This jargon
isn’t difficult to master, but there is real
danger of
hearing and using words you don’t fully
understand.
Following are some basic
terms that are often misunderstood:
MLS—Multiple Listing
Service
An organization that collects, compiles, and
distributes information about properties listed
for sale by its members, who are real estate
brokers. Membership isn’t open to the general
public, although selected MLS data may be sold to
real estate listing websites. MLS’s can be local
or regional. There is no “one” MLS covering the
entire nation.
PITI
Principle, interest, taxes and insurance (PITI)
are the four
components of a monthly mortgage payment.
Principal refers
to the part of the monthly payment that reduces
the remaining balance of the mortgage. Interest is
the fee charged for borrowing
the money. Taxes and insurance refer to the
amounts that are paid into an escrow account each
month for property taxes and
mortgage and hazard insurance.
CMA
Comparative Market Analysis. A CMA is a report
that shows prices
of properties that are comparable to a subject
property and that were recently sold, are
currently on the market or were on the market,
but not sold within the listing period.
Closing Costs
The entire package of miscellaneous expenses paid
by the buyer
and seller when the transaction closes. These
costs include the brokerage commission,
mortgage-related fees, escrow or attorney’s
charges, recording fees, title insurance, etc.
Closing costs generally are paid through escrow.
Contingency
provision of an agreement that keeps the agreement
from being
fully legally binding until a certain condition is
met. One common example is a buyer’s contractual
right to obtain a professional
home inspection before purchasing the home.
Title Insurance
An insurance policy that protects a lender’s or
owner’s interest in
real property from assorted types of unexpected or
fraudulent claims of ownership. It’s customary for
the buyer to pay for the lender’s
title insurance policy.
