CLOSING COSTS: Costs the buyer must pay at the time of closing in addition to the down payment. Closing costs average 3-4% of the loan amount.
CONTINGENCY: A condition that must be met before a contract is legally binding.
EARNEST MONEY: A deposit made by the potential homebuyer to show that he or she is serious about buying the house.
ESCROW: The holding of documents and money by a neutral party prior to closing; also, an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
LOAN ORIGINATION FEE: A fee paid to the lender for processing a loan application; it is stated as a percentage of the mortgage amount.
MORTGAGE INSURANCE PREMIUM (MIP): The fee paid by a borrower to the FHA or a private insurer for mortgage insurance.
POINTS: A one-time charge by the lender to increase the yield of the loan; a point is one percent (1%) of the amount of the mortgage.
EQUITY: A homeowner's financial interest in a property. Equity is the difference between the fair market value of a property and the amount still owed on the mortgage.
AMORTIZATION: The gradual repayment of a mortgage by installments, calculated to pay off the obligation at the end of a fixed period of time.
FIXED-RATE MORTGAGE: A mortgage in which the interest rate does not change during the entire term of the loan.
VARIABLE-RATE MORTGAGE: A mortgage in which the interest rate may change at scheduled intervals during the term of the loan.
TITLE COMPANY: A company that specializes in examining and insuring titles to real estate.
If you have question about any of the procedures mentioned here, or wish to check the complaint history of a business, contact the Pinellas County Office of Consumer Protection at (727) 464-6200.