When it Comes to New Homes in Portland, Buyers Should Know the Lingo

When searching for new homes in Portland, potential first-time buyers can often become confused with the lingo and acronyms used in the sales process. When looking at new homes, Oregon shoppers shouldn’t need a cryptologist. Simply use the following cheat sheet.

Portland New Home Lingo

• Annual Percentage Rate (APR): The annual interest rate and finance charges on a loan.
• Appraisal: The estimated value of a property.
• Appreciate: An increase in a home’s value.
• Assessment: A home’s property tax based on its value.
• Binder: The receipt that you get after paying a deposit on a home.
• Certificate of occupancy: A document that states that your home meets the local code, ordinance and regulation requirements.
• Closing:  A meeting where you sign documents that transfer ownership of the home from the former homeowner to you.
• Closing costs: The payment that you make to obtain a loan (the down payment) and transfer the real estate title.
• Default: When a homeowner breaches a mortgage contract, like by not making a mortgage payment on time.
• Density: The number of properties in a specific area.
• Downpayment: A percentage of a home’s selling price that you pay to secure a mortgage.
• Equity: The difference between the value of a home and the mortgage amount.
• Escrow: When a third party handles documents or funds on your behalf.
• Federal Housing Administration (FHA): The federal agency that provides mortgage insurance if your down payment is less than 20 percent of the total mortgage.
• Fixed rate mortgage: A mortgage that has a fixed interest rate.
• Fixed scheduled mortgage: A mortgage that has a fixed payment plan, but not necessarily a fixed interest rate.
• Graduated payment mortgage (GPM): A mortgage that lets you have a fixed rate and fixed schedule. The mortgage payments initially start out low and annually increase during the first five to ten years.
• Growing equity mortgage (or rapid payoff mortgage): A mortgage with a fixed rate and fixed schedule that has payments that annually increase so you can pay off the home loan faster.
• Hazard insurance: A type of insurance policy that covers damage to the property.
• Interest: The cost a lender charges for letting you borrow money.
• Level payment mortgage: A home loan that allows you to pay the same monthly amount over the life of the loan.
• Mortgage broker: A person who represents several lenders and helps you find the best mortgage plan.
• Mortgage commitment: A letter that a lender writes that states that it agrees to lend you money for a property.
• Mortgage company: A company that borrows money, lends it to homeowners and then sells the loan to investors.
• Mortgage origination fee: The fee that a lender charges for preparing and servicing a loan application.
• PITI: An acronym that for principal, interest taxes and insurance.
• Principal: The amount of a loan, not including interest or other fees.
• Property survey: A survey that determines a property’s boundaries.
• Recording fee: The fee that governments charge to record the transfer of a property.
• Sales contract: A contract that specifies what the purchase of a home includes, any guarantees, the closing cost amount and a move-in date.
• Title: A document that proves that you legally own a property.
• Walk-through: The final inspection of a home for problems that need correcting.
• Zoning: Regulations regarding the use, height and location of your property.

[Photo by: Sam Beebe via CC License]

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