Does home-buying vocabulary make your head spin? Scan through our handy homebuyers glossary to learn the lingo and talk like a pro.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Adjustable Rate Mortgage (ARM)
A type of loan where the interest rate changes periodically up or down, usually once or twice a year.

Amortization
The process of reducing a loan in equal installments of principal and interest.

Annual Percentage Rate (APR)
The sum of finance charges (interest, loan fees, etc.) expressed as a percentage of the loan amount.

Appraisal
An estimate of the fair market value of a land parcel and any improvements at a given point in time.

Assessments
Special taxes imposed on a property benefiting from local improvements such as street lighting or flood control.

Automated Underwriting
A computerized method of reviewing home mortgage applications for loan approval.

B

Buy Down
An incentive offered by a builder that allows you to lower your interest rate by putting up a certain amount of money.

C

Cap
The limit on an interest rate for an adjustable rate mortgage; applies to each adjustment or over the life of the mortgage.

Closing
The final step after a lender approves an application. The homebuyer and lender sign the security-agreement note for the mortgage loan, which states all the terms and conditions of the loan, and the funds for the loan are turned over to the homebuyer’s closing agent.

Closing Agent
Usually an attorney or title agency representative who oversees the closing and witnesses the signing of the closing documents.

Closing Appointment
A meeting between you and the escrow company to sign the final paperwork needed to start the process of transferring title (evidence of right of ownership) of the home to you and collect the balance of funds necessary to close.

Closing Costs
Your costs as a buyer such as points, mortgage insurance, homeowner’s insurance, prepayments for property taxes, etc. paid at the time of closing.

Closing Date
The day you do a dance of joy, jingling the keys to your new home; officially known as the date escrow closes and your deed and mortgage are recorded with the county.

Closing Disclosure
The Closing Disclosure reflects the actual terms and costs of the transaction.  This disclosure is provided to the borrower by the lender prior to the closing of the transaction.  The Closing Disclosure replaces disclosures known as a Settlement Statement or HUD-1 Settlement Statement.

Closing Document
The financial disclosure statement that accounts for all of the funds received and expected at the close of escrow.

Community Facilities District Assessment
A long fancy word for a special tax that varies by district; see Mello-Roos.

Contingency
A condition that must be met, such as selling your current home, before your contract to purchase a new home becomes binding.

Conventional Loan
A mortgage-secured loan that is not insured or guaranteed by a government agency such as FHA, VA or Farmers Home Administration.

Conversion Clause
A provision that allows you to change an adjustable rate mortgage to a fixed rate, usually set at the prevalent interest rate and for an additional fee.

Covenants, Conditions and Restrictions (CC&Rs)
A document with terms you agree to live by when owning a home in a neighborhood that has a Homeowner’s Association.

Credit Report
A report issued by an independent agency which contains certain information concerning a mortgage applicant’s credit history and current credit standing.

Curb Appeal
The home-shopping equivalent of love-at-first-sight.

Cut-off Dates
Construction deadlines for your Standard and Optional Selections that must be selected by you and ordered by TRI Pointe Homes so that your home may be delivered to you on time and complete by the scheduled closing date.

D

Debt-to-income Ratio
A formula lenders use to determine the loan amount for which you may qualify. Guidelines may vary, depending on the loan program.

Down Payment
The difference between the sale price and the loan amount, which must be paid in cash by the buyer.

E

Earnest Money
Money the buyer (you) give the seller (TRI Pointe Home) as a security deposit for the home. It tells the seller you’re a committed buyer, and it helps fund your down payment.

Equity
The value of a property exceeding the amount owed on it.

Escrow
A procedure in which a third party acts as a stakeholder for both you and TRI Pointe Homes carrying out closing instructions and assuming responsibility for paperwork and funds.

Escrow Account
A holding account for the amount a mortgage borrower pays each month and which the lender uses to pay for the borrower’s taxes, other periodic debts against the property, homeowner’s insurance and, if applicable, mortgage insurance.

Escrow Opening Package
The initial documents required to start the escrow process. The escrow process is a procedure in which a third party acts as a neutral intermediary for both you and TRI Pointe Homes carrying out closing instructions and assuming responsibility for paperwork and funds.

