Home buying terms,
in plain English.

A mortgage with an interest rate that can change according to the loan's index, margin, adjustment schedule, and caps. An initial fixed-rate period does not mean the rate stays fixed for the full loan term.

Paying down a loan over time through scheduled payments. With a fully amortizing mortgage, payments cover interest and gradually reduce principal until the balance is paid off at the end of the term.

A measure of borrowing cost expressed as a yearly percentage that includes interest and certain loan charges. It differs from the interest rate. Compare APRs alongside loan terms, fees, and how long you expect to keep the loan.

An appraiser's opinion of a property's value as of a particular date. Lenders use valuations in their financing decisions, although some loans qualify for an appraisal waiver. An appraisal is not a home inspection.

An increase in a property's value over time. Market conditions, property changes, and other factors can affect value; appreciation is not guaranteed.

The value assigned to a property by the assessor for property-tax purposes. It may differ substantially from market value. Use actual tax bills and check exemptions rather than estimating taxes from the asking price alone.

Your attorney's examination and negotiation of the purchase contract. Do not assume you have three business days to cancel after signing a New York home purchase contract. Have your attorney review the terms before you sign and explain when the agreement becomes binding and any cancellation rights it provides.

A loan with a large remaining balance due at the end of its payment schedule. The regular payments do not pay off the entire loan. Do not assume you will be able to refinance when the balloon payment comes due.

A real estate broker's or agent's estimate of a property's likely price. It is not an appraisal and does not replace a lender-required appraisal. BPOs may be used in servicing, foreclosure, short-sale, or portfolio decisions.

A contract describing the buyer-broker working relationship, including services, duration, covered properties, compensation, and termination terms. Read it separately from the agency disclosure form and understand any payment obligations.

An agent representing the buyer's interests under the applicable agency relationship. Compensation is negotiable and should be explained in the buyer agreement. Do not assume the seller will cover the fee or that buyer representation is automatically free.

Conditions in which buyers generally have more negotiating power because available homes outnumber active demand. Conditions can differ by town, price range, and property type.

The amount you still need to bring to closing after accounting for your loan, deposit already paid, closing costs, adjustments, and approved credits. It is different from both the down payment and the emergency savings you plan to keep.

The completion of the purchase, when the required documents and funds are exchanged and ownership is transferred. The agreement determines possession; receiving ownership does not always mean the seller has already moved out.

Charges associated with financing and transferring ownership, separate from the down payment. They can include loan, attorney, title, recording, and applicable tax charges. Prepaid expenses and escrow funding also affect cash needed. Obtain estimates for the actual purchase rather than relying on one percentage.

The form detailing final loan terms, projected payments, and closing costs for most covered mortgages. The borrower generally must receive it at least three business days before consummation. Compare it with the Loan Estimate and ask about differences before signing.

An agent's comparison of relevant sales and competing properties to help evaluate a likely price range. Differences in condition, location, size, and timing matter. It is a pricing analysis, not a lender appraisal.

A provision making an obligation or right depend on a stated event, such as financing approval. The wording, deadlines, and required notices determine what happens if the condition is not met. A contingency does not create unlimited cancellation rights.

A mortgage not insured or guaranteed by a federal government program such as FHA or VA. Down payment, credit, and mortgage-insurance requirements vary by program and lender; a conventional loan does not always require 20% down.

Monthly debt obligations divided by qualifying gross monthly income, expressed as a percentage. Lenders decide which income and obligations count under the loan program. DTI is a lending measure, not a complete household budget.

The legal document used to transfer an ownership interest in real property. The deed type and wording affect the promises being made. Your attorney and title company handle the legal and recording details.

The portion of the purchase price funded without the purchase mortgage. It is separate from closing costs. A contract deposit already paid is generally credited toward the purchase funds rather than added as a second down payment.

Representation of both buyer and seller in the same transaction under a dual-agency arrangement. In New York it requires informed written consent and limits the full range of duties an agent can provide. Ask the broker to explain the arrangement before agreeing.

Money paid toward the purchase under the contract, commonly held by an attorney as escrow agent in a Long Island transaction. The agreement controls its handling and release. A financing problem does not automatically mean a refund.

The property's current value minus outstanding loans secured by it. Equity is not the same as cash you would receive from a sale, because selling costs and other obligations may reduce the proceeds.

An arrangement in which a third party holds funds or documents under agreed instructions. A contract-deposit escrow differs from a mortgage escrow account, which collects money toward property taxes and insurance bills.

