Bangor, Buyers, South Haven

First-time-buyers: Glossary of Basic Terms

If you’re new to the real estate market, it’s always good to familiarize yourself with some of the unfamiliar terms. You don’t want to agree to something you’re not comfortable with, simply because you didn’t know what the term meant. Here are a few basic terms that I think first-time buyers in South Haven and Bangor should know.

Annual percentage rate (APR): Yearly interest on a loan, expressed as a percentage. Includes fees and other costs so you can compare offers from different lenders. The lower the APR, the better.

Appraisal: An estimate of a property’s value. A lender will usually require an appraisal, and won’t approve a loan for more than this figure.

Back on Market (BOM): A property that has been relisted because a previous deal fell through. These are often described as “no fault of seller” to assure buyers that there is nothing wrong with the house.

Closing attorney or escrow agent: A neutral party, they work with all parties - the lender, title insurance company, buyer and seller - to make certain that all the details of the closing come together without a hitch.

Comparative Market Analysis: These are also known as “comps”, and are a comparison of the value of a certain home with other similar properties in the area. They are usually based on sales and offering prices, along with number of bedrooms, similar home features, land acreage, etc. As your agent, I will put these together for you when you’re starting to zero in on a specific house, to make sure that it is appropriately priced, and a good value for you.

Credit bureau score: a number showing how likely you are to default on a loan, based on your credit history.

Down payment: The amount of a home’s price you pay in cash; usually from 0% to 20%

Lock-in: A lender’s guarantee that you’ll get a specific interest rate if your loan is closed within a certain period. Interest rates can change at any time, so if you think you have a good rate, be sure to lock it in.

Mortgage banker: A lender, bank or company that provides loans.

Mortgage broker: A person or firm that arranges loans from multiple lenders.

Preapproval: A lender’s promise (subject to final guarantee) to supply you with a specific amount for a mortgage.

Prequalification: A lender’s informal estimate of the maximum you’d be allowed to borrow.

Private mortgage insurance (PMI): Protects the lender if you default on a mortgage; only required if your down payment is less than 20%.