If you’d like to get involved in the real estate space, be it as a buyer, seller, investor, or general enthusiast, the first thing you’ll need to do is familiarize yourself with the language. The real estate world has a language of its own that can be difficult to wrap your head around, and if you can’t decipher what another occupant in the space is telling you, there’ll be trouble in store down the road. This is especially true in New Jersey, where complex regulations can make the process significantly more difficult to comprehend.
Here are the top New Jersey home buying terms you need to learn:
Annual Percentage Rate
A broad measure of your cost for borrowing money, the annual percentage rate (or APR) includes the interest rate, broker fees, points, and other credit charges that a borrower must pay. The APR is usually higher than your interest rate, as these costs are rolled in.
Appraisal
An appraisal is a professional analysis used to estimate the value of a property, and as it validates the home’s worth to you and your lender, it’s a crucial step towards securing your financing. The result of the appraisal will be based in part on sales of similar New Jersey properties, as an example.
Credit Score
Based on an analysis of your credit history, your credit score is a number ranging from 350-800 that plays a major role in securing a mortgage (as it helps lenders determine the likelihood that you’ll repay future debts). Over 55% of approved loans in New Jersey had a score below 750, but the higher your score, the better.
Escrow
Escrow is the holding of money or documents by a neutral third party before closing. It might also be an account held by the lender into which a New Jersey homeowner pays money for insurance and taxes.
Fixed-Rate Mortgages
Any mortgage with an interest rate that stays constant for the entire term of the loan is referred to as a fixed-rate mortgage. These typically run from 15 to 30 years, with variable rate loans being shorter-term.
Mortgage Rate
The interest paid to borrow money to purchase a home is the mortgage rate, and the lower your interest rate, the better. We’ve seen interest rates for a 30-year fixed rate mortgage hover around 4% for most of 2017 thus far.
Primary Mortgage Insurance
If you’re forced to make a down payment lower than 20%, your lender will require primary mortgage insurance, which serves as an added insurance policy that protects the lender if you can’t pay your mortgage and can be canceled from your payment once you reach 20% in equity.
Source: TAPinto