Below are some of the terms you will encounter when embarking on your real estate transaction.

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Agreement of Sale
​The document that binds the seller and buyer to the transaction. Once all terms of the agreement have been met and satisfied, the transaction goes to closing. At closing, money is exchanged for the deed to the home.

Hand Money
Also called Earnest Money or Good Faith Money. This is the cash a buyer shows at the time an offer is presented to a seller. Upon acceptance of the offer by the seller, the money is placed in an escrow account and held until the transaction closes (that's when the buyer gets the keys to their new home). At closing, this hand money is credited to the buyer towards the cost of the purchase.
The buyer is at risk of losing their hand money to the seller should the buyer default on any of their responsibilities within the bounds of the agreement of sale. The amount of hand money provided with the offer shows to the seller the buyer's strength of purpose to purchase the home and follow through with the transaction.

Loan to Value Ratio (LTV)
This is the ratio of money borrowed for purchase to the value (purchase price) of a home. On a $100,000 home, an LTV of 80%, means the lender is loaning 80% of the home's purchase price. The buyer provides the other 20% as a cash down payment. Loans that have an LTV ratio higher than 80% (when a buyer pays less than 20% down in ready cash) the lender might add a Mortgage Insurance Premium fee to insure them against potential mortgage defaults. 

Mortgage
The note a bank issues to a borrower to purchase a home. The borrower owns the home and the bank owns the note on it. If the borrower were to default on the mortgage, then the bank may foreclose on the home because it was the collateral placed by the borrower to secure the granted loan. Mortgages come in two flavors:

• Conventional Mortgages are secured by the lender providing the money for purchase. Typically, lenders look for a 5% to 20% down payments for conventional loans (LTV of 95-80). Qualifying for a conventional mortgage is based on a number of income to debt factors as well as the borrower's credit score.
• FHA Mortgages are insured through the Federal Housing Administration. These loans are intended to help borrowers with lower credit gain a pathway to home ownership. Because they are insured against default by the FHA, there are additional costs associated with these loans that are paid by the borrower.

Mortgage Insurance Premium
​This is a monthly fee associated with loans that have a high (by bank standards) loan to value ratio (LTV). The percentage is based on the amount of money borrowed for the purchase and fluctuates according to the level of down payment cash used to purchase. (The more down down payment, the lower the rate and a rate is not charged when 20% or more is put down on the house.) For conventional mortgages this insurance premium fee goes away after a certain equity threshold has been satisfied (usually 22%). For FHA mortgages the insurance premium remains for the life of the loan.

​PITI Payment
Abbreviation for "Principle, Interest, Taxes, Insurance" monthly payment towards your mortgage loan. 

• The Principle portion goes towards loan's payoff (typically a 15 or 30 year term). Example: For a $100,000 home with a 10% down payment, the principle loan amount is $90,000.
• The Interest is based on the agreed upon interest rate between the borrower and the lender. (The upside here is that a portion of this amount is usually tax deductible on your 1020 tax form for loans on owner-occupied properties.)
• Taxes are the real estate taxes associated with the property. In Pennsylvania, the taxing bodies we pay to are the county government, the municipal government, and the school district the house is located within. (Pittsburgh residents also pay a small portion helping to support our library system.) 
• Insurance is the home owner insurance premium you have contracted with through your insurance provider. Insurance is required for financed homes and strongly recommended for cash purchasers.

Real Estate Taxes
In Pennsylvania, home owners pay taxes to their home county, municipality, and school district. The amount of tax paid is calculated on the home's assessed value. (In Allegheny county, you can find the assessed value of any home by searching for it here.) To calculate the annual tax bill for a property, the millage rates of each taxing body are added together and then multiplied by the home's assessed value. Each county, municipality, and school district sets their own millage rate. You can find the millage rates within Allegheny County  here and the school district millage rates here. If a home is within the City of Pittsburgh, the small tax supporting the Carnegie Library System is also applied.

Burkhardt helped us sell our old house and buy a new one in a different area of the city. He was simply awesome. He gave us great feedback and worked diligently to find us places in our price range. There were no surprises or glitches. The bumps that we did encounter were ones that Burkhardt had  alerted us to well in advance. Most importantly, he's an honest guy with integrity (and also some humor). - David from Highland Park