Appraisal fee
The amount paid for the lender’s appraisal of the property.
Credit report fee
The fee charged by the lender to obtain a credit report on the buyer.
Title insurance fee
A one-time premium that a buyer pays for protection against loss or damage in the event of an incorrect search of public records or misinterpretation of title. The tide insurance policy also shows what the property is subject to in terms of liens, taxes, encumbrances, deed restrictions and easements.
Escrow fee
The amount a buyer pays the escrow company or closing agent for preparing papers, accounting for all funds and coordinating the information between all parties involved in the transaction.
Closing costs
A general term for all the estimated charges associated with the transfer of ownership of the property.
Prepaid interest
The amount of interest due on the loan during the time period between the closing of escrow and the first mortgage payment, due at the time of closing.
Prequalified vs. Preapproval
Prequalification is a determination of your probable ability to obtain a loan. To become prequalified, meet with a loan officer or mortgage company. They will help you determine the price you can afford, based on your monthly income and your current debts, as well as the cash you have for a down payment. Preapproval means that the mortgage lender has already verified and approved your credit and employment. Obtaining preapproval early in the process will make your offer more attractive to the seller.
Earnest money
Earnest money is a “good faith” deposit submitted with your offer to show the sellers that you are serious about purchasing their home. Earnest money is a required part of an offer. There is no set amount that is required, but the amount sometimes makes a difference in the negotiation process.. Earnest money eventually becomes part of the purchase, and will show as a credit to the buyers on the settlement statement drawn up by the escrow company.
PITI
The estimated house payment, including principal, interest, taxes and insurance.
Principal and interest
The loan payment, consisting of the amount to be applied against the balance of the loan, and the interest payment, which is charged for interest on the loan.
Total cash required
The total amount of cash the buyer will need, including down payment and closing costs.
Premium mortgage insurance (PMI)
Insurance for the lender, to cover potential losses if the borrower defaults on the loan.
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