Terms every home buyer/seller should know (Part 2: F-Z)
Like any industry, real estate has its own language and jargon. Below are some terms to help you translate. Before you dive in, be sure to check out Part 1 of the list.
Fannie Mae: The Federal National Mortgage Association, created during the Great Depression as part of the New Deal to encourage home ownership. This government-sponsored lender is one of the biggest mortgage providers in the country.
FICO: Abbreviation for the Fair Isaac Company, the former name of the company that provides the software used to calculate your credit rating. Lenders use your credit rating to determine the amount and conditions of your mortgage. Your FICO score is based on the amount you currently owe on your debts, your payment history, recently opened lines of credit, length of credit history and the types of credit you use.
GFE: The Good Faith Estimate form gives you an idea of what your closing charges and loan terms will be if you are approved for the loan you are applying for.
Lien: A legal claim against a property that must be satisfied before the property may be sold. Common liens include tax liens filed by the government if you haven’t paid your taxes, judgment liens from losing a lawsuit or an unpaid attorney, and mechanic’s liens from unpaid contractors or repairmen.
Lock-In (Rate Lock): A lender's promise to guarantee a borrower a certain interest rate and loan terms for a specified period of time.
MLS: Short for the Multiple Listing Service, a database of all properties for sale.
PITI: Stands for Principal, Interest, Taxes and Insurance. This is your monthly mortgage payment. The principal is the part of the payment that pays down the loan, the interest is the part of the payment that pays the lender for loaning you the money to buy the property, and the taxes and insurance are usually paid into an escrow account each month.
Settlement Statement: The standard document with the details of the sales transaction and the closing costs.
Short Sale: When a home is sold for less than the amount the current owner owes the mortgage company.
Title: The document that proves ownership of a property, publically recorded in the county in which the property is located.
Walk-Through: This is the final inspection the buyer makes of the home before closing to make certain the conditions of the property match the contract.
Hopefully this vocab lesson helped you feel more comfortable in the world of real estate. For more information about the process of buying or selling a home, contact a RE/MAX Blue Chip Realty agent.