Some of these terms might be very confusing. Here is some important vocabulary for first-time home buyers to know:

Closing Costs: The fees associated with purchasing a home, including title search fees, loan origination fees, appraisal fees, etc.

Escrow: The process of holding money and property in a neutral third-party account

Loan-to-value ratio (LTV): A ratio calculated by dividing the loan amount by the property’s appraised value

Mortgage: A loan used to finance the purchase of a home

Interest rate: The cost of borrowing money, expressed as a percentage of the loan amount and charged over a specified period of time

Principal: The original amount of a loan, not including interest

Pre-approval: A preliminary evaluation of a loan application by a lender, indicating that the borrower is likely to be approved for a mortgage 

Home Inspection: A comprehensive examination of a property’s condition, including it’s structure, systems, and appliances