Acronyms are tossed around like crazy in the real estate world, which can be confusing to even the most veteran home buyers. But don’t worry — it doesn’t take long to learn the language.
Here’s a quick list of the most widely used home buying acronyms and what they actually mean. Of course, if you’d like to know even more real estate terminology, don’t hesitate to call us.
MLS: Multiple Listing Service
The multiple listing service is a massive database of available properties that is split up into hundreds of different regions. If you’ve ever heard someone refer to a home as “on the market,” it means that the home is available on the MLS.
Buyers can search for properties that are on the MLS by using a real estate agent’s website (like ours!), but that’s not the only way to find homes. Your agent can send you updates whenever new properties hit the market.
Want to get these email updates? Call us at 734-761-3060 and we’ll set them up for you!
PITI: Principal, Interest, Taxes, and Insurance
Principal, interest, taxes, and insurance are the four parts of a mortgage payment. Initially, you will pay more toward the interest on the mortgage, but you will start to pay off more of the principal (the initial loan amount) the longer you stay in your home.
Want to see the estimated PITI for your next loan? Check out our handy mortgage calculator on our website.
FHA: Federal Housing Administration
The Federal Housing Administration, or FHA, is a mortgage insurer that offers a variety of home buying assistance programs to help people purchase homes that they otherwise couldn’t afford.
FHA-insured loans generally offer more flexible credit qualifications and a lower down payment. However, borrowers are required to pay for mortgage insurance.
Interest rates and terms depend on the FHA-approved mortgage lender you choose.
PMI: Private Mortgage Insurance
Speaking of mortgage insurance, many lenders require you to have private mortgage insurance (PMI) if you can’t put 20% down on your home. This insurance protects the lender in case you can’t pay off your mortgage.
HOA: Homeowners Association
Want to live in a community with a pool or clubhouse? Chances are you’re looking for a neighborhood with an HOA, or homeowners association.
An HOA is responsible for maintaining common areas and any amenities, and it typically sets standards for how homes should look in order to keep property values up. In some cases, homeowners associations may even include Internet, cable, and lawn care with their HOA dues.
If you’re considering buying a home in a neighborhood with an HOA, check the association’s CC&Rs — Covenants, Conditions, and Restrictions — to see what rules the HOA enforces.
We’ll Help You Speak the Language
Understanding real estate terminology is one of the best ways to start your research as a home buyer. Want to know the meanings of other commonly used terms? Give us a call at The Bouma Group at 734-761-3060 or email info@bouma.com!