Acronyms are everywhere! There are plenty you use and many more you do not, but before you buy a home you should probably know these.
APR – Annual Percentage Rate is the yearly interest percentage of a loan, as expressed by the actual rate of interest paid.
ARM – Adjustable Rate Mortgage is a loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender
CMA – competitive market analysis is a report that shows prices of homes that are comparable to a subject home and that were recently sold, are currently on the market or were on the market, but not sold within the listing period.
EMD – Earnest Money Deposit is a good faith deposit of funds given by a potential buyer who is offering on a property.
FPM – A Flexible-Payment Mortgage is a loan that allows the borrower to pay only the interest for the first few years of the loan.
FRM – Fixed-Rate Mortgage is a mortgage loan first developed by the Federal Housing Administration where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float.”
HEL – A Home Equity Loan is a mortgage loan first developed by the Federal Housing Administration where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float.”
HELOC – A Home Equity Line of Credit is a loan in which the lender agrees to lend a maximum amount within an agreed period. This differs from standard loans or a reverse mortgage because the borrower is not advanced the entire sum up front, but uses the line of credit to borrow sums totaling no more than the amount.
MLS – Multiple Listing Service is an organization that collects, compiles and distributes information about homes listed for sale by its members, who are real estate brokers. Membership isn’t open to the general public, although selected MLS data may be sold to real estate listings Web sites. MLSs are local or regional. There is no MLS covering the whole country.
PITI – Principal, Interest, Taxes and Insurance is what most home buyers can expect to pay as their mortgage payment. Most home buyers choose to have their Annual Taxes & Insurance Premiums escrowed at the mortgage company, and included in their monthly payments.
PMI – Private Mortgage Insurance is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home’s value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI.