Buyers and Sellers

Buying a Home

The ABCs of Buying and Selling Property

  • Adjustable rate mortgage (ARM): A mortgage where the rate can change based on designated market indicators.
  • Assumable mortgage: When the buyer qualifies for and takes over the seller’s mortgage.
  • Balloon mortgage: If a mortgage is not paid during the loan term, it is considered a balloon mortgage. The borrower then has the option to pay off the mortgage or refinance.
  • Closing costs: Charges beyond the actual cost of the property that are paid when the escrow closes.
  • Common interest development: Property such as townhouses where units are owned by single individuals or families, but common areas are shared.
  • Disclosure: Sellers are required to announce or disclose physical and structural defects that are not readily observable.
  • Earnest money deposit (EMD): A partial deposit that enters parties into a contract when a purchase offer is made. The rest of the deposit is paid when the sale closes.
  • Escrow: A deal to ensure the financial safety of both parties where a neutral third party holds funds and documents until the closing of the sale.
  • Foreclosure: When a mortgaged property is reclaimed due to a borrower’s failure to maintain payments.
  • Fixed rate mortgage: A mortgage’s interest rate remains constant over a predetermined number of years.
  • Hazard insurance: Part of homeowners’ policies that protects against physical damage.
  • Homeowners' association: An organization where homeowners communicate and manage common areas.
  • House closing: The sale is finalized and ownership of the house is transferred.
  • Mortgage: A loan to help borrowers purchase a house. If the loan and its interest aren’t paid, the house can be reclaimed.
  • Non-recurring closing costs: One time fees that must be paid when closing a home.
  • PITI: The components of a mortgage: principal, interest, taxes, and insurance.
  • Recurring closing costs: Costs that will occur throughout a buyer’s ownership of the home. These would be costs such as property tax.