For many homebuyers, the idea of buying a new home can seem overwhelming. The reality is the process is rather simple once you understand the steps. Part of that understanding is learning the most common acronyms used in buying a home. Here is a quick reference list of the most often-used acronyms and how they pertain to your transaction. These are great to know, especially when looking for affordable homes on the Mississippi Gulf Coast.
Become the Savvy Homebuyer
APR (Annual Percentage Rate)—APR is the total cost of borrowing money. This includes the interest rate, closing costs and other fees associated with the loan. It provides a more accurate picture of your total monthly investment.
FRM (Fixed-Rate Mortgage)—A fixed-rate loan is one where the interest rate remains the same over the life of the loan.
DTI (Debt to Income)—DTI is the percentage of your income used to service all your recurring debt. This includes your mortgage, credit cards, car loans and other loans or lines of credit.
FHA – Federal Housing Administration: FHA is a government agency that provides mortgage insurance for loans made by FHA-approved lenders. FHA loans are a popular choice for first-time homebuyers because of their lower down payment requirements.
PMI (Private Mortgage Insurance)—Loans for more than 80% of the home’s value are subject to PMI. This is insurance that protects the lender in the event of borrower default. Every loan with less than a 20% down payment will include PMI.
P&I (Principal and Interest)—P&I is the portion of your loan that goes to pay down the principal of the loan amount.
HOA – Homeowners Association: Many communities have HOAs that establish and enforce rules and regulations for properties within the neighborhood. HOAs often charge fees for the maintenance of common areas and amenities.
More Tips for Buying a New Home
It’s important to remember that there are additional monthly costs when buying a new home. We have covered PMI and HOA above. However, it could include taxes, insurance and other costs. These are included in your payment but separate from P&I. Understanding common real estate terms can make the home-buying process less confusing and help you feel more confident as you search for a new home. To navigate the process, it’s essential to have a knowledgeable real estate agent and lender to guide you and answer your questions.
Contact me to discover your new home in Coastal Mississippi, where you can live comfortably and affordably.
