Homebuying & Mortgage Glossary: Essential Terms for Your Journey

Embarking on the journey of buying or building a new home can be exhilarating, but the array of unfamiliar terms can be overwhelming. Fear not! We've compiled a list of 12 essential terms to empower you with confidence throughout your home buying process.

Home Financing Terms

1. Pre-qualification:

- An estimate of your borrowing potential based on financial information provided to your lender. It's an opportune time to explore mortgage options and seek clarification.

2. Pre-approval:

- A comprehensive evaluation by a lender, verifying information, checking credit, and approving you for a specific loan amount for up to 90 days. It signals to sellers that you're a serious and well-assessed buyer.

3. Rate Lock:

- A safeguard against interest rate increases during the buying process, securing a specific rate for a defined period, even if market rates fluctuate.

4. Down Payment:

- The upfront payment made at closing, typically a percentage of the purchase price. It varies based on the type of mortgage and your budget.

5. Closing Costs:

- Additional expenses, such as fees, taxes, and insurance, incurred at closing, usually ranging from 3% to 6% of the loan amount.

6. Homeowners Insurance:

- Property insurance covering losses and damages to the residence and belongings, with liability coverage. Lenders often require it before the closing date.

7. Private Mortgage Insurance (PMI):

- Insurance required by lenders for conventional loans with less than a 20% down payment, protecting the lender in case of missed payments.

Homebuilding Terms

8. Home Automation:

- Integration of Wi-Fi-enabled smart devices, allowing remote control of various home aspects. Features from M.Connected Home™ Automation Suite enhance convenience.

9. Home Energy Rating System (HERS):

- Standard measuring a home's energy efficiency; lower scores indicate higher efficiency and reduced energy bills.

10. Spray Foam Insulation:

- Polyurethane foam used for insulation, sealing cracks and gaps, enhancing energy efficiency, and reducing air infiltration.

Interior Design Finishes

11. Interior Design Finishes:

- The enjoyable process of selecting design elements like tile, cabinets, and light fixtures for your new home.

12. Homeowner Orientation:

- A session before moving in, allowing you to ask final questions and finalize details with the builder.

Now equipped with these basics, elevate your understanding with our extended homebuyer glossary or reach out to our team for any queries.