In New York City as well as in other major metropolitan areas around the country, many people will live in rental apartments until some type of life event causes them to think about buying a home instead!
This can occur for many reasons such as starting a family, educational opportunities or perhaps a raise that makes the mortgage interest deduction an important part of a financial plan.
The search can also either be for a primary residence or perhaps for a vacation home.
Whatever the reason for buying, newbie prospective property owners will be facing real estate and mortgage terminology that will be much different than what is commonly found in an apartment lease. Terminology that they may be unfamiliar with!
For this reason, these are fifteen terms that anyone stepping into the real estate arena should familiarize themselves with:
1. Adjustable Rate Mortgage (ARM)
When applying for a home loan, you can get an adjustable-rate mortgage (ARM) or a fixed-rate mortgage. An ARM usually has a specific interest rate for a set time and then the interest rate fluctuates. Most of these mortgages have a cap on how high the interest rate may increase.
2. Amortization Schedule
First off, amortize basically means to reduce a debt. An amortization schedule is a detailed breakdown that illustrates how much interest and principal of the mortgage has been paid off and how much remains with each payment.
3. Closing
The final step in a real estate transaction, a closing is the transfer of the title of the property for money or other considerations.
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