Home Buyer’s Glossary O’ Terms

Buying your first home can be a scary process, so we’ve taken the mystery out by giving you the key terms and definitions.

Amortization Schedule: A schedule showing the principal and interest payments throughout the life of a loan.

Appraised Value: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings. 

Credit Report/Credit Score: A report on the past ability of a loan applicant to pay installment payments.

Document Preparation: A fee charged by an attorney for preparation of legal documents for the transaction.

Escrow Fee: A fee charged by the title company to service the transaction, to escrow monies, and to cover documents. The amount varies by company; usually split between buyer and seller.

Homeowner’s Insurance: Protects the property and contents in case of loss.

Inspections: An examination of property for various reasons such as termite inspections, inspection determines if repairs are required.

Loan Application Fee: Paid to the lender at time of application; varies by lender.

Loan Discount: The points a lender charges; may be paid by either the buyer or the seller on conventional loans; number of points fluctuates with the mortgage money market.

Maintenance Fee/Homeowner Dues: Charged by the homeowner’s association as set out in subdivision restrictions.

Mortgagee’s Title Policy: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.

Origination Fee: A fee the buyer pays the lender to originate a new loan.

Owner’s Title Policy: Insurances that the buyer has title to the property.

Point: 1% of loan amount.

Prepayment Penalty: Charged by the lender on some loans for premature payment of a loan balance.

Private Mortgage Insurance: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor). Required on FHA loans or conventional loans with less than 20% down payment.

Realtor Fees: An amount paid to the Realtor as compensation for his or her services.

Recording Fees: Charged by the County Clerk to record documents in the public records.

Restrictions: Certified copy of deed restrictions required by lender.

Tax Prorations: Taxes are charged to the Seller and credited to the Buyer from January 1 to date of Closing.