When you’re buying a new home, sometimes it can feel like everyone is speaking a language you don’t understand. There are certain terms you need to know to make sense of it all. This is a basic list of those terms. For more information, please ask your Legend Homes Sales Counselor.

Closing Costs - Costs in addition to the price of the home, which are paid at closing. These include taxes, title insurance, financing costs, items that must be prepaid or escrowed and other costs.

Earnest Money - The deposit money given to the seller by the potential buyer when signing the sales contract.

Escrow - An account held by the mortgage lender into which a homeowner pays money at the time of the periodic mortgage payments to cover annual property taxes and insurance.

Good Faith Estimate - An estimate of charges which a homebuyer is likely to incur in connection with their home purchase, including closing costs and monthly investment.

HOA (Homeowner’s Association) - The governance body of a community, which enforces the covenants, conditions, and restrictions of managing the common amenities of the development.

Homestead Exemption - A concession made by local taxing authorities to provide a reduction in property taxes by exempting a portion of the valuation of the homeowner’s principal residence from taxation.

Inventory Home - A home on which construction has already begun or is complete before a homebuyer signs a contract on that home. Also known as a spec (speculative) home.

Mortgage - A pledge of real property given by the buyer to the lender as security for the repayment of money borrowed.

MUD (Municipal Utility District) Tax - A fee homeowners pay to provide water, sewage, drainage and other services to their area. MUD rates generally decline over time as the district is built out and operating and debt service costs are shared by more homeowners.

Owner’s Title Policy - Insurance policy that protects the buyer/owner of real property from successful claims of ownership to the property by others.