If you’re getting ready to buy or sell, it may be time for a vocab review to make sure you are ready to speak the language of real estate.
Amortization – The repayment schedule of a loan, including payments of principal (the original amount borrowed) and interest. An amortization schedule displays, in a table format, the amount of principal and interest included with each payment, along with the remaining loan balance.
Appraisal – The estimated value of a property based on a qualified appraiser’s written analysis. Banks typically require appraisals before issuing loans to ensure the estimated value of the property adequately exceeds the amount borrowed.
Assessed value – The value of a property assigned by a governing authority to levy a tax or fee on the property owner.
Buyer’s agent – A real estate agent who represents the interests of home buyers.
Closing costs – Incidental fees associated with completing real estate transactions, potentially including lender fees, credit report fees, document preparation fees, deed recording fees, appraisal fees, etc.
Contingencies – Particular conditions that must be met prior to closing a real estate transaction. These could include a home inspection, a financing contingency, or a the buyer having a home to sell.
Earnest money – A “good faith” deposit. These are funds held by a neutral party to demonstrate the buyer has serious interest in purchasing a property.
FHA loan – Loans insured by the Federal Housing Administration (FHA). Attractive financing rates and less stringent lending requirements than conventional mortgages, FHA loans are often appealing options for buyers with lower credit scores and/or smaller down payments. They do, however, require two types of mortgage insurance: an upfront premium and an annual premium, which is wrapped into monthly mortgage payments.
Fixed-rate mortgage – A conventional loan with a pre-determined (or “locked in”) interest rate for the duration of the loan repayment period. They are traditionally 30 years in length but can be issued for 15 years, 10 years, or another duration.
Home inspection – A thorough professional examination (at the buyer’s expense) that evaluates the structural and mechanical condition of a property. If the inspector identifies issues that may be expensive to remedy, these can be revisited with the seller through your real estate agent before proceeding with the sale.
Listing – The printed and digital description of a property for sale. Listings may include details about the property, the home (number of bedrooms, baths, featured rooms), other structures, the price, and photos.
Offer – A formal request to buy a home.
Points – Prepaid interest on a loan, equal to one percent of the loan amount. The advantage of paying points up front is that a lower interest rate can be secured for the lifetime of the loan. This may be a good deal if a buyer plans to stay in the home for many years (so the long-term interest savings outweigh the initial cost in points).
Pre-approval (loan) – A lender’s written guarantee to grant a loan up to a specified amount (subject to receiving full documentation). Pre-approval for a loan can strengthen a buyer’s negotiating position with a seller.
Pre-qualification – Less “official” than a mortgage pre-approval, banks offer (at no cost or obligation) pre-qualifications to estimate the amount a buyer may be able to borrow. It is often used early in a buyer’s search to help determine a reasonable price range.
Private mortgage insurance (PMI) – A monthly insurance payment that may be required if a buyer’s down payment is less than 20 percent of the home’s purchase price. It protects lenders against loss if a borrower defaults.
Sales contract – A legal agreement between a buyer and seller to purchase real estate, for a specified price and terms, for a limited time period (also called a purchase agreement). It is a legally binding sales contract.
Seller’s agent – The real estate agent who represents the seller of a piece of property. Their job is to act in the best interests of the seller, marketing their home to potential buyers and negotiating on the seller’s behalf.
Title insurance – This type of insurance is acquired to protect against any unknown liens or debts that may be placed against the property. Before issuing title insurance, public records are searched to ensure that the current owner has legal rights to the title as well as the legal ability to sell the home and that no liens are held against the property.
If you have real estate questions or needs call and let us help you navigate the path to you achieving your home purchase or home sales goals.