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First Time Buyers, here is a vocab cheat sheet

Pre-Approval – An evaluation by a lender that
determines whether the borrower qualifies for a loan and
the maximum amount they qualify for.

Adjustable Rate Mortgage (Arm) – Interest rates are
periodically updated to coincide with the current market
interest rates.

Annual Percentage Rate (APR) – The cost of a
mortgage stated as a yearly rate with all financial cost:
including interest, mortgage insurance, and loan
origination fee.

Back End Ratio – The ratio of all fixed debt, including
housing expenses to gross income.

Escrow – The mortgage company establishes an
escrow account to pay property taxes and insurance
during the term of the mortgage.

Private Mortgage Insurance (PMI) – A down payment
of less than 20%, the lender requires PMI. This protects
the lender from losing money if you end up in
foreclosure.

Homeowner’s Insurance – Combined property and
liability insurance designed for residential property
owners.

Lien – A form of encumbrances that holds property as
security for the payment of a debt.

Market Value – The amount for which something can be
sold during the current market.

Fix Rate Loan – A loan whose interest rate never
changes during the life of a loan.