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June 11, 2022

For many, the idea of buying a new home can seem overwhelming; the reality is the process is rather simple once you understand the steps. Part of that understanding is learning the most common acronyms used in buying a home. Here is a quick reference list of the 5 most often-used acronyms and how they pertain to your transaction.

  1. APR (Annual Percentage Rate) – APR is the total cost of borrowing money; this includes the interest rate, closing costs and other fees associated with the loan.
  2. FRM (Fixed Rate Mortgage) – A fixed-rate loan is one where the interest rate remains the same over the life of the loan.
  3. DTI (Debt to Income) – DTI is the percentage of your income used to service all your recurring debt; this includes your mortgage, credit cards, car loans and other loans or lines of credit.
  4. PMI (Private Mortgage Insurance) – Loans for more than 80% of the home’s value are subject to PMI. This is insurance that protects the lender in the event of borrower default and every loan with less than a 20% down payment will include PMI.
  5. P&I (Principal and Interest) – P&I is the portion of your loan that goes to pay down the principal of the loan amount.

Other monthly costs could include taxes, PMI, association fees, and other costs that are included in your payment but separate from P&I. Real estate has a lot of terms, and understanding the most common can take the mystery out of the home buying process and provide peace of mind as you search for your new home.

For more home buying tips, contact our New Home Specialist at 228-239-2621.



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This post was written by Acadian Homes