Buyers Lingo 101 | Milwaukee Real Estate | Sparks Property Investors LLC

If you are considering buying a home in Milwaukee, you need to understand the terminology being used. Check out our guide to buyers lingo, so you can feel like a pro… even if you’re a first-time buyer!

Buyers Lingo 101

Abstract of Title – This is actually a full paper trail of the property.  It includes property transfers, proof of inheritance, liens, encumbrances and conveyances.

Adjustable Rate Mortgage – Usually comes at a lower cost, however, the interest rate will vary depending on the market. Considered less stable than a fixed-rate mortgage.

Amortization Schedule – A table that helps you keep track of your mortgage payment schedule, while also outlining your principal and interest payments.

Appraisal – This part should be done by a professional, and it will help you determine the value of your house.

Assessed Value – This is the value of your house, but the amount is determined by the county and it serves for tax purposes.

Balloon Mortgage – A mortgage in which the final balance is due in one large payment at the end of the loan term.

Bridge Loan – This is a loan that will cover the period between two transactions – usually it’s the period between buying and selling a property.

Caveat Emptor – Latin for: “Let the Buyer Beware.” Basically, at the end of the day, you are assuming any risk involved in the transaction.

Chain of Title – A list of successive owners of a specific property.

Closing Costs – These are the charges that you have to pay additionally to your downpayment. Depending on your case and state, this may include title fees, loan origination fees, fees from the city to record the deed and similar expenses.

Closing Statement – This is a legally required document that itemizes credits and debits to both the buyer and seller.

Comps – This is the list of similar sales in your area that can be compared to your property. It’s one of the best ways to determine a value of your house and agents use it to create a Comparative Market Analysis.

Contingency – A provision in the contract canceling the sale should a certain event occur. For example, a house not appraising high enough to satisfy a lender.

Conventional Mortgage – This is a mortgage that is not guaranteed by the federal government. It can have fixed or adjustable rate.

Conveyance – The transfer of property from one person to another.

Debt-To-Income Ratio – A comparison of what you owe each month to what you earn.

Earnest Money Deposit – Often used when a buyer needs more time to secure financing. It shows good faith and is typically help in a joint escrow account by the buyer and seller.

Equity – The market value of a property, minus any liens. (Including your mortgage balance.)

Escrow – When an impartial 3rd party holds the deed or funds.

FHA Loan – Issued by a federally qualified lender, and backed up by the Federal Housing Administration. Requires a lower down payment in comparison to a conventional mortgage.

Good Faith Estimate – Also called a GFE, is provided by your lender when you are shopping for a loan. It breaks down the loan terms and fees.

Inspection – A service provided by a licensed inspector during the sale of a home. They inspect the foundation, plumbing systems, electrical work, sewage system, heating/cooling systems and the roof.

Loan-to-Value Ratio – A term commonly used by banks and lenders to show the value of the loan vs. the value of the home.

Negative Amortization – This is an increase to the principal balance of the loan caused by making payments that do not cover the loan’s interest.

Origination – The process of applying for a loan, all the way to the disbursement of funds.

Refinancing – Getting a new mortgage to replace an old one. Usually done to provide a better interest rate to the buyer.

Seller Contribution – Instead of discounting the price of the home, a seller will directly contribute to your costs or downpayment.

Title Insurance – This protects property owners and lenders from damage and loss. It is required if you have a mortgage on the home.

Underwriting – Determines the amount of risk a lender is taking on.

Are there more terms you would like to see defined? Let us know! 

Looking to buy a property in Milwaukee? We can help you navigate the process! Send us a message now, or give our office a call! (262) 288-0580

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