Before you begin the home-buying process, having a fundamental understanding of common real estate terms will immediately provide you peace of mind and could save you a lot of money.
Before starting your home search, you should know the following common real estate terms 101.
The Real Estate Terms 101
Here are the ten common real estate terms you need to know before you proceed in the home-buying process:
1. Buyers Agent vs. Listing Agent
When buying a home, the "buyer's agent" represents you, and the "listing agent" means the seller. One agent represents both sides in a dual agency.
2. Fixed Rate vs. Adjustable Rate Mortgages
Fixed- and adjustable-rate mortgages are conventional loans. The most popular fixed-rate mortgage is 30 years. Most adjustable rate mortgages have a 5, 7, or 10-year term.
3. Pre-Approval Letter
The pre-approval letter from a bank, which estimates how much they'll lend you, should be obtained before you apply for a mortgage or even begin looking for a home. This letter will reassure home sellers that you can acquire a loan when necessary and assist you in figuring out what you can afford.
Real estate agents frequently use the term "listings" to refer to homes for sale. A "listing" on a website provides details about a property, such as the selling price and the number of bedrooms and baths.
After making an offer on a home, buyers must plan an inspection, which usually costs $500–$800, depending on the housing market. The inspector will inspect everything, including the plumbing, electrical, foundation, walls, etc.
Your lender will want an appraisal of the house you intend to buy once you apply for a mortgage. A certified appraiser will estimate the home's value using comparable properties recently sold in the neighborhood and examine the property.
As part of your offer to buy a home, you can include contingencies, which must be met before closing.
The following are some typical examples of contingencies:
- Financing Contingency
- Inspection Contingency
- Appraisal Contingency
In addition, there are many additional kinds of contingent clauses, all of which you and your real estate agent ought to discuss.
8. Offers And Contracts
Your agent or attorney will assist you in making an offer on the right home. If the seller counters your offer, they normally would like more money or a faster closing date, so you'll have to negotiate. To modify your offer, include a cover letter explaining why you want to purchase the home.
9. Closing Costs
Homebuyers might expect high fees. Closing costs, excluding the down payment, average 2-5% of the home's purchase price. Excise tax, loan processing, and title insurance are common fees.
10. Title Insurance
You might get a home title report about a week after the seller accepts your offer. Most mortgage lenders need title insurance as part of the closing costs. Title insurers check public records to ensure the seller has title rights and no liens on the home.
Finally, we're done discussing the common real estate terms 101 that you need to know before deciding to buy a home. This article may help you a lot by considering real estate terms 101.
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