HomeBuilder Definitions and Terms

Have you ever asked a computer programmer how a program works? 30 minutes later you're looking at them with a dizzy expression and wondering, why did I ask that question? It can be the same when you start shopping for a home. All the terms associated with buying, selling, financing, building, designing, and even living in your home...it's enough to make you frustrated.

But don't be! We're glad you asked the question and we want to provide some simple answers.

TCRcolorado Terms/Dictionary

General Terms

builder-included feature - TCRcolorado homes come with many of the most popular builder-included features. Builder-included features may include a specific style of cabinets, or a specific type of countertop. Our homebuyers can personalize their home by choosing from a range of colors for their standard features at no additional cost.

easement - A right given to a third party to use a portion of property for certain purposes, such as power lines or water mains.

elevation - The exterior facade of a home or building, including the materials (like brick or stone) used on that face.

framing - The construction of the skeleton structure, or framework, of a home or building.

floor plan - An architectural drawing showing the overall layout of a home or building. The size and shape of each room, as well as any optional configurations of those rooms, are shown on the floorplan.

HOA (Homeowners Association) - In our communities, an association of homeowners is formed. The Homeowners Association is responsible for enforcing the rules and regulations of the community, and also for the maintenance and upkeep of any common areas, including community centers, swimming pools, health club facilities and landscaping. Along with those items, they also provide winter time snow removal in common area only.

homesite premium - A premium paid by the buyer for a special, unique homesite that may be either larger or in a more desirable location.

homeowner orientation - The Homeowner Orientation provides buyers with the opportunity to become acquainted with their new home prior to moving in. During the orientation, our Customer Service Representative provides a thorough demonstration of the completed home (e.g., mechanical components, appliances, etc.) and reviews items covered by the warranty.

LID (Local Improvement District) - A Local Improvement District is an arrangement between property owners in a specified neighborhood (district) that provides for the funding of improvements to that district. Improvements can be to the roadway and drainage (i.e. paving, adding curbs/gutters, or simply chip-sealing). Or it can be for public utilities such as installing a city sewer system. The LID fee is added to your monthly mortgage payment.

master plan community - A large community, often with homes built by several different builders, in a wide variety of prices. Master plan communities usually include community centers, pools and other recreational facilities. Often there are commercial districts, offering shopping and entertainment within the master plan.

option - Our homes come with many of the most popular standard features and buyers are able to select colors or textures for many of these features. In addition, our homebuyers are able to personalize their home to fit their unique lifestyle by purchasing additional options such as appliances, designer finishes on cabinets, countertops and floors, fireplaces and a variety of other choices through our design studio. This enables us to keep the price of the home low while ensuring that you only pay for the options that are truly important to you.

phase - A group of homes within a community or building. Most homebuilders sell homes within the current phase before moving on to the next phase of the community. The benefit to the homebuyer is that construction activity is focused in one small area at a time. So when you move in to your new home, most of the construction for neighboring homes will already be complete. Builders "release" a new phase when the current phase is almost sold out. This means that there is now a completely new selection of homes available for purchase.

plan - See floor plan.

reservation - A non-binding agreement to purchase a home at a future date. Often, a reservation is taken for a specific home in an upcoming phase, giving the buyer the first opportunity to purchase that home when the phase is released. A reservation usually requires a deposit.

warranty - A plan to fix or repair specific items of your home according to the warranty terms. All elements of the warranty are reviewed with the homeowner at the time of the walk-through.

Mortgage Terms

Mortgage lender - Extends money in the form of loans to homebuyers.

Appraiser - Estimates the market value of a home so the lender can determine if the mortgage loan amount asked for is appropriate to the value of the home being purchased.

Attorney/Settlement/Escrow Agent - Manages the proper completion of documents at Closing, including title search and title insurance.

Mortgage Insurer - Provides insurance protection for loan payments, resulting in lower down payments for the borrowers.

Loan Servicer - Collects mortgage payment and disbursing funds from escrow accounts.

Pre-Qualified - Your lender will quickly look at several variables, including salary, mortgage or rent payments, etc. to "Pre-Qualify" you for your new home. They will then send us a letter within 5 days giving you conditional approval to purchase your new home.

Formal Loan Approval - Within 30-45 days of signing your purchase agreement, your lender will have had time to completely review all the documents necessary for mortgage qualification. Upon favorable review, you will have formal loan approval. The documents listed below will help your lender make that decision.

Good Faith Estimate - The estimate is provided by your lender. They will obtain this estimate by verifying forms to your employer, banks and current mortgage company or rental company. The Good Faith Estimate lists the costs you will incur at closing.

Truth in Lending Disclosure - This disclosure shows the total cost to you, over the term of the loan, for your specific financing. The calculation is based on the assumption that you own the home and make regular payment throughout the term of the loan.

Verification of Employment - VOE form. Lender sends to all employers for the last two years. The form shows dates of employment, amount of money earned last year and how much you have earned during the calendar year. The VOE also document bonuses and overtime earnings as well.

Verification of Deposit - VOD form. Like the employment form, your lender will send this form to each banking institution that you listed. This form will show average balances for the last three months, amount of money currently in your accounts and any loans and overdrafts that may be yours.

Verification of Mortgage - VOM form. Mortgage companies and landlords complete this form. For homeowners, this document tells your lender how much you owe and whether you make your payments on time. For renters, it tells your lender the amount of your monthly rent payment and whether you make your payments on time.

Credit Report - Your credit report shows the amount of money you owe to each of your creditors, minimum monthly payments and your manner of payment.

Appraisal - The appraisal confirms the value of the home you are purchasing for you and your lenders.

Loan to Value Ratio - Lenders evaluate loan amounts based on a percentage of the property value of the home you are purchasing. This is referred to as the loan-to-value ratio.

Contingencies - Mortgage loan approvals sometimes carry "conditions of approval." The sale of a previous home or proof of funds are two examples. Once all contingencies are met, final loan approval can be obtained.

Loan Lock - Mortgage companies allow you to "lock" your interest rate. Length of times vary, but loans can be locked from two weeks to two months or more, depending on your lender and their programs. Locking rates may allow you to secure a more suitable interest rate before rates potentially go up. However, locking your rate can also hinder you if rates go down during that same time or, can result in extra expense if your home is not completed in time to close within the lock period. During construction, we will update you throughout the entire construction process on the expected delivery date. However, we cannot control bank interest rates and until we reach a point in construction where factors outside our control can no longer affect the delivery date, the decision to lock your loan is at best a gamble.

PMI - If a borrower (homebuyer) does not put down 20% of the purchase price of the home that a mortgage company is funding, the mortgage company is entitled to insurance against the loan. This is called PMI. Generally, PMI is a percentage of the purchase price and generally adds $60-$120 per month to the mortgage payment. As there is no benefit to the borrower, PMI should be avoided.