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First-time Homebuyer Dictionary

Buying your first home can be a scary process. We’ve taken a little liberty to interject some fun after each true definition. Enjoy.

Amortization Schedule: A schedule showing the principal and interest payments throughout the life of a loan. Sadly, First-time buyers, it’s not all fun and romance…snooze.

Appraised Value: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings. Your opinion about your first love home isn’t the only one that counts. In case you are blinded by your first love home, seek professional help.

Credit Report/Credit Score: A report on the past ability of a loan applicant to pay installment payments.

Document Preparation: A fee charged by an attorney for preparation of legal documents for the transaction. You pay for a marriage license…it’s no different here. Make it official.

Escrow Fee: A fee charged by the title company to service the transaction, to escrow monies, and to cover documents. The amount varies by company; usually split between buyer and seller. Think of the title company as your marriage counselor. They keep things fair, don’t take sides and do their best to ensure things go smoothly.

Homeowner’s Insurance: Protects the property and contents in case of loss; must be for at least the loan amount or 80% of the value of the improvements, whichever is greater  Always have protection!!

Inspections: An examination of property for various reasons such as termite inspections, inspection determines if repairs are required. Does your first love home have any skeletons in the closet?

Loan Application Fee: Paid to the lender at time of application; varies by lender. Once again, it’s not all fun and romance.

Loan Discount: The points a lender charges; may be paid by either the buyer or the seller on conventional loans; number of points fluctuates with the mortgage money market.

Maintenance Fee/Homeowner Dues: Charged by the homeowner’s association as set out in subdivision restrictions.

Mortgagee’s Title Policy: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.

Origination Fee: A fee the buyer pays the lender to originate a new loan.

Owner’s Title Policy: Insurances that the buyer has title to the property.

Point: 1% of loan amount.

Prepayment Penalty: Charged by the lender on some loans for premature payment of a loan balance.

Private Mortgage Insurance: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).  Required on FHA loans or conventional loans with less than 20% down payment.

Realtor Fees: An amount paid to the Realtor as compensation for his or her services.

Recording Fees: Charged by the County Clerk to record documents in the public records.

Restrictions: Certified copy of deed restrictions required by lender.

Survey: Confirms lot’s size and any encroachments or restriction violations. Make sure you know what your boundaries are.

Tax Prorations: Taxes are charged to the Seller and credited to the Buyer from January 1 to date of Closing.

Tax Certificates: Certificates issued by taxing authorities showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected from seller at closing.