Buying your first home can be a challenge, especially if you're unfamiliar with real estate and finance industry jargon.
Fortunately, it's relatively easy to learn the meaning of an APR, ARM, PITI or any of the other terms your real estate agent may casually drop into the conversation as you hunt for the home of your dreams.
Aware that buying that first home can be somewhat daunting, the Federal Trade Commission has issued a "Real Estate Marketplace Glossary," an 18-page A-to-Z "talk-the-talk" guide (also available online), which can take the mystery out of terms commonly used in the real estate and mortgage marketplace.
There are also a host of online and print guides, including http://www.RealEstateWords.com, http://www.RealEstateABC.com and Barron's Dictionary of Real Estate Terms, which includes definitions of 3,000 items in great detail.
Stephanie Singer, who keeps tabs on consumer trends and runs the National Association of Realtors' Public Awareness Campaign, believes the terms "buyer agency," "listing agent," "ARM," "as is" and "PITI" are among the more common terms that confuse first-time homebuyers. "Understanding the difference between the terms 'condo' and 'co-op' is another," she says. Also, not every real estate agent is a Realtor, she notes. "Realtor" is a trademarked designation that only can be used by members of the National Association of Realtors, the nation's largest trade association, representing 1.2 million brokers, real estate sales representatives and others engaged in the industry.
Here are some terms to get you started:
*APR (annual percentage rate): the cost of a loan or other financing as an annual rate.
*ARM (adjustable-rate mortgage): a mortgage with a floating interest rate -- usually adjusted annually -- based on and tied to a financial index.
*"As is": "What you see is what you get." The seller makes no guarantees on the physical condition of the property and will not make repairs.
*Assumable mortgage: a seller's mortgage loan that can be taken over by the homebuyer with no change in terms.
*Buyer broker (or buyer's agency): a real estate agent or agency that represents the interest of the buyer.
*Clear title: property that is free of liens, defects and other legal encumbrances.
*Closing costs: fees that you will have to pay upfront at the "closing," the date on which the sale of the property is finalized and a mortgage loan transaction is completed. Bring your checkbook. They may include fees for a loan origination, a title search, an insurance survey, an attorney or other things.
*Condo (condominium): an individually owned unit in a multi-housing complex in which common areas -- such as sidewalks, stairs, clubhouses or greenbelts -- are jointly owned and maintained through monthly fees.
*Co-op (cooperative): housing in which residents own shares in a housing corporation that owns the real estate. Like condo owners, co-op owners must pay monthly maintenance fees, but in addition, they must pay interest and principal on share loans.
*Deposit (or earnest money deposit): a token amount of money a potential buyer gives to the seller to show he or she is committed to buying the home.
*Listing agent: a real estate agent who represents the interests of the seller.
*PITI: an acronym (pronounced like the word "pity") for the four primary components of a monthly mortgage payment: principal, interest, taxes and insurance.
Of course, in the great house hunt, you also will find that not every term accurately describes what you find, at least according to some anonymous pundits whose tongue-in-cheek real estate classified ad descriptions can be found online. Here are a few of our own:
*Country living: Five hours from absolutely everything.
*Cozy: Forget about a sofa or king-size bed.
*Executive home: Oversize, overpriced.
*Efficient kitchen: Room for you, one pot and one pan.
*Close to all amenities: Overlooks shopping center loading dock.
*Must see inside: Because the outside is a turnoff.
*Motivated sellers: Offer 20 percent less than the asking price.
*Close to transportation: Across from busy interstate; commuter rail line abuts backyard.
*Well below market: Well below sea level.
*Sunny lot: No trees, no shrubs, no landscaping.
*Priced for quick sale: Nobody else wants it.