit history and the credit rating as reported by the creditor.
Customer Walk Through:
The Customer Walk Through is a scheduled meeting with the home buyer prior to the closing. This meeting provides the home buyer an opportunity to view their home and list any items for correction that need to be resolved prior to the closing.
Earnest Money:
This is the portion of the down payment delivered to the seller or an escrow agency by the home purchaser of real estate used to secure the buyer’s obligation to purchase.
Elevation or Exterior:
This is the term for what the front of your home looks like. Many home plans are available with choices between several different elevations (exteriors), meaning that although they are the same home plan they will look different from the front, (e.g. different roof lines, porch sizes, placement of windows, etc.). Different elevations may cause slight adjustments to the inside of the home
Federal Housing Administration (FHA):
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals.
FHA Mortgage:
A mortgage for which the lender is insured against loss by the Federal housing Administration, with the borrower paying the mortgage insurance premium. The major advantage of an FHA mortgage is that the required down payment is very low, however, the maximum loan limit is also low.
Fixed Rate Mortgage:
A mortgage with monthly payments that remain the same throughout the life of the loan because the interest rate is fixed.
Home Site:
The home site is the location of your new home; the property the new home will be built on. This is also sometimes called a “lot”
Included Features:
Included features are home features included in the base price of your new home. Examples include a specific type of appliance, cabinet configuration, door height, flooring or windows. These vary by community and home collection.
Mortgage:
A mortgage is a loan, secured by the collateral of specified real property, that the borrower is obliged to pay back with a predetermined set of payments.
Mortgage Insurance:
This is insurance that protects the lender against loss, which could result from a mortgage default.
Options:
Options are items the home buyer can choose to install in their new home including such things as flooring color or type, paint color, cabinet color, etc., These personalization options may also be referred to as Upgrades when they add to the cost of the home. If they do not add to the cost of the home, they are simply options for the buyer to select. Options vary by community and home collection.
Purchase and Sales Agreement:
Sometime referred to as the “contract”, this is the written agreement between the buyer and seller to purchase/sell a specific home.
Title:
The evidence of the right to or ownership in property; also known as the “deed”.
Title Company:
The company that researches the title of the property and may issue a policy of title insurance and/or facilitate the Closing.
Quick Move-In Home:
These are homes that were started by the builder that have not yet been purchased. Because you are not starting from scratch, the timeframe to move in is shorter and known as a quick move-in home. These homes will usually have a specified date that they can be ready, included immediate move in.
Underwriting:
The process of analyzing the loan application and supporting information to decide whether the loan is acceptable and at what terms. This is sometime known as “qualification.”
VA Mortgage:
A mortgage for which the lender is insured against loss by the Veterans Administration. The primary advantage of such a mortgage is that the borrower can put little or no money down. While the maximum loan limit is greater than that of an FHA mortgages, the borrower still needs to pay the mortgage insurance premium. Only Veterans are eligible for this type of mortgage.