Real Estate Acronyms
A mistake made in a interpreting the Acronym can be awkward especially when thought that “LOL” means “Lots of love” instead of “Laughing out loud” but the similar mistake in acronym can cost you lot of money.
There are lots of Acronyms in the Real Estate and professionals use them so frequently that sometimes it feels like they using an alien language. Knowing these acronyms will help you understand the language of real estate. Here is a primer on such commonly used acronyms.
ARM (Adjustable-rate mortgage)
In contrast to fixed rate Mortgage which carries same interest rate and monthly payment for the duration of the loan, ARM interest rates are typically fixed for a period of 3 to 10 years before they change.
CFPB (Consumer Financial Protection Bureau)
It is a government agency which is in charge in helping the people in understanding the government rules like “Know Before You Owe”.
This ratio represents the percentage of the income which goes towards paying the bills on monthly basis.
FHA loans (Federal Housing Administration)
Established during the great depression in 1930, the main purpose of these loans was to make home more accessible by providing the mortgage and letting the borrowers qualify for the loan with just 3.5% down payment.
HELCO (Home Equity Loan Credit)
The working of the HELCO is just like a credit card difference being that you draw the money against the equity in the home.
IO (Interest Only)
These are the monthly payments which consist of paying interest only. Only certain mortgages allow this for a specified period of time.
LOX (Letter of Explanation)
This consists of short letters which are provided to the lender in order to explain the changes in income, defend late payment or to summarize the rental history.
P&I (Principle and Interest)
These payments are the amount which is typically due every month on the Mortgage Amount.
PITI (Principal, Interest, Taxes and Insurance)
Total monthly hosing expense which also includes your P&I that is due on the mortgage amount.
VOE (Verification of Employment)
Proof of the income which is provided in terms of W-2s, paystubs and income tax returns.
WDO (Wood destroying organism)
It’s all about termites.
These were some of the most common acronyms used frequently in the real estate language and of you find some acronyms which you don’t know refer to this primer and hopefully you will find it here.
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