Common Real Estate Terms

Published on 08/23/04
By Lewis J. Corcoran - Realtor-Associate - Weichert, Realtors

Common Real Estate Terms

Here are definitions of some of the most commonly-used real estate terms. Learning the terms may help you navigate more confidently through your next transaction:

* Contract
The document that states the price, mortgage amount, closing and possession dates, and what items stay with the property.

* LTV
Loan-to-value ratio is the comparison of the amount of money you are borrowing and the price of the property. The smaller the amount of your down payment, the riskier the mortgage is perceived to be by mortgage lenders.

* PMI
Private mortgage insurance protects the lender in case you default on your home loan. If your down payment is less than 20% of the selling price, most lenders will require that you buy PMI.

* Inspection
This is a thorough review of the property and its systems by a qualified inspector. Many buyers request an inspection as a condition of the sale, so that an independent third party can determine the condition of the property they are buying.

* PITI
This is a statement of the principal, interest, taxes and insurance. Lenders look at the PITI amount in relation to the gross income of the borrower to make sure the borrower can afford the payments.

Don't hesitate to call if you would like more information. Your agent's goal is always to make the buying or selling process as smooth and comfortable for you as possible. Then all you have to do is pack!

Owner's Tip:

Closing (also known as settlement) is when the deed is recorded and the funds are made available to the seller, not when the papers are signed.

Owner's Tip:

A point is one percent of the loan amount, also called a discount fee. You may pay points in order to obtain a lower interest rate.