Real Estate Terms That Aren’t Quite as Scary as They Seem
With so much crazy industry jargon out there, it’s enough to scare off any first-time home buyer. Sure, the process itself can be overwhelming enough, but don’t let the language scare you off too. You just have to break things down and make the terms understandable for you. Don’t let confusion lead to discouragement because you might miss out on an amazing opportunity and home.
That’s why we’re taking a moment to break down the most vital and most commonly used real estate terms so that you can go into the home buying process confident and at ease. Who knows, you may even be able to use these industry terms to draw in potential buyers to look at your own for-sale property. Below is a list of terms you should get acquainted with before diving into the market.
Real Estate Terms You Need to Know
Appraisal – This is the estimated value of the property. Properties are appraised to learn the amount of money a lender might lend in order for a buyer to buy a particular property.
Certificate of Title – This is a document that ensures the property is legally owned by the person who claims it.
Closing Costs – These are all of the fees and expenses that are associated with closing on a home. They’re usually come in around 6% of the cost of the home.
Comparative Market Analysis (CMA) – This is a study of how comparable local homes have sold. It’s meant to help determine a reasonable price for the property.
Contingencies – These are conditions that must be met in order for an offer on a home to proceed.
Due Diligence – These are actions that a responsible buyer must address in order to protect the real estate investment.
Debt to Income Ratio – In order to qualify for a loan, your monthly debt cannot exceed 43% of your monthly income.
Earnest Money Deposit – This is a payment made to the seller along with the offer to show serious intention to purchase.
Escrow – This is an account where all closing costs are collected while the lender approves the deal.
FICO Score – This is a numerical value assigned to lenders based on their credit history.
Fiduciary Duties – These are the responsibilities of the broker that the real estate agent works for.
Good Faith Deposit – This is a payment made to the lender with the offer to show serious intention.
HOA – Also known as the homeowner’s association, this organization determines community rules and standards.
Loan to Value Ratio – This is how the lender determines if the loan is worth the risk associated with it.
Mortgage – In the most basic terms, this is the home loan.
Prequalification – This is the process to determine if a borrower is qualified for a loan (the amount is approximate).
Payment Terms – Terms like principal, interest, taxes, PMI, etc. – all the buyer really needs to know is the monthly and cumulative totals.
These are only some of the terms that you, as a new home buyer, will hear as you enter into negotiations for the purchase of a home. So remember, if you have any questions or are uncertain of the lingo agents are throwing your way, don’t hesitate to ask. It is, after all, your agent’s responsibility to fill you in on the details. No term, phrase or piece of information is too unimportant for such a major investment and change in your life.
Are you ready to dive in? Get in touch today to begin your search for the perfect home!