When you’re a first-time home buyer, searching for that home you’ve been dreaming of is exciting—but it can also be a little daunting. Between real estate jargon and technical mortgage terms, it’s almost as if you’re learning a new language! No worries, though, because we’ve broken down some of the most common home buying terms to help you step into the housing market with the knowledge you need to successfully buy a home.
What is a mortgage?
A mortgage is a legal document that pledges real property (like your home!) to a lender as security for the repayment of a debt. It signifies that the borrower (that’s you!) will pay the lender over a period of time (typically 15 or 30 years).
What is a lender?
A lender is a financial institution or agency that loans you money to buy a home. You will work with a loan officer who will guide you through the lending process from application to approval to closing. Find an Agency participating lender offering our mortgage products to get started.
What is an annual percentage rate (APR)?
This is the yearly cost of credit, expressed as a percentage. It calculates the amount of interest you’ll pay on your total loan each year. Typically, a lower APR means a lower monthly mortgage payment.
What is an interest rate?
This is the amount charged to the borrower for borrowing money, shown as a percentage of the total amount of the loan. It is paid on a monthly basis along with your principal payment until your loan is paid off. Interest rates for the NC Home Advantage Mortgage™ are always available on our website.
What is a down payment?
A down payment is the percentage of the home’s purchase price a buyer pays up front at closing. It’s usually given as a percentage of the total home purchase price. The more money you put down on the home, the less your monthly mortgage payment will be. The NC Home Advantage Mortgage™ offers up to 3% down payment assistance to eligible first-time and move-up buyers. We also offer an $8,000 down payment option—the NC 1st Home Advantage Down Payment—for eligible first-time buyers and military veterans.
What are closing costs?
Closing costs are the costs outside a property’s sales price that must be paid to cover the cost of the transaction. These costs include loan origination fees, discount points, insurance fees, survey fees, attorney’s fees and more. Closing costs are typically negotiable, so make sure you do your research and advocate for yourself!
What does PITI stand for?
PITI stands for principal, interest, taxes and insurance. These are the four basic elements of a monthly mortgage payment, with principal and interest payments going toward repaying the loan. Your loan officer will go over each of these fees before you sign on the dotted line.
The NC Housing Finance Agency provides more than just a mortgage to our home buyers. We have resources on our website to help you get the information you need to help get you into a home and stay there.