Navigating Jargon: A Glossary for the First Time Home Buyer

If you’ve decided to buy a home, you might feel a mix of excitement and intimidation. It’s a smart investment, but the process is a bit tricky if it’s your first rodeo. 

Knowing the best time to buy, navigating the home-buying process, and understanding your loan options are crucial for a successful outcome. But before you get into these concepts, it helps to understand some of the common jargon used in the real estate and mortgage industries.  

To help you out, we’ve put together a glossary of terms every first time home buyer should know. This is a great starting point and will help you better understand many of the steps in the process.

Home Buying Terms

The following terms will likely pop up when you’re shopping around and transacting the sale. They’re all concepts any first time home buyer needs to be familiar with. 

Purchase Price 

This refers to the total asking price of the home. The buyer and seller must both agree on this price before the sale moves forward. In some cases, negotiation takes place before a price is finalized. 

The purchase price includes the full value of the home along with the land where it’s situated. It’s determined by factors like the condition of the home, location, and the local real estate market. Home appraisers and real estate agents often help determine the purchase price. 

Property Tax 

Every new homeowner must pay property taxes on their house and land. In most cases, local governments determine the amount based on the value of the property and tax rates in the area. They use the taxes to fund road construction, schools, fire departments, and other public services. 

As a first time home buyer, you can opt to pay your property taxes annually or semi-annually. You may also be able to add the tax to your monthly mortgage payment. 

Title Insurance 

This is a specific type of insurance coverage that protects a homeowner from legal action due to issues with the home title. These problems could include liens, disputes, unpaid taxes, or fraud attached to the title. 

Title companies issue this insurance after conducting a thorough title search to uncover any problems. If they discover issues, the title company works to resolve them before issuing the insurance policy. 

Home Inspection 

This crucial step in the home-buying process involves a detailed inspection of the property conducted by a qualified inspector. Typically, it’s up to the buyer to arrange and pay for the home inspection. 

The inspector examines all aspects of the home, inside and out. They look at the roof, foundation, landscaping, HVAC system, windows, walls, and much more. The inspector provides a report to the buyer detailing any damage or issues. If there are problems, the buyer may be able to negotiate for a lower price or have the seller make necessary repairs before closing. 

HOA Fees 

If you buy property managed by a homeowners association (HOA), you’ll have to pay regular fees. These go toward general maintenance, renovations, and the upkeep of amenities like swimming pools and playgrounds. 

The amount varies based on the type of property, location, and size of the community. If you’re a first time home buyer considering property managed by a homeowners association, make sure you understand the fees and regulations before moving forward.   

Closing Costs 

Once you finally close on the purchase of a home, you’ll need to pay additional fees called closing costs. These are expenses related to the mortgage loan and can include the appraisal, origination fees, attorney fees, and insurance. 

Closing costs are based on local guidelines, terms of the transaction, the location of the property, and the loan amount. To get an idea of what you can expect to pay, use our closing cost calculator

Mortgage Loan Terms 

If you’re a first time home buyer, applying for a loan can feel like learning another language. Familiarizing yourself with the following concepts will help you navigate the process with more confidence and clarity. 


This is a smart step in the home-buying process that involves your lender determining whether you’ll qualify for a loan and how much you can get. Getting pre-approved gives you a clearer picture of what you can afford. It also demonstrates your seriousness to the seller, which gives you a competitive advantage over other buyers. 

To get pre-approved, your lender will need to verify your income and review your assets, credit score, and debt. Pre-approval doesn’t guarantee you’ll get the loan, but it does secure a commitment from the lender. 

Up-Front Mortgage Insurance 

Some loans require you to pay an insurance premium as a lump sum at the time of closing. This up-front mortgage insurance is associated with government-backed mortgages like FHA or VA loans. 

This type of insurance exists to protect the lender in the event of default. The cost of the premium will vary depending on the purchase price, loan amount, and loan terms.  

Private Mortgage Insurance (PMI) 

If you plan on taking out a conventional loan and making a down payment of less than 20%, your lender will likely require you to get private mortgage insurance. This type of insurance protects the lender if you default on the loan. 

PMI is typically added to the monthly mortgage payment. The amount is determined by the loan amount, your credit score, and how much you put down on the house. Once your home equity reaches 20%, you may be able to have your PMI canceled, which means your monthly payments will drop. 

Origination Fees

Lenders charge origination fees to cover the costs of processing your loan. This includes administrative requirements like running a credit check, verifying income, and underwriting the loan. The lender includes these fees in the closing costs. 

Origination fees are typically between 0.5% and 1% of the total mortgage loan. Depending on the lender and the size of the loan, you may be able to negotiate for lower fees. Keep in mind that these are non-refundable, even if you don’t close on the home. 

Interest Rate 

This refers to the amount charged by your lender for taking out a loan. It’s expressed as a percentage and added to your monthly mortgage payments. 

Interest rates fluctuate due to inflation, economic shifts, and the housing market. Your credit score, debt, and income will also affect the rate you qualify for. It’s important to find the best rate possible, as it will have a huge impact on the affordability of a home and your long-term financial stability. 

Loan Term 

This is the length of time you have to pay off your mortgage before owning your home. The loan term affects the amount of your monthly mortgage payments. The longer the loan team, the lower the payment. 

Most loan terms are either 15 or 30 years, but shorter terms are available. If you purchase a home and eventually want to shorten the loan term, you may be able to refinance. This gives you the option to adjust your term and lower your interest rate. 

Start Your First Time Home Buyer Journey Today

The Moreira Team is ready to help you navigate the home-buying and loan process so you can start the next chapter of your life. It’s our mission to maintain transparency so you understand each step. Our team has the experience and resources to find a loan that suits your needs at a competitive rate. 
Get your custom rate quote today and take the first step toward homeownership.