Finance Terms Every Buyer Should Know

Navigating the journey of buying your first home can feel overwhelming, especially when faced with home-buying terms you've never heard of or don't fully understand. At Cothran Homes, we’re here to simplify the process and empower you with the knowledge to make informed decisions. Whether you’re researching how to buy a new house or preparing to apply for a mortgage, understanding these key terms will help you feel more confident in financing a home.

Home Buying Terms for First Timers

For first-time home buyers, getting familiar with essential terms is a critical step. Below, we’ve created a comprehensive list of home-buying terms to guide you:

• Adjustable Rate Mortgage (ARM): A type of mortgage with an interest rate that can change over time, based on market conditions.
• Annual Percentage Rate (APR): The annual cost of a loan to a borrower expressed as a percentage. Unlike an interest rate, it includes other charges or fees (such as mortgage insurance, closing costs, and discount points) to reflect the total cost of the loan.
• Appraisal: An estimate of real estate value, usually issued to the standards of the lender. Recent comparable sales in the neighborhood are the most important factor in determining value.
• Closing Costs: Costs involved with the closing. This may include down payment, title fees, appraisal fees, attorney fees, inspection fees, and points bought to buy down interest rate.
• Closing/Settlement/Escrow: The closing process with all of the parties in the real estate transaction where you sign all of the paperwork required to complete the purchase.
• Conventional Loan: A loan that’s neither insured by the FHA (Federal Housing Administration) nor guaranteed by the VA (Veterans Affairs).
• Cost Calculations: The financial calculations involved in buying a home, such as down payment, purchase price, closing costs, HOA fees, taxes, insurance, utilities, and maintenance.
• Credit Report: A record of an individual’s debts and payment habits per the three major credit bureaus.
• Credit Score: One of the first things you’ll learn when searching how to buy a new house is increasing your credit score. This is the number that rates the quality of an individual’s creditworthiness. Mortgage lenders use it to determine your loan eligibility.
• Debt-to-Income Ratio (DTI): This ratio compares your monthly debt payments to your monthly income. A lower DTI is preferred by lenders.
• Down Payment: The upfront amount you might pay toward the purchase of your home. This is often a percentage of the total purchase price between 5% and 20%.
• Earnest Money Deposit: A deposit made by the buyer to show serious intent to purchase the home, applied toward the down payment or closing costs.
• Equity: The difference between the market value of a property and what the owner still owes on their mortgage.
• Escrow Payment: The portion of a borrower’s monthly payment held in trust by the lender to pay taxes, insurance, etc.
• Fee Simple: Clear and absolute ownership of a piece of property. The fee simple owner of a property has the right to use the land in any way desired: build on it, sell it, or lease it.
• FHA Loan: Loan insured by the Federal Housing Administration. If the buyer fails to repay the loan, the federal government pays the lender for any losses.
• Fixed Rate: A mortgage where the interest rate is locked in and cannot go up over the term of the loan. Comes in 10, 15, 20, and 30-year options.
• Homeowners Association (HOA): A governing body in some communities that manages shared spaces and amenities, often requiring monthly or annual fees.
• Home Inspection: An evaluation of a property’s condition before purchase. It helps identify any potential issues with the home.
• Mortgage: When financing a home, you might need to take out a loan. A mortgage is a loan specifically for purchasing a home, which you repay over time with interest.
• Pre-Approval: A lender’s confirmation of how much they’re willing to lend based on your financial information. Talk to a mortgage professional or two about getting your finances in order and getting pre-approved for a loan.
• Private Mortgage Insurance (PMI): Insurance required for borrowers with a down payment of less than 20% of the home’s value. PMI protects the lender if you default on the loan.
• Title Insurance: An insurance policy that protects the insured (purchaser or lender) against loss arising from defects in title.
• VA Loan: A special type of loan backed by the government and only available to veterans of the US military and their surviving relatives.

The Cothran Homes Process

At Cothran Homes, we’ve streamlined the process of buying a new home to ensure it’s as exciting and stress-free as possible. Here’s an overview of our homebuilding steps:

1. Design Selection: Choose from an incredible selection of design options, from flooring to paint to lighting and plumbing fixtures.
2. A Proper Foundation: Time to prep the homesite and lay the foundation to set your new home.
3. Framing: This is when we put the “skeleton” of your home together. For your safety, we recommend waiting to visit the site after this phase.
4. Rough-Ins: We’re ready to install the plumbing, HVAC, and electrical rough-ins.
5. Carpentry: Here’s where your cabinets and doors will be installed.
6. Painting: This is where your home’s personality starts to come to life.
7. Plumbing & HVAC: We’ll finalize installing your home systems, along with appliances, light fixtures, and switches and outlets.
8. Flooring: Flooring is installed.
9. Quality Inspection List: Here, we’ll ensure everything is ready for move-in.
10. Orientation: You’ll walk through your home and learn about its systems during your Home Owner Orientation.
11. Time to Move In: Start unpacking! Your home is ready for move-in.

Personalize Your Home at Our Design Studio

Your home should be as unique as you are. That’s why at our Design Studio, you can work with expert consultants to choose finishes, fixtures, and features that reflect your style and bring your home to life. From elegant countertops to custom flooring, the possibilities are nearly endless, and the process is enjoyable and inspiring.

Smart Living with Living iQ Homes

Cothran Homes takes pride in building homes that are as efficient as they are beautiful. Our Living iQ promise ensures every home is equipped with energy-smart and tech-forward features, such as:

• Energy saving HERS score
• LED and CFL lighting
• Advanced home insulation
• Smart thermostats and media panel

These innovations are designed to save you money, reduce your environmental footprint, and enhance your daily life.

Contact Us Today for Info on New Home Communities in South Carolina!

Ready to take the first step toward owning your new home? Cothran Homes is here to help first-time home buyers and seasoned homeowners alike. Explore our thoughtfully designed communities across South Carolina, each offering modern features and an exceptional lifestyle.

Contact us today to learn more about our available floor plans and financing options. Let us show you how to buy a new home and how easy and rewarding it can be. Schedule an appointment to begin your journey with Cothran Homes!