When you have the basic knowledge of real estate terminology before you begin the home buying process, you will be instilled with a great deal of confidence. Here are real estate terms that everyone should know before they start searching for the perfect home.
Listing Agent versus Buyer’s Agent
When buying a home there are generally two agents participating in the process. First is the “buyer’s agent”. Buyers’ agents represent the party buying a house, and the listing agent represents the party selling the property. The responsibilities of each type of agent differ, so it is important to know the difference.
A real estate professional will refer to a house for sale as a “Listing”. Website listings are a great way to learn information about the property such as square feet, the number of bedroom, and bathrooms, and the asking price.
Adjustable Rate Mortgages versus Fixed Rate
A conventional loan can include both fixed rate mortgages and adjustable rate mortgages. An adjustable mortgage rate has a fluctuating interest rate while a fixed rate mortgage has an interest rate that stays the same the entirety of the loan
When applying for a mortgage, the lender will require an appraisal of the home that you are hoping to purchase. The home’s value will then be evaluated by a licensed appraiser and compared to other homes that have been sold in the area.
Get ready to pay extra fees when you are buying a home. Normally, the closing costs will amount to 3-5% of the price of the home. Typical fees include, but are not limited to loan processing costs, excise tax, and title insurance.
Before applying for a mortgage you should get a pre-approval letter from your bank. It is an estimation of how much money that they will lend you. This will help you choose a house in your price range.
Once you’ve made an offer on the home that you have chosen you will need to schedule an inspection. It will cost hundreds of dollars depending on the circumstances of the market. The inspector will diligently investigate every square inch of the house. The inspector scrutinizes every little detail such as electrical, plumbing, heating, walls, foundation, and even appliances. They ensure that there is nothing hazardous or problematic for a potential buyer.
When submitting an offer on a home, you can cite certain conditions that have to be met before the deal can proceed. Common contingencies include but are not limited to:
- A Home Inspection
- A Home Appraisal
- Sale of the current home
- Clear Title
Private Mortgage Insurance
This is insurance that reimburses a mortgage lender if the buyer happens to default on the loan and the foreclosure is less than the total amount owed to the lender.
A homebuyer who puts less than 20% of a down payment on the house will likely have to purchase private mortgage insurance.
Real Estate Agent
A real estate agent is the backbone of the real estate industry. They show houses and handle most of the heavy lifting and difficult tasks that are related to selling and buying real estate. A real estate professional is supervised and must have a license in order to sell real estate.
Dealing with real estate transactions can be daunting especially to those who have just started delving with the industry. Understanding these terms will help you navigate through the process a lot more easily than having no idea of what these means. Now you can face your agents without worrying about what they are saying, and you can be sure that you’ll get your money’s worth.