Real Estate Terms for Home Buyers
The purchase of a home is probably one of the most complex transactions you will ever complete in your life. We will be with you every step of the way but it's still important that you feel comfortable and confident about the process. Here is a list of real estate terms you should understand before beginning your home purchase.
An appraisal is the process of determining the value of a home based on factors like the condition of the property, location, upgrades, and sell prices of similar homes in the area. Lender's require an appraisal during the mortgage loan process to ensure that the money requested isn't greater than the value of the property.
Closing costs are fees associated with the home buying process like appraisal fees, credit check fees, escrow fees, etc. The typical home buyer can expect to pay between 2 and 5 percent of the purchase price of the home.
Contingencies are conditions placed on the offer on a home that must be met before closing or the contract can be voided.
Due Diligence is a period of time when buyers are expected to evaluate the property before closing the deal. This includes things like a home inspection, a title search, and reviewing HOA rules.
A buyer gives the seller earnest money to indicate that he/ she is serious about the transaction. If the buyer fails to follow through on the purchase, the seller gets to money.
Equity is the difference between what is owed on a mortgage and the market value of the home. It's essentially how much ownership a homeowner has in their home.
During a transaction, a third party holds the buyer's money so that the seller can see that they have it. Then, at closing, the buyer receives the title/ deed and the funds are released to the seller.
Homeowners' Association (HOA)
Some communities have associations to ensure that the neighborhood and its amenities are well-maintained. Residents are required to pay fees and abide by a set of rules.
A home inspection is an examination of a property's condition before a sale.
Multiple Listing Service (MLS)
The MLS is an online database of regional properties for sale.
A mortgage is a loan that a bank or lender gives the buyer to help finance the purchase of a home. If the buyer stops paying the mortgage, the lender can foreclose.
Principal is the total amount a buyer borrowed to purchase a home.
More Home Buying Resources
We know that buying a home is very exciting but it can also be very scary. That's why we want to help take some of the stress off by arming you with the resources you need for a smooth transaction. If you have any questions at all don't hesitate to reach out!