Real Estate Buyers' Glossary

Loan amount
The amount of the mortgage based on the
purchase price, minus the down payment.

Down payment
Cash that the buyer provides the lender as
their portion of the purchase price. The down
payment is considered the buyer's equity (or
cash investment) in their home.

Points
Fees charged by the lender to offset their
interest rate, if it's below the prevailing
market rate. One point equals one percentage
point-so one point on a $100,000 loan
would be $1,000.

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
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 title insurance
policy also shows what the property is subject
to in terms of liens, taxes, encumbrances, deed
restrictions and easements.

Prepaid
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.

Pill
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