F

FICO Score
A numerical rating that indicates a mortgage applicant’s creditworthiness based on a number of criteria. It is one piece of information used in the decisioning process.

Final Documents
Once your loan is approved and all “conditions” are met (see Loan Conditions), your lender sends Final Loan Documents to your Escrow Officer who then schedules an appointment for you to sign these and other final escrow documents in order to complete your transaction.

Final Orientation
A room-by-room tour of your new TRI Pointe home, during which we provide important product care and warranty information, homeowner maintenance requirements and warranty request procedures. We will familiarize you with all the new exciting functions and features of your home as well as important home maintenance tips.

Final/Formal Loan Approval
A formal loan approval is an “Unconditional Loan Approval” which is required within 30 days after the Purchase Agreement is signed.

Fixed Rate Mortgage
A loan with an interest rate that remains the same for the entire repayment term.

Float the Rate
This term is used when a mortgage applicant chooses not to secure a rate lock, but instead allows the interest rate to fluctuate until the applicant decides to lock in, usually no later than five days prior to closing.

Front-end Ratio
Also known as the housing expense-to-income ratio, it compares your proposed housing payment (PITI) to your total household gross monthly income.

Funding Fee
The amount charged on VA mortgages to cover administrative costs.

G

Government Issued ID
A United States driver’s license or passport (if you are not a U.S. Resident).

Grant Deed
A legal document that transfers real property from the seller (TRI Pointe Homes) to the buyer (you).

Grantee
The buyer of a deed (That’s you!).

Grantor
The seller of a deed (That’s us!).

H

Home Warranty
The express limited warranty that TRI Pointe Homes provides concerning the construction of the home.

Homeowner’s Insurance (Hazard Insurance)
A real estate insurance policy required of the buyer protecting the property against loss caused by fire, some natural causes, vandalism, etc. May also include added coverage such as personal liability and theft away from the home.

Homeowners Association (HOA)
An association formed by TRI Pointe Homes and managed by homeowners like you with the assistance of a professional management company for the purpose of maintaining the quality of your neighborhood.

Housewarming Party
A celebration of your new home with family and friends during which you exchange great food and beverages for household gifts.

I

Impound Account
A special account held by the lender on your behalf, from which your property taxes and insurance will be paid.

Index
Interest rate adjustments on adjustable rate mortgage (ARM) loans are based on a specific “index” or treasury issue (bond) which is selected because it is a reliable, familiar financial indicator. Your monthly interest rate payment will be adjusted up or down in relation to this market indicator, plus the margin as specified in your note. See Margin and Note.

Initial Loan Approval
A pre-approval which includes verifying income, assets, credit.

Interest Rate
A percentage of the mortgage amount that is paid to the lender for the use of the money, usually expressed as an annual percentage.

Interim Interest
The interest that accrues, on a per-diem basis, from the day of closing until the end of the month.

L

Legal Description
A description of real property that usually refers to recorded maps, surveys and other public documents to designate the location of the property.

Loan Conditions
These are terms under which the lender agrees to make the loan. They include the interest rate, length of loan agreement and any requirements the borrower must meet prior to closing.

Loan Consultant
The home mortgage representative who a homebuyer initially consults about a mortgage loan. Sometimes called a loan officer or home mortgage consultant.

Loan Estimate
The Loan Estimate provides an estimate of the loan’s costs and terms.  The Loan Estimate replaces disclosures previously known as a Good Faith Estimate and Truth In Lending statement.

Loan Payment Reserves
A requirement of many loan programs that, in addition to funds for the down payment and other purchase-related costs, you have saved enough money to cover one or two months of mortgage payments after your closing.

Loan Processor
The mortgage company employee responsible for collecting the completed application and all supporting documents before the entire loan packet is submitted to underwriting.

Loan Settlement
The conclusion of the mortgage transaction. This includes the delivery of a deed, the signing of notes and the disbursement of funds necessary to the mortgage loan transaction.

Loan-to-Value (LTV)
The ratio of the amount borrowed to the appraised value or sales price of real property expressed as a percentage.

M

Margin
The number of percentage points added to the index to calculate the interest rate for an adjustable rate mortgage (ARM) at each adjustment period.

