Most people who go through a real estate transaction are reluctant to admit that they are, all too often, pretending to understand what’s being said. This is particularly true of first time buyers who are often embarrassed by their lack of experience. Pretending to comprehend the process is a dangerous business, one that can cost you money in the long run.

It's always best to remember the rule that there are no stupid questions -- especially where your money is concerned. At the same time that you're going online to look at property listings or to research the part of town to which you're thinking about moving, you might also spend a few minutes familiarizing yourself with some of the terminology you're likely to encounter when buying a home OR getting a home loan.

** Basic Mortgage Terms You Should Know **

Nowhere is the problem of feigned knowledge more prevalent than in negotiating a home mortgage. Some basic terms you need to understand include:

Amortize -- It's a complicated sounding word that can be simply defined as paying off a debt or loan through regular payments, with a portion of each applied in part to the principle (amount borrowed) and in part to the interest.

Adjustable Rate Mortgage - Basically, there are two types of mortgage loans. In an ARM, the interest rate goes up and down over the duration of the loan in response to an economic index. (An example would be the value of U.S. Treasury securities.) When an index goes down, the interest and payment goes down.

Fixed Rate Mortgage - This is the other type of mortgage where the interest rate stays the same for the life of the loan. In general, this avenue offers more stability and many people like it because they know exactly what they will be paying.

Interest - We all hate it. We all resent it. But interest is part of the deal and is the compensation paid to the lender for using his money to buy your home. It is always calculated as a percentage of the total loan amount according to a prevailing rate.

Closing Costs - This is an aspect of the real estate process that always seems to catch buyers and sellers unaware. Basically, these costs are the fees associated with the home loan that are to be paid at the signing. Items that may be included are things like lender charges, the price of a credit report, an appraisal, and so on.

** Listen While Your Agent is Talking **

There's a famous scene in the play Auntie Mame when the boy's wildly eccentric aunt hands him a pad and a pencil and tells him to write down every word he hears that he doesn't understand. His list winds up being pretty exotic, but the advice is excellent.

Don't allow the real estate process to simply wash over you. When you hear a phrase like depreciation -- the decrease in value of properties as they age -- and you don't understand how it's being used in context, don't do anything until you do understand.

Real estate agents don't just show properties. They represent buyers and sellers in the complicated business of property transfer. Part of their function is to explain that transfer and to guide you through the process to your satisfaction.

** Use Available Online Tools **

The Internet puts powerful tools at your disposal to understand all the vocabulary of a real estate transaction. Two good sites for this purpose are:

• realestateabc.com

• realestatewords.com

Here's a comparison of how the two sites define another key term, escrow.

• An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed. (realestateabc.com)

• An arrangement for the deposit of instruments and/or the handling of funds with instructions with a neutral third party to carry out the provisions of the agreement or contract when the specified conditions have been met.Informally short form to describe Escrow Agent Escrow Account or Escrow Period. E.g. Escrow (Agent) works closely with agents to close a transaction. The buyer deposits funds into Escrow (Account). Escrow (Period) is 30 days. (realestatewords.com)

Pretty big difference, huh? It makes a good point. There's always more than one way to explain something. If you don't understand a term or concept on the first pass, keep looking until you find a definition that comes from an angle you can grasp. Don't just assume that you're being stupid. Everyone learns in different ways. Never be afraid to admit to yourself or to your agent that you just don’t get it.

** It's Okay to Be in a Foreign Land **

For most of us, real estate transactions are foreign territory. Rarely is buying or selling a home something we do often. You will hear words and phrases you don't understand. It may be embarrassing to admit that, but it will be much more painful to pretend you're following what's said and then realize it's costing you money. You would not hesitate to use a dictionary if you really were visiting a foreign country. Take that same attitude into buying and selling a home. The details are in the lingo and in this case, you're not a native speaker!