Understanding mortgage terminology-contingent offer and other phrases can drive anyone a bit cookoo. This particular term is commonly used when the buyer is also trying to sell a home and has accepted an offer but has not yet closed on it. Let us help guide you with any real estate questions you may have!

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A contingent offer homebuyer

Someone who has made an offer to purchase a home, but the offer is contingent upon certain conditions being met. Typically, these conditions relate to the buyer’s ability to obtain financing or to the home passing certain inspections or appraisals.

In other words, the buyer is saying that they will only go through with the purchase if certain conditions are met. If those conditions are not met, the buyer can back out of the deal without penalty. This type of offer is common in real estate transactions and is often used to protect buyers from potential financial or legal risks associated with the purchase of a home.

If you have any other questions about mortgage terminology-contingent offer, please reach out!

Other Common Mortgage Terminology

1. Mortgage: A loan that is taken out to purchase real estate, where the property itself serves as collateral.

2. Principal: The amount of money borrowed from the lender.

3. Interest: The cost of borrowing money from the lender.

4. Down Payment: The initial payment made by the borrower to the lender at the time of purchase. Typically expressed as a percentage of the total purchase price.

5. Amortization: The process of gradually paying off the mortgage over time.

6. Term: The length of time that the mortgage is in effect.

7. Fixed-Rate Mortgage: A mortgage where the interest rate remains the same throughout the entire term of the loan.

8. Adjustable-Rate Mortgage (ARM): A mortgage where the interest rate can fluctuate over time.

9. Points: A fee paid to the lender at closing, typically expressed as a percentage of the total loan amount.

10. Closing Costs: Fees associated with obtaining a mortgage loan, including appraisal fees, title search fees, and legal fees.

11. Private Mortgage Insurance (PMI): A type of insurance that protects the lender in the event that the borrower defaults on the loan.

12. Escrow: A separate account that is set up by the lender to hold funds for property taxes and homeowners insurance.

13. Prepayment Penalty: A fee that is charged if the borrower pays off the mortgage before the end of the term.

14. Refinancing: The process of obtaining a new mortgage to replace an existing one.

15. Equity: The difference between the value of the property and the amount owed on the mortgage.