Mello-Roos
A legislative act in California that allows a Community Facilities District Assessment to ensure critical facilities like schools, roads and utilities are available to serve the first homeowners in a new area.

Mortgage Insurance (MI)
An insurance policy which will repay a portion of the loan if the borrower does not make payments as agreed upon in the note. Mortgage insurance may be required in cases where the borrower makes less than a 20% down payment on the home loan.

Mortgagee
The Lender.

Mortgagor
The Borrower.

N

Natural Flooring Products
Any of a variety of optional natural wood or stone flooring products that you can choose for your home.

Nonconforming Loan
A mortgage-secured loan program that offers approval guidelines which are not industry standard. It may, for example, have different loan limits than conforming loans, but may offer financing in conforming and jumbo amounts.

Note
The agreement which states the home mortgage amount to be borrowed and the terms and conditions of the loan. It also includes a complete description of how the loan should be repaid and the time frame for the repayment.

O

Origination Fee
A lending fee (such as 1% of the loan amount) charged to offset the costs of evaluating, preparing and submitting a proposed mortgage loan.

P

PITI
Principal, Interest, Taxes and Insurance; a quick way to reference your combined monthly house payment.

Personal Property
Anything you own (such as furniture, stocks, bonds, etc.) that is not land or permanent improvements affixed to the land.

Points
A one-time charge assessed by the lender at closing for the cost of the loan; each point is equal to 1% of the loan amount.

Power of Attorney
A written authorization allowing a selected individual to perform specified acts on your behalf.

Preliminary Title Report
A report from the title company regarding the current condition of title on the property you intend to purchase.

Prepaids
That portion of your loan closing costs which must be collected at closing to cover taxes, interest and insurance.

Prepayment Penalty
A fee imposed for paying off part or all of a loan before its maturity.

Prequalification (Prequal)
A preliminary review of your finances by TRI Pointe Connect as an important step in the purchase process with TRI Pointe Homes.

Principal
The amount of a loan, excluding interest; or the remaining balance of a loan, excluding interest.

Private Mortgage Insurance (PMI)
A type of insurance that is usually required by a lender if your Down Payment or Equity is less than 20% of the loan value; it insures the lender against loss if you were to default on your mortgage.

Processing
The completion of a mortgage loan application and supporting documents.

Purchase Agreement
A written document confirming your decision to buy your new home and TRI Pointe Homes’ decision to sell under stated terms and conditions.

R

Rate Cap
The limit of how much the interest rate may increase on an ARM at each adjustment and over the life of the loan.

Rate Lock
The borrower and the lender agree to protect the interest rate, points and term of the loan while it is processed.

Recordation
Filing documents, such as your new deed and mortgage, for record in the County Recorder’s Office.

Recordation of the Grand Deed
The filing of the grant deed (the document which transfers title to real estate from one party to another).

S

Sales Contract Purchase Agreement
A written document confirming your decision to buy your new home and TRI Pointe Homes’ decision to sell under stated terms and conditions.

Satisfaction
Fulfillment of your greatest desires and an assurance of lasting quality; the state-of-mind TRI Pointe Homes hopes to provide all our buyers.

Signing Appointment
An appointment to sign the final documents before you take legal possession of your home.

Special Documentation
Documents that may be required to fulfill various legal steps in your purchase. Examples are power of attorney (granting another individual authority to execute contracts on your behalf) or inter-spousal deed (also referred to as an inter-spousal transfer grant deed, it is used when a real estate transaction is between spouses).

T

Title
Evidence of a person’s right to ownership in real property.

Title Insurance Policy
Protection for you and your lenders against loss of interest in property in the event that there are legal defects in the Title.

U

Underwriting
The process of a lender reviewing the application, documentation and property prior to rendering a loan decision.

V

Vesting Options
The options for taking title (ownership) to your home. Legal and tax consequences should be considered so it’s important to consult with your attorney and tax accountant regarding the various ways you can take ownership.

W

Wire
The transfer of money from one bank or entity to another by electronic method. Banks typically charge a fee for this service.

Y

Yard Sale
A temporary relocation of Personal Property to your front yard for the purpose of selling unused items before Moving to a new home.