Real estate terms to know

 

So you want to buy or sell a home? Here are some words to know:

 

So you are entering the real estate world? Whether you are trying to buy or sell a home (or do both!), you need to familiarize yourself with the lingo.

You don’t want industry jargon to confuse you and keep you from missing something crucial. Here are 15 real estate buzzwords to keep you in the know.

1. Home inspection

This is the chance for the buyers to have the home inspected by a third party.

2. Closing

The final step in a real estate transaction, a closing is the transfer of the title of the property for money or other considerations.

3. Down Payment

The down payment is the amount of money that a buyer pays upfront in order to purchase a property. This amount is typically between 5% and 25% of the value of the property.

4. Escrow

When a third party holds property, cash and the property title until all conditions of the property agreement have been satisfied. The third party, likely a lawyer, will then hand over the assets to the respective parties, as outlined in the agreement.

5. Fannie Mae/Freddie Mac

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are two government-sponsored enterprises that purchase mortgages from lending institutions. Their purpose is to promote stability and affordability in the housing market.

6. Lien

A lien occurs when a legal claim is put on a property in order to receive payment for debt or for services rendered. The holder of the lien can sell the property in order to recover the money owed. Points Mortgage points are upfront charges the lender may add to the overall price of the mortgage. One point is equal to 1% of the total amount of the loan.

7. Prequalification

When a potential buyer is screened by a lender or third party to see how much the buyer can borrow as well as the terms of the loan. This is purely informational and does not obligate the lender but it is a great place to start to figure out your budget. 

8. Pre-Approval

Pre-approval from a bank locks in an interest rate for a specific amount of time. It comes after prequalification. It is an in-depth process that requires a potential buyer to provide a lending institution with proof of income and debts. The lender will most likely check your credit report in this process.

 

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