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!