When you’re buying a loft or condo in Downtown Los Angeles and using a mortgage (like most people do), you’re going to hear all kinds of industry terms.
Here’s how to make sense of it all.
7 Mortgage Terms You Need to Know
Check out these common terms:
- Closing costs
- Earnest money
- Private mortgage insurance
- Title search
Amortization is the reduction of debt over the term of your loan. It refers to you paying off the principal, not the interest.
An appraisal is an estimate of a property’s value. Your lender will require an appraisal before it agrees to give you the money to buy the condo or loft you want.
Closing costs are all the expenses you’ll have to pay to buy the condo or loft. They don’t include the home’s sale price, though.
Earnest money is cash (well, a check) that your agent puts in escrow the deal closes. It shows sellers that you’re serious about buying, because you put the money in escrow when you make an offer on the home.
Points (commonly called discount points) are fees you pay your lender at closing to lower your interest rate. Usually, one point equals one percent of your loan amount. That means if you’re borrowing $200,000, one point would cost you $2,000.
Private Mortgage Insurance
Private mortgage insurance, or PMI, is the insurance you have to buy if you’re putting down less than 20 percent of the home’s purchase price. There’s an exception, though – if you’re using a VA loan or some other types of government-backed loans, you don’t have to buy PMI.
A title search, performed by a title insurance agency, looks for any issues with the property’s title that could challenge your ownership in the home. You can’t buy title insurance without someone performing a title search first. Your lender will require you to buy a policy that protects the lender – not you – but you can buy your own title insurance policy, as well.
Are You Buying a Loft or Condo for Sale in DTLA?
Call us at 213-254-7626 or get in touch with us online to start exploring your options when you want to buy a loft or condo in downtown Los Angeles.
While you’re here, check out our:
- DTLA Arts District lofts for sale
- Historic Core lofts for sale
- DTLA Little Tokyo lofts for sale
- Bunker Hill lofts for sale
- City West lofts for sale
- South Park lofts for sale
- Fashion District lofts for sale
- Financial District lofts for sale