First time and season homebuyers alike often are bombarded with real estate terms and jargon. We have compiled a list of 10 terms you can use to understand the lingo.
Essentially, this term is used to describe the repayment schedule of a loan including both principal or the original amount borrowed and interest. Amortization schedules are often displayed in table format highlighting the amount of principal and interest included with each payment. The table also includes the remaining loan balance after each payment.
The dollar value assigned to a property by a governing authority to levy a tax or fee on the property owner. The assessed value of your home is used mostly for tax purposes and refinancing.
A real estate agent who represents the best interest of a home buyer. They guide you through the complex transaction of purchasing a home or property. Accredited Buyer’s Representatives are buyer’s agents who have successfully completed specialized coursework in representing buyers.
Fees paid at the closing of a real estate transaction. Closing costs vary but can include attorney fees, credit report fees, documentation preparation fees, title insurance fees, appraisal and inspection fees.
Conditions that must be met prior to closing a real estate transaction are called contingencies. Many offers include a home inspection contingency that ensures the home has no serious defects. Other contingencies include financing or selling a property before purchasing the new one. Offers with fewer contingencies give the buyer more negotiating power.
Usually held by a neutral party, earnest money is a “good faith” deposit buyers make demonstrating their interest and ability in purchasing a property. Buyer’s can lose the deposit by backing out of the sales contract.
Not to be confused with pre-qualification, a pre-approval is a lender’s written guarantee that a buyer qualifies for a loan up to x amount. Financing is subject to receiving full documentation regardless of obtaining a preapproval. Buyer’s with preapprovals have a better chance of their offers being accepted by the seller.
Private mortgage insurance consists of a monthly payment to a lender when a buyer’s down payment is less than 20 percent. PMI protects lenders against loss if the borrower defaults on the loan.
Contrasting a buyer’s agent, the seller’s agent represents the best interest of the seller in a real estate transaction. This representation includes marketing the home to potential buyers and negotiating on the seller’s behalf.
A type of insurance that protects your home purchase against any unknown liens or debts placed against the property. Typically, public records are searched to ensure that the current owner has legal rights to the title and the legal ability to sell the home before the title company issues insurance.