Learn to speak the Language of Finance and Real Estate. When you begin to research financing options for your home purchase you are likely to encounter many terms you may not be familiar with. But who wants to school themselves on ratios, points, and amortizations when there are other tasks that need to be done like picking out flooring and deciding on paint colors. Unfortunately, while I agree it is not nearly as exciting, it’s important to use a financial glossary to help learn the lingo to avoid getting confused by all the jargon. Use the Finance Glossary below to view the definition of the terms used in home loans and real estate transactions. By becoming familiar with these terms you will have a clearer understanding of what is being offered to you and what you agree to when you sign your loan documents. You will also be able to ask the right questions when speaking to a lender or mortgage broker and avoid being taken advantage of. You don’t want appear to be a rube or a newcomer to the residential real estate game. For example, if you know something about cars and the mechanic tells you that you are low on blinker fluid and that your muffler bearing needs to be replaced you will know it’s a scam and you can call him on it. Likewise, if you are fluent in the mortgage language, a mortgage broker will know they’ll have to justify any fees they charge you. You also will be more effective when communicating with your broker to ensure they understand what you want and expect.
Becoming an educated and informed buyer/borrower will help you avoid common mistakes and pitfalls and make the whole process more enjoyable. After all, buying a home should be fun and exciting and not something to loose sleep over.