New Home 101 Glossary of Terms
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New to the world of new home buying? It’s probably time to update your vocabulary! Taken straight from the Pre-ConstructionHomes.com eBook, New Home 101: Your Guide to Buying and Building a New Home, the New Home 101 Glossary of Terms can get you up to date on your new home lingo. Browse through these terms and you’ll be one step closer to finding your next home.
Adjustable-Rate Mortgage (ARM)
A mortgage loan with an interest rate that periodically changes in response to the market or to Treasury bill rates.
Allowance
A sum of money set aside in the contract for items that have not been selected and named in the contract, such as a sum of money for electrical fixtures or for subflooring.
Amortize
Paying off the mortgage debt through regular installment payments of both principal and interest over a set period of time, making equal or nearly equal payments until the loan is paid.
Annual Percentage Rate (APR)
The yearly interest rate paid on a loan. Federal law requires that this rate be disclosed as part of the truth-in-lending documents.
Construction Loan
A mortgage used to buy land and build a custom home.
Deposit
A sum of money due when the purchase contract is signed for a newly built home. The amount of the deposit varies from one builder to another and can range from a few hundred dollars to thousands of dollars depending on the home price and whether the buyer is working with a production or a custom builder.
Walk-through (or Walk-Thru)
A final inspection of the home by the buyers and their agent to check for any last-minute problems that must be addressed. This walk-through takes places shortly before settlement.
Written Warranty
A policy provided by the builder for a certain period (often two years on appliances and systems and ten years on the structure) that provides for the repair of any covered item at the expense of the policy rather than the homeowner.
