It’s been a busy year on the blog and in the real estate industry. As I look back on 2017, I see a successful market with ever-growing potential in Prince William County and the surrounding areas. We’ve covered a lot of ground on the blog this year, and, as we start to wind down, I thought I’d pull together all the terms covered this year. A kind of summary or cheat sheet, if you will. Here we go!
Terms to Know
Adjustable rate mortgage – Adjustable rate mortgages, or ARMs, are mortgages where the interest rate applied to your outstanding balance fluctuates throughout the life of your loan. In most cases, the initial interest rate is fixed for a set period of time. ARMs typically start out at a rate lower than that of a traditional 30-year fixed rate mortgage. Once the initial period is over, the rate fluctuates based on the market conditions.
Assessed value – The assessed value of your home is a value assigned to the property for the purpose of measuring taxes. Yep. This is the value that matters to Uncle Sam — and really only exists for tax purposes.
Assessment – Home assessments are essentially something you have no control over. This determination of value is made by the local city or county government and reported to you annually. They place their assessed value on your home in order to be able to bill you properly for property taxes.
Convertible ARM – Convertible adjustable rate mortgages provide you with the option to convert to a fixed-rate mortgage down the line. This offers borrowers a way to avoid the potentially scary rising rates and certain conditions that traditional ARMs can present.
Contingencies – A contract with a contingency on it means that an offer has been made on the home and the seller has accepted it, but the finalized sale is dependent upon certain criteria being met.
Escrow – In the real estate world, an escrow is a deposit of funds held by a third party on behalf of two other parties that are in the process of completing a transaction. The funds are held by the escrow agent until receiving instructions for the fund or until predetermined contractual obligations have been fulfilled.
PITI – PITI stands for principal, interest, taxes and insurance. So why are they all lumped together like that, and what does one have to do with the other? PITI represents all the components of a mortgage payment.
RESPA – RESPA stands for the Real Estate Settlement Procedures Act, which was passed to help create more well-informed consumers. RESPA requires lenders to provide more information to prospective borrowers at certain points throughout the loan settlement process. It also prohibits involved parties from paying kickbacks to each other — no dirty dealings or shady business allowed!
Reverse mortgage – A reverse mortgage is a special loan on your home that allows you to convert some of the equity in your home into cash. This comes as payments to you. As a borrower, you do not have to repay the mortgage loan until the home is no longer your primary residence.
Two-step ARM – With two-step adjustable rate mortgages, you’ll receive an initial fixed-interest rate for a set period of time, often five to seven years. After this time period is up, on a preset date, the rate adjusts to the market rates. On this date, the borrower may have a choice — to opt for a fixed-interest rate or to choose a variable rate for the remainder of the loan’s term.
Remember to contact me for all of your real estate needs! I serve Gainesville, Haymarket, Warrenton, Middleburg, Prince William and Fauquier County, Virginia.
Looking to buy or sell a home in Gainesville, Haymarket and Manassas? Call Realtor® Marcia Goodman at Samson Properties at 703-819-4776.