Common Real Estate Terms & Mortgage Terms Explained - Part 10

More definitions for commonly used real estate terms and mortgage terms:

Prequalification
The first stage of a mortgage application where the lender will run a basic credit report and determine your debt to income ratio in order to see how much mortgage a lender qualifies for.

Pre-paids
Paid for (in cash) at closing for such items as homeowners insurance for one year and real estate taxes for several months.

Principal
The amount borrowed for a mortgage loan. In most cases, monthly mortgage payment include both the interest and the principal (be assured, though, that the lions share will go to the interest portion in the first years of the loan).

Property Tax
An annual or semi-annual tax paid to one or more governmental jurisdictions based on the amount of the property value assessment. Property Tax is generally paid as part of the mortgage payment.