The Homebuying Dictionary
Appraisal: estimation of a home’s market value by a licensed appraiser based on comparable recent sales of nearby homes. Appreciation: the growth in value of your home over time. As a homeowner, you benefit knowing the equity in your home is a pool of money you have increasing as long as you own the home. Conventional Loan: a loan that is not backed by the government and carries private mortgage insurance if you put less than 20% down. Closing: the transfer of property from a seller to a buyer (also called Settlement.) Down Payment: percentage of the home purchase price (usually between 5% and 20%) paid upfront in cash. Escrow: neutral third party that holds funds from the buyer and distributes them when all conditions have been met. Equity: the difference between the home’s current worth and how much is owed on it; it is like a savings account you add to each time you make a mortgage payment.
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FederalHousingAdministration (FHA): government agency that insures loans designed for low- to moderate- income borrowers. Homeowners’ Association (HOA): management organization within a community that creates and enforces rules for properties within its jurisdiction. Interest Rate: the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding. Loan-to Value (LTV): risk assessment ratio used by lenders; to calculate, divide the mortgage amount by the appraised value. Mortgage Loan: a loan to finance the purchase of a home, with specified payment periods and interest rates.
Preapproval Letter: letter indicating a lender is willing to loan a specific amount of money for a home purchase; preapproval does not guarantee a loan. Settlement: the transfer of property from a seller to a buyer (also called a closing). Title: the right to ownership of real property recognized and protected by the law. VA Loan: mortgage loan for veterans and their spouses, made by private lenders and guaranteed by the U.S. Government.
Warranty: A home warranty covers costly home repairs and replacements due to normal wear and tear. Ryan Homes offers 1-, 2- & 10-year warranties.
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