A term sometimes used for a practice that represents buyers only. Do not confuse it with an exclusive buyer representation agreement, which can require you to work with and compensate a particular brokerage even if that brokerage also represents sellers. Ask which meaning is intended.

The federal law prohibiting housing discrimination based on race, color, national origin, religion, sex, familial status, and disability. New York and local laws provide additional protections. Evaluate homes using your needs and property facts, not stereotypes about residents.

A government-sponsored enterprise that purchases qualifying mortgages from lenders, helping supply funds for mortgage lending. It generally does not take a home buyer's loan application directly.

A mortgage insured by the Federal Housing Administration and offered through participating lenders. Eligibility, down payment, property standards, and mortgage-insurance charges apply. Compare the complete cost with other programs you qualify for.

A mortgage whose interest rate stays the same for the loan term. On a standard fully amortizing loan, principal and interest payments stay level, but taxes, insurance, and other ownership costs can change.

Coverage for qualifying flood damage, generally separate from standard homeowners insurance. A lender may require it based on the property and loan. Flooding can occur outside mapped high-risk areas, so discuss the address and coverage with your insurer.

The legal process used to enforce a mortgage after default, which can result in the property being sold. Buying a foreclosure may involve different terms, access limits, and risks from an ordinary sale.

A loan-cost disclosure replaced by the Loan Estimate for most mortgages beginning in 2015. It still applies to certain loans, including reverse mortgages. Ask which disclosures apply to the financing you are considering.

Monthly income before taxes and deductions. A lender may adjust or average income when deciding what qualifies. Your everyday spending budget should also consider take-home pay and ongoing household expenses.

An evaluation of visible, accessible property conditions within the inspector's agreed scope. On Long Island, inspections often occur before the purchase contract is finalized. Confirm timing with your agent and attorney; specialized systems may need separate inspections.

An organization that administers shared property or rules in a community. Review dues, restrictions, financial condition, and possible assessments. Condominiums and co-ops have their own ownership and governance documents that also need review.

Coverage for specified property losses and liability, subject to limits, exclusions, and deductibles. Lenders usually require it. Obtain an address-specific quote early; do not assume flood damage or every type of water damage is covered.

Proposed monthly housing expenses divided by qualifying gross monthly income, sometimes called the front-end ratio. What counts and how the ratio is used depend on the loan program. It does not include every expense of owning the home.

On Long Island, the home inspection usually happens after your offer is accepted and before the contract is signed. Nothing is binding until the contract is signed, so if the inspection turns up a problem, you can renegotiate or walk away. Your attorney handles the contract itself.

The percentage charged for borrowing, applied to the outstanding principal under the loan terms. It does not include all borrowing costs; APR and the loan's fee disclosures provide additional information.

A mortgage exceeding the applicable conforming loan limit. Limits vary by year, location, and property size. Ask the lender which limit applies and how the loan's underwriting and pricing differ.

A legal claim against property that can secure a debt or obligation. Liens can affect a sale or financing and must be addressed through the title and closing process. Your attorney should explain any lien affecting the purchase.

The agent representing the seller under the listing relationship. Contacting that agent or viewing the listing does not by itself give you buyer representation.

A standard three-page form showing proposed terms and estimated costs for most covered mortgages. It generally must be delivered or mailed within three business days after the lender receives the required application information. It is not a final loan approval.

The loan amount divided by the value the lender uses, expressed as a percentage. For many purchase loans, that value is the lower of the purchase price and appraisal. A low appraisal can change your loan amount or cash requirement.

New York's additional transfer tax commonly called the mansion tax. The statewide tax is generally 1% of the full consideration for covered residential transfers of $1 million or more and is generally paid by the buyer. Additional rules can apply; have your attorney calculate the tax for your purchase.

Commonly used to mean a home loan. Legally, the mortgage secures the debt against the property, while the promissory note records the repayment obligation. Default can lead to foreclosure.

Coverage that protects the lender against certain losses if a borrower defaults. Costs and rules vary by loan program, and some programs use guarantee or funding fees instead. It is separate from homeowners insurance.

A service through which participating real estate professionals share listing information. Public websites may receive portions of that information on different schedules. Have your agent confirm current availability and property details.

An increase in the loan balance when payments do not cover all interest due and the unpaid interest is added to principal. You can owe more despite making the scheduled payments.

