Glossary of Terms Every Home Buyer Should Know

Buying a new home is a lengthy and challenging task. On top of all the decisions that need to be made, you might also find yourself being bombarded with words that you might not have heard before. So, to make things easier, we’ve prepared a glossary to help explain some of terms you’ll hear throughout the house buying process:

Adjustable Rate Mortgage (ARM)

An ARM is primarily focused on interest rates and the fluctuation throughout the duration of the loan. This means that the loans are limited on how often, and by how much, the rates change.

Annual Percentage Rate (APR)

APR is the final cost and the last step before obtaining your loan. It includes the interest rate for a whole year, rather than just a monthly fee or rate. The final cost includes associated fees and costs with your loan, such as:

  • Fees
  • Interest
  • Insurance

Appraisal

An appraisal is used to compare recent sales of similar properties. It is then used by lenders to determine the limit of what they will lend for that property.

Closing costs

In short, closing costs are the final payment of a real estate transaction and the title of the property is conveyed to the buyer.

Closing costs may include:

  • Appraisal fees
  • Credit check fees
  • Escrow fees
  • Points
  • Loan origination fees
  • Surveys
  • Taxes
  • Credit report charges

Contingencies

Contingencies are certain conditions that must be met for a contract to become binding. The seller and the buyer must agree to the terms and conditions of a contingency clause to bind a sales contract

Contingencies typically fall under three major categories;

  • Appraisal
  • Home inspection
  • Mortgage approval

Due diligence

Due diligence is investigating a property once entering an agreement, and before the purchase occurs. It is at this stage that you would research the history of the house and the neighbourhood, before settling on the wrong house. Your solicitor or conveyance specialist would assist with this stage.

Escrow

Escrow is an account (not required for everyone) that is held by a third party who regulate payments required between two parties in a transaction. This account also assures that the seller can see that you have the money and that you are ready to pay.

Equity

Equity is the difference between the market value of your home and how much you owe to the lender on it.

Loan-To-Value Ratio (LTV)

The LTV Ratio denotes how much equity you have in your home. It looks at how much you owe as a percentage in comparison to the value of your home.

Private mortgage insurance (PMI)

If you do not have at least 20% of your down payment, PMI is required. It is designed to protect the lender — if you default, the insurance will reimburse the lender.

This glossary lists just a few of the hundreds of terms you may come across. We definitely recommend doing adequate research before signing any contracts, especially if you aren’t 100% sure that you understand the terms!

REQUEST A CALLBACK

  • TANIA & DANIEL / SCULLIN

    We recently checked in with our valued clients, Tania & Daniel, at their brand new home in Scullin, ACT. Take a listen to what they...
    Read more
  • Kate / Holt

    We recently caught up with our valued client, Kate, at her brand new home in Holt, ACT. Take a look at what she had to...
    Read more
  • Anita & Ram / Throsby

    Anita & Ram have just moved into their new home in Throsby, ACT. We popped in to see how they're finding their brand new home.
    Read more
  • Tristan / Googong

    Tristan just moved into his new home in Googong, NSW. We dropped in to see how he's finding the new home.
    Read more
  • Patrick & Sarah / Ginninderra Estate

    We recently caught up with our valued clients, Patrick and Sarah, at their brand new home in Ginninderra Estate. Here's what they had to say...
    Read more
  • Brodi & Catherine / Hackett

    We recently caught up with our valued clients, Brodi and Catherine, at their new home in Hackett. Here's what they had to say of their...
    Read more

LATEST NEWS

Melbourne Development Update

We are excited to be expanding & growing across Australia to bring our passion for building real homes for real people to more Australian families....

Read More

2019 HIA-CSR ACT & SNSW Housing Awards

On Saturday the 26th of October a few members of our team had the pleasure of attending the HIA-CSR ACT & Southern NSW Housing Awards...

Read More

Ginninderry Display Home Launches!

On October 26th we opened our brand new Ginninderry Display Home! This new display home, Vivid, is the epitome of a statement family home, embodying...

Read More

Our Awards

  • HIA ACT & SOUTHERN NSW REGION AFFORDABLE HOME

  • JUDGES RECOMMENDATION FOR WORK HEALTH & SAFETY

  • HIA ACT & SOUTHERN NSW TOWNHOUSE/VILLA DEVELOPMENT OF THE YEAR – LAWSON

  • HIA (ACT) AFFORDABLE HOUSING

  • HIA (ACT) PROFESSIONAL MEDIUM BUILDER/RENOVATOR

  • MBA (ACT) PROJECT HOMES – LESS THAN $300,000

Achieve Homes is a home building company that has become one of the most trusted builders in the industry operating in Canberra, surrounding NSW region and Melbourne. We have been operating since 2008 and understand what our customers want.

Keep in touch

Contact

Address
15/9 Beaconsfield Street
Fyshwick, ACT 2609

9/20 Graduate Road
Bundoora, VIC 3083

Phone
1300 234 432

ABN 31 137 872 014
ACT BL No 2009645
NSW BL No 224797C
VIC ABN 41 608 214 375
VIC BL No CDB-U 61982

© 2019 Achieve Homes All Rights Reserved | Site Created By 23 Creative

Skip
Translate »