If you are unfamiliar with technical phrases and market jargon, understanding something can be tough. You don’t need a real estate license to find your perfect house, but being familiar with real estate jargon will help you understand what you’re talking about. Any of the terms or acronyms listed below may be used by your real estate agent or lender whether you’re looking for a property or applying for a mortgage.
This real estate phrase dictionary is ideal for beginners as well as those who need a refresher.
- Amortization: Rather than merely paying off interest at the outset, this method combines both interest and principal in instalments. This allows you to accumulate more equity in your property sooner.
- Approved for short sale: A word indicating that a homeowner’s bank has approved a lower listing price for a home and that the residence is ready to sell.
- Appraisal: A professional appraiser does a house appraisal to provide a third-party assessment on the value of a property. The appraisal is based on local house sales, market conditions, the appraiser’s judgment, and a thorough examination of the property. If there is financing involved in the acquisition, the lender will need an appraisal. The lender will examine the assessment and the purchase price to ensure that the buyer is not borrowing more money than the house is worth.
- Assessed value: Determines the value of the home for tax purposes.
- Closing: The closing refers to the meeting at which the sale of the property is completed. Buyers and sellers sign the final documents during the closing, and the buyer pays the down payment and closing costs.
- Closing cost: These are the costs connected with buying a home, and they are paid at the closing of the transaction. The title of the residence is transferred from the seller to the buyer during closing. Closing fees differ from one county to the next.
- Comparative market analysis (CMA): A calculation of a home’s worth based on previously sold, comparable homes in the region.
- Contingencies: Conditions included into a property purchase contract to safeguard the buyer in the event of finance, home inspection, or other concerns.
- Equity: A percentage of the home’s value owned by the homeowner.
- Escrow: During the home-buying process, your funds will be held in “escrow” by a third party until the real estate transaction is completed.
- Fixed-rate mortgage: Refers to a home loan with a fixed interest rate for the duration of the loan, which means the mortgage has the same interest rate from start to finish.
- Home equity line of credit (HELOC): A second mortgage allows a homeowner to borrow money against the value of their home.
- Lien: If a homeowner falls behind on payments, a mortgage lender can place a lien on the property. It’s a type of security interest that’s issued over a specific property to guarantee the payment of a debt or the fulfillment of some other obligation.
- Inspection: Once a potential buyer makes an offer, a home inspection is required. They are usually a few hundred dollars. The goal is to ensure that the plumbing, foundation, appliances, and other features of the house are all up to code. Failure to conduct an inspection may result in the house buyer being faced with unexpectedly expensive repairs down the road.
- Mortgage: A legal agreement in which a bank or other creditor lends money at interest in exchange for seizing title to the debtor’s property on the condition that the debt is paid in full.
- Mortgage broker: An intermediary who connects mortgage borrowers and lenders, but does not use their own funds to generate mortgages.
- Right of Refusal: This clause in a lease or contract means that an individual has the option to make an offer on a property before it is placed for sale by a seller.
- Title insurance: As part of the closing costs, title insurance is frequently required. It includes public records research to ensure that the title is free and clear and ready to sell. After the title firm has completed their search, they will provide you with a title insurance coverage to protect you from any problems that were not discovered during their original search.
- Transfer of ownership: This indicates that a home has a new owner who has taken over the mortgage obligation.
- Under contract: A prospective buyer and seller coming to an agreement on a property is referred to as this. Both parties are in agreement on the deal’s conditions, including the property’s price and closing date, at this early stage.
Buying or selling a property is already a difficult task, so understanding this common terminology will help you in your present and future house hunting or selling endeavors.
If you are looking for a realtor in Southwest Florida, I would definitely love to help you find or sell your home!
Contact me at 239-331-9432 or visit my website.