In any line of work, such as a janitor, architect, or Realtor, there are words they use everyday that sound familiar to them. To those of us who aren’t in that line of work, we might be thinking huh? What? Do you even speak English? We don’t know what they are talking about. In the real estate industry, I found out from my wife that it is the same thing. Sometimes I use expressions I understand because I have used it for 15+ years, but to her, she looks at me like hmm idk. So, I am going to use a short list to explain terms that some may not fully understand. We will break this up into 3 or 4 parts.
What is a mortgage?
A mortgage refers to a loan on a house or land or other piece of real estate property that can’t move.
What is a mortgage payment?
It is something you pay monthly on a home loan, just like you would pay monthly on a car payment
What is a loan balance?
This is the amount you borrow, for example on a car or a home. Each month you make a payment, part of it goes towards the principal reduction.
What is principal reduction?
This is the amount of money reduced each month from the money you borrowed from a bank. Part of the payment reduces the loan amount (principal reduction) and the other part goes towards interest on the loan.
Check our next blog as we continue part 2 of the explanation of words used in the real estate industry.