Buying a home can be a stressful task. That’s why you need an experienced real estate agent to help walk you through the buying process. In the meantime here are some common acronyms that you should learn if you are thinking of buying a home.
APR (Annual Percentage Rate)
APR is the annual cost of borrowing money for your home loan based on the loan amount, interest rate and other fees. APR uses a mathematical formula to calculate your percentage rate that does not include compounded interest. This is not to be confused with APY, Annual Percentage Yield.
FRM (Fixed-Rate Mortgage)
Interest rate that does not change during the entire term of your loan. This is why it is called the “fixed rate.”
The percentage of your monthly income that goes toward your monthly debt payments.
PMI (Private Mortgage Insurance)
This is insurance that protects lenders from losses if a homeowner is unable to pay their mortgage. It is required for homebuyers who make down payments less than 20% of the home purchased price.
P&I (Principal and Interest)
Principal and interest are the portions of your monthly mortgage payment that go toward paying off the money you borrowed to buy your home.
These acronyms are just the tip of the iceberg. However, if you learn these you have a great start to being an informed and knowledgable buyer.
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