A Glossary of Real Estate TermsAre you looking to refinance your current home mortgage? In order to successfully communicate with your mortgage broker, you should know the basic real estate jargon. There are a plethora of terms that those involved in real estate use, and you need to educate yourself to protect your investment in the refinancing process.

Key Real Estate Terms You’ll Encounter During Refinancing

This glossary will help you as a homeowner to understand the basic terms that you will hear before, during and after refinancing:

  • Appraisal – What It Is and Why It’s Important

An opinion made by an appraiser that suggests the market value of a house that a homeowner wants to sell or refinance. It protects the lender from lending money on a house that is worth less than what the buyer has agreed to pay for it.

  • Adjustable-Rate Mortgage (ARM) – Pros and Cons

A mortgage whose interest rate and monthly payments vary throughout its life. If interest rates fall, so does the monthly payment.

  • Automated Valuation Model (AVM) – What You Need to Know

A service that uses mathematical modeling to value properties, and they do not factor in the condition of the property to determine its value.

  • Broker vs. Real Estate Agent – Understanding the Difference

Higher on the totem pole than a real estate agent. A broker supervises real estate agents.

  • Closing Costs – What to Expect During the Refinancing Process

Costs that include the appraisal fee, credit report fee, loan origination fee and other charges. They generally add up to 5% of the home’s purchase price.

Common Financial Terms You Should Know

  • Debt-to-Income Ratio – What Lenders Look For

Measures your future monthly housing expenses in relation to your monthly income.

  • Equity – How It Impacts Your Refinancing Options

The difference between the market value of house and the amount the homeowner owes on it.

  • Escrow – What Happens During the Closing Process

The holding of important documents and money associated with the sale of the house.

  • Fair Market Value (FMV) – What It Means for Your Home

The price an educated home buyer will pay and a seller will accept.

More Real Estate Terms You May Hear During Your Refinance

  • Fixed-Rate Mortgage – Stability vs. Flexibility

Allows you to lock into an interest rate that doesn’t change during the term of a 15- or 30-year mortgage.

  • For Sale By Owner (FSBO) – The DIY Home Sale Process

When a home owner attempts to sell their house themselves.

  • Homeowners Insurance – What’s Covered and Why You Need It

Insurance that is required and necessary to protect your home from fire, storms and other events that can cause damage.

  • Home Inspection – How It Helps You Make Informed Decisions

An inspection of the interior and exterior of a house to make necessary repairs.

  • Home Value Report – Estimating Your Home’s Market Value

An estimation of your home’s worth to help you decide whether or not to buy or sell.

Other Important Terms to Keep in Mind

  • Listing Agent – Who They Are and How They Help You

An individual that helps homeowners sell their home and negotiates with the selling agent.

  • Private Mortgage Insurance (PMI) – When It’s Required

Insurance that the borrower will probably need to purchase if the down payment of a home is less than 20% of the purchase price. Also known as mortgage default insurance.

  • Real Estate Agent – How They Assist in Property Transactions

The “salesperson” of real estate sales who is paid through commissions generated by selling property.

  • Refinance – How It Can Benefit You Financially

When you get a new mortgage on your current home in order to lower your monthly payments, change mortgage companies, or take cash out for debt consolidation, medical bills, or college tuition.

Using Expert Tools to Navigate the Refinancing Process

While this list of terms isn’t exclusive, it should help you to better understand the jargon so that you can put it to good use in your when you decide to refinance!

The Home Loan Advisor is a tool that was built to provide homeowners with insight into opportunities available in the current market, without having to shuffle through all of the clutter on the Internet. Not only does the Home Loan Advisor analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, but we match you with potential lenders who have products that may help you and provide you with a sense of stability. As an added feature of the Home Loan Advisor service, we provide you with a free home value report generated from Neighborhood IQ. All of these services are absolutely free!