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Understanding Terms Used When Home Buying in Irvine, CA

Understanding the Terminology of Home Buying

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Buying a home in Irvine for the first time is a learning process that some people may find mystifying due to the numerous financial and legal aspects involved in real estate transactions. To better understand the process, it helps to become familiar with the terms you will be hearing and reading as you work your way toward the closing table. Here are a few of the terms often used when purchasing a home.

Amortization

When you obtain a mortgage loan, the lender will arrange the monthly payments so they remain the same over the life of the loan or during the periods following the adjustment of the interest rate. This is a feature known as amortization. Even though the principal will diminish as you make payments, the amount you pay each month will be the same.

Annual Percentage Rate(APR)

The APR is the true cost of the mortgage, and it is often higher than the interest rate because it includes points and other fees payable to the lender and broker. You could lower the APR by paying points and fees upfront, but this is unusual.

Appraisal

This valuation analysis determines how much a home is worth, and it may not be the same as the purchase price. Several factors are considered in an appraisal, from the condition of the home to the state of the housing market, as well as from comparable sales to the neighborhood. Depending on how long it takes to process your mortgage, the bank may require more than one appraisal.

Closing Costs

Purchasing Westpark Irvine homes for sale means having to pay more than the price on the sales contract. Closing costs are fees and payments that are necessary to carry out a real estate transaction. Some of the most common closing costs include property taxes, the appraisal, title insurance, mortgage processing fees, and registration fees.

Discount Points

Mortgage lenders price their loans by means of discount points calculated in the APR. These points can be negotiated to a certain extent, and they can also be paid up front to get a lower interest rate.

Down Payment

Most home purchases require a down payment, which is a percentage of the price agreed on the contract. Typical down payments range between 3 and 20 percent. The more you can afford to pay, the better mortgage terms and conditions you can obtain.

Escrow

This term can be used to describe the process of depositing money in good faith with a neutral third party, and it can also be used to describe the accounts maintained by mortgage servicing entities that collect money from borrowers to pay for property taxes and home insurance. Title agents who perform closings in California are sometimes called escrow agents.

Home Inspection

This professional opinion about the condition of a property is highly recommended for all buyers. In some cases, a home inspection report can be used to negotiate a sales price.

Whether you’re looking for condos in Columbus Grove or Quail Hill Irvine townhomes for sale, make sure you work with a trusted agent who can guide you through the home buying process. At OC Residential, we can show you the latest listings on the market and keep you informed on everything you need to know when purchasing a home. Give us a call today at 714-454-6304.

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