real estate terminology
Sometimes it gets a little overwhelming, here are some keywords to help you with the home selling or home buying process
Application Fee: The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.
Appraiser: A professional who conducts an analysis of the property, including examples of sales of similar properties in order to develop an estimate of the value of the property. The analysis is called an "appraisal."
Assets: Everything of value an individual owns.
Closing (Closing Date): The completion of the real estate transaction between buyer and seller. The buyer signs the mortgage documents and the closing costs are paid. Also known as the settlement date.
Closing Costs: The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, and financing costs.
Commitment Letter: A letter from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.
Concession: Something given up or agreed to in negotiating the sale of the house. For example, the sellers may agree to help pay for closing costs.
Condominium: A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.
Contingency: A plan for something that may occur but is not likely. For example, your offer may be contingent on the home passing a home inspection. It the home does not pass inspection, you're protected.
Counter-offer: An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter-offer with a slightly higher sale price.
Credit Score: A computer-generated number that summarizes your credit profile and predicts the likelihood that you'll repay future debts.
Deed: The legal document transferring ownership or title to a property
Down Payment: A portion of the price of a home, usually between 3-20%, not borrowed and paid up front.
Escrow: The holding of money or documents by a neutral third party before closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
Fixed-Rate Mortgage: A mortgage with an interest rate that does not change during the entire term of the loan.
Home Inspection: A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
Homeowner's Insurance: A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances
Interest: The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.
Lock-In Rate: A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.
Mortgage: A loan using your home as collateral. In some states the term mortgage is also used to describe the document you sign [to grant the lender a lien on your home]. The amount of your mortgage is usually the purchase price of the home minus your down payment.
Mortgage Rate: The cost or the interest rate you pay to borrow the money to buy your house.
Offer: A formal bid from the homebuyer to the home seller to purchase a home.
Open House: When the seller's real estate agent opens the seller's house to the public.
Pre-Approval Letter: A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you're a serious buyer.
Pre-Qualification Letter: A letter from a mortgage lender that states that you're pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.
Title: The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land.
Warranties: Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.
The best way to ensure that your home-buying process is a confident one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher,’ and who puts your family’s needs first.