An estimate of a seller's proceeds after loan payoffs, selling costs, and other adjustments. It is useful for planning but is not a final closing statement or a buyer's cash-to-close calculation.

A proposal to buy on stated terms, including price, financing, timing, and requested protections. Do not assume verbal acceptance guarantees the sale or removes the home from the market. Ask your attorney what is binding in your situation.

A lender charge for originating the loan, which may be a flat amount or a percentage. Compare total lender charges across equivalent loan offers rather than judging one fee in isolation.

Principal, interest, property taxes, and homeowners insurance: common components of a housing payment. Mortgage insurance, association dues, flood coverage, utilities, and maintenance may be additional. Check which items are included in a quoted payment.

Charges expressed as a percentage of the loan amount; one point equals 1%. Discount points are paid to obtain a lower interest rate. Ask what a quoted point charge buys and compare its upfront cost with the expected savings.

A lender's preliminary, conditional assessment of financing. Lenders use this label differently, so ask which income, asset, debt, and credit records were reviewed. The borrower, property, and loan must still meet the remaining conditions.

An early estimate of borrowing capacity, often based on information supplied by the applicant. The verification behind the label varies. Ask what the lender has actually checked and what remains to be approved.

The amount borrowed or the remaining loan balance, excluding interest owed. The principal portion of a payment reduces the outstanding balance.

Mortgage insurance commonly required on conventional loans with less than 20% down, although exceptions exist. It protects the lender. Ask about the cost, payment method, and the requirements for cancellation or termination.

A category of mortgage meeting specified federal standards related to repayment ability and loan features. QM status does not mean a loan is government-guaranteed or that its payment is comfortable for your household.

A deed transferring whatever ownership interest the grantor has, without a warranty of title. It does not establish that the grantor actually owns the property or remove liens. Have an attorney review the proposed transfer.

An agreement to hold specified loan pricing for a stated period, subject to its conditions. Ask when the lock expires, what changes can affect it, and whether an extension would cost money.

Land and the improvements or rights legally attached to it. Whether a particular item is a fixture included in the sale can require clarification in the contract.

A member of the National Association of REALTORS® who subscribes to its Code of Ethics. It is a membership designation, not a substitute for a state real estate license.

Replacing an existing mortgage with a new loan. Compare closing costs, rate, term, and total interest as well as the monthly payment. Future approval or lower rates are not guaranteed.

New York's School Tax Relief program for eligible primary residences. Some existing participants receive an exemption on the school-tax bill; eligible new homeowners generally register for the STAR credit. The seller's benefit does not automatically transfer to you. Check current eligibility and registration with New York State.

A professional depiction of property boundaries and relevant features, which can identify encroachments or other issues. Your attorney and title company should determine whether an existing survey is sufficient or a new one is needed.

The legal ownership rights in a property. Title review examines who owns those rights and what claims, restrictions, or other interests affect them.

Coverage against specified title-related losses, subject to the policy's terms and exceptions. A lender's policy protects the lender's interest; an owner's policy protects the owner's covered interest. Ask what coverage is being purchased.

A review of relevant public records to investigate ownership and identify recorded liens or other matters affecting title. It is part of the review process, not a physical inspection of the home.

A tax associated with transferring real property. Rates, exemptions, and responsibility depend on the jurisdiction and transaction. It is different from a mortgage recording tax. Have your attorney identify the charges that apply.

The lender's evaluation of the borrower, property, and loan documentation against program requirements. Approval may include conditions that must be satisfied before the lender will fund the loan.

Home financing available through U.S. Department of Agriculture programs for eligible borrowers and properties. Programs include guaranteed and direct loans. Address eligibility, income limits, and other requirements must be checked for the specific program.

Home financing backed by the Department of Veterans Affairs for eligible borrowers, including qualifying veterans, service members, and certain surviving spouses. Eligibility does not replace lender approval. Ask about entitlement, property requirements, and any funding fee or exemption.

An interest rate that can change under the loan's terms, usually in relation to an index. Review the adjustment schedule, margin, and any caps or floors. See Adjustable-Rate Mortgage for a common home-loan example.

A final check of the property's agreed condition, included items, and promised work close to closing. Timing depends on the contract and occupancy arrangements. It is not a substitute for a home inspection; report unresolved issues to your agent and attorney before closing.

A deed containing promises about title from the grantor. The extent of those promises depends on the deed and applicable law. It does not guarantee the physical condition of the house or replace title review.