We know that buying your first home can sometimes seem like learning a foreign language. Even if you’re buying your second or third, with the homebuying market being ever-changing, it’s likely that you’ll come across new terms you didn’t hear the first time. That’s why we’re here to help! Here are eight additional mortgage terms that you should know when financing your new home. (If you haven’t already, check out our first list of mortgage terms you should know by clicking the button below!)
Equity
Your home’s equity is the difference between the appraised value of your home and your outstanding mortgage balance. Find out how to calculate your home’s equity here!
Float Down
A float down option allows borrowers to take advantage of lower interest rates, even if they have already locked in their mortgage rate. Keep in mind that most lenders have rules regarding how and when you can float the rate down.
Buydown
When mortgage rates are on the rise, your lender may offer a mortgage rate buydown to help temporarily or permanently reduce your interest rate. To learn more about buydowns, read more here.
Long-term (or Extended) Rate Lock
A rate lock on a mortgage means that your current interest rate is “locked in” and won’t change for a certain amount of time. When purchasing a new construction home, you will likely need a long-term, or extended, rate lock that will last beyond the typical 15-60 days.
Basis Points
A basis point is an amount equal to 1/100th of a percentage point. For example, a fee calculated as 50 basis points of $200,000 would be 0.50% or $1,000.
Amortization
Amortization is a calculation for the repayment of a loan, by which the monthly principal and interest payment is applied and the principal balance decreases over a period of time. Learn more about amortization schedules here!
Earnest Money
Earnest money is a deposit the borrower makes toward a down-payment as a sign of good faith. This deposit is typically made when a purchase agreement is signed.
If this is your first time buying a home, you may be seeing a lot of these terms for the first time, but there’s no need to worry! Your Pulte Mortgage Loan Team will be with you every step of the way, ready to answer all your questions.
