Like any industry that requires some expertise to navigate, real estate has its own lingo. Any first time home buyer realizes this when they start to dip their toes into the world of real estate, and it can be very intimidating.
To minimize overwhelm, confusion, and paralysis in moving forward with buying or selling a property, we’ve put together a guide for understanding real estate terminology.
1. Adjustable-rate Mortgage
This is one of the two types of conventional loans for a home. With this loan, the interest rate can change over the course of the loan at different intervals. The rates for this loan are dependent on market conditions.
This is when both the interest and principal payments are combined rather than paying off the interest at the start of the loan. Amortization allows you to build more equity in the home earlier on.
This is the process of valuing a home based on an examination of the property and the sale prices of local comparable homes.
4. Assessed Value
This is the worth of a home as determined by a public tax assessor in order to determine how much city or state tax the owner owes.
5. Buyer’s Agent
This agent represents the buyer in the home-buying process.
6. Cash Reserves
This is the money left over for the buyer after the down payment and closing costs.
7. Closing Costs
These are the costs associated with closing that don’t include the down payment–– such as loan processing costs, title insurance, and excise tax. It’s typically about two to fiver percent of the purchase price.
Contingencies are the conditions that have to be met in order for the purchase of a home to be finalized.
In home ownership, this refers to how much of your home you actually own, otherwise known as how much of the principal you’ve paid off. The more equity you have, the more financial flexibility you have.
This is an account set up by a lender where the seller receives monthly payments from the buyer.
11. Fixed-rate Mortgage
This is a loan where the interest rate stays the same throughout the lifespan of the loan.
12. Home Warranty
This protects from future problems in the home such as plumbing which can be very pricey to fix. It’s an enticing feature to include as a sales point to home buyers.
This is a required step once a potential buyer makes an offer where all the basics of the home are checked to ensure they’re up to code. The home’s foundation, appliances, plumbing, heating, and other features will be checked to help determine the negotiations on a final price.
Interest is the cost on the loans you take out to purchase a home. It’s combined with the principal to determine monthly mortgage payments. The longer the mortgage, the more interest you will end up paying.
This is a legal claim or right against property which provides security to someone in satisfying debts or other obligations. These can be attached to the title of a home a buyer is looking to purchase, and may be part of the public record.
A home for sale that’s “listed” publicly either on a website or another publication.
17. Listing Agent
This is the person who represents the seller in the home-buying process.
18. Mortgage Broker
This is either an individual or a company that facilitates all aspects of the deal between borrowers and lenders.
19. Pre-approval Letter
This is a note from the bank that notifies a buyer of an estimate on how much the bank will lend them for a prospective home purchase. It’s used to determine what a buyer can afford.
This is the amount of money borrowed to purchase a home. Principal plus interest is used to determine monthly mortgage payments, and as these payments are made, the buyer builds equity in a home.
21. Private Mortgage Insurance
PMI is an insurance premium that a buyer pays to a lender so the lender is protected on a mortgage. These payments generally finish once the buyer builds up 20% equity in a home.
22. Real Estate Agent
This is a professional with a real estate license who works under a broker to help both buyers and sellers in the home-buying process.
23. Real Estate Broker
This is a real estate agent who passed a state broker’s exam and met a minimum number of transactions so they’re able to work on their own or hire their own agents.
A real estate agent that’s a member of the National Association of Realtors.
This is when you replace your existing home loan with a new loan agreement with different rates and payment structures. Refinancing can help individuals get lower interest rates on their mortgages and therefore lower their monthly payment.
26. Title Insurance
Often a requirement in the closing costs, this covers research into public records to ensure the title to a home has no liens and is ready for sale.
Are you ready to get the key to your realty solutions? Connect with one of our licensed agents today.