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First Time Home Buyers: Part 2 “Real Estate Lingo”

New Vocabulary

When buying your first home, you will acquire a whole new vocabulary. It is already overwhelming trying to navigate the process, let alone looking up every new word or phrase in the dictionary. As a continuation to “Part 1” we have provided some commonly used terminology when buying a home or property.

Pre-Approval– Pre-qualification by a mortgage lender determining much the borrower can afford to meet

Appraisal – An estimate of value of property at a specific point in time

Adjustable Rate Mortgage– Mortgage loan that bases it’s interest rate on an economic index that fluctuates with the market

Debt to Income Ratio– Monthly debt payments divided by your monthly gross income

Multiple Listing Service (MLS) – Service used by real estate brokers that allows them to see one another’s listings and properties

Escrow– A document kept by a neutral third party to transfer property from the seller and money from the buyer

Homeowners Insurance– Coverage that includes theft, and personal liability, in addition to hazard insurance

Home Equity– Portion of your home you actually own, or real property value

Market Value– The amount for which a home would most likely sale in the current market

Fixed Rate Loan– Fixed interest rate for the entirety of the loan

Conventional Loan– Not offered or guaranteed by a government agency

Comparative Market Analysis– Process by which realtors determine a listing price estimate by comparing similar properties

Offer– Buyer presents certain terms to seller with intent to purchase property

Home Inspection– Examination of conditions of a home, things like: heating, air conditioning system, interior plumbing and electrical, roof, attic, insulation, etc. 

Earnest Money– Money given to the seller to confirm contract

Due Diligence/Contingent– Time buyer has after signing a contract to perform inspections and “do their homework” before actually purchasing the property

FHA Loan– Mortgage issued by FHA approved lender and insured by the FHA. Designed for low to moderate incomes. 

Commission– Compensation paid to the realtors for their services, usually included in closing costs. Typically 6 percent of the sales price is split between the listing and buying realtors. 

Recording- putting real estate documents into the official records of the County where you purchased property

Title– Formal document that evidences rights of ownership in a property

Closing– When the deed is delivered, documents are signed, and funds are dispersed

Closing Cost– Fees paid at the end of a closing transaction (loan application fees, appraisal fees, inspection fees, escrow fees, title insurance, commission, etc.)

This small compilation is just the tip of the ice burg when it comes to real estate lingo. We hope that it’s been helpful! As always, give us a call at (801)544-4307 or visit our website if you have any questions!

Sources: https://www.thebalance.com, https://magazine.realtor/tool-kit/rookie/article/real-estate-glossary, https://www.realwealthnetwork.com/learn/due-diligence-real-estate/

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