Real Estate Glossary

The following are some common real estate terms you may run across during the process of buying or selling your home.

Mortgage-Related Closing Costs

Mortgage-related closing costs generally are costs associated with your loan application. They vary, but here are some of the most common ones:

  • Loan origination fee: covers the administrative costs of processing the loan.
  • Loan discount points: These points are additional funds you pay the lender at closing to get a lower interest rate on your mortgage. Typically, each point you pay for a 30-year loan lowers your interest rate by .125 of a percentage point.
  • Appraisal fee: pays for the appraisal, which the lender uses to determine whether the value of the property secures the loan should you default. The buyer usually pays this fee.
  • Credit report fee: covers the cost of the credit report.
  • Assumption fee: charged if you take over the payments on the seller's existing loan.
  • Prepaid interest: You are charged interest when you borrow money from a lender, and you will pay interest on the mortgage amount from the date of settlement to the beginning of the period covered by the first monthly mortgage payment. At closing, you may be required to pay in advance the interest for the period.
  • Escrow accounts: Also called reserves, these accounts are required if your lender will be paying your homeowner's insurance and property taxes.
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