Are you hoping to become a homeowner in the near future? In the process of purchasing a new home, you may encounter some terms that you’re unfamiliar with. No worries! Here’s a glossary of the real estate terms every homebuyer should know.
A mortgage financing technique in which you obtain a lower interest rate in exchange for an upfront cash payment.
When there are more homes for sale than there are buyers, causing homes to sit on the market and prices to drop.
Fees that usually encompass about 1% to 3% of the purchase price. Closing costs are due at the end of the transaction.
Recently-sold homes in the area, used to determine home value.
Conditions written into a contract to protect the buyer. For example, an inspection contingency may allow you to cancel the sale or negotiate repairs based on inspection findings.
Any mortgage not guaranteed by a federal agency.
A circular turnaround on a street that is closed at one end. Desirable if you don’t want a lot of traffic on your street.
DTI (Debt-to income ratio)
Your total monthly expenses divided by your monthly income. This is one of the main factors in getting approved for a mortgage.
A security deposit made by the buyer at the beginning of the buying process to confirm intent to purchase.
An account funded by your mortgage payment to pay for homeowners insurance and property taxes.
When you’re “in escrow,” the sellers have accepted your offer but you haven’t yet closed on the home. The escrow period is usually around 30 days or longer.
Good Faith Estimate
An estimate of your closing costs, provided within 3 days of applying for a mortgage.
The price of the home, set by the seller. Often can be negotiated.
Pre-Approval / Pre-Qualification
An assessment of your income, assets, and debts to determine the loan amount you will qualify for.
An agreement in which a specific interest rate is guaranteed, typically for a period of 30, 45, or 60 days, to ensure that your interest rate doesn’t change between the loan offer and the closing date.
Right Of Way
A type of easement that allows another person to cross your land. Some homes come with a right-of-way attached to the title, which should be disclosed when buying the property.
When there are more buyers than there are homes for sale, causing homes to go quickly and prices to rise.
The minimum required margin between the structures on a property and the bordering streets/neighboring plots. Different neighborhoods will have different requirements.
The sale of a home in which the seller owes more than the home is worth.
A government claim against a property when a homeowner fails to pay a tax debt. It will prevent the sale of the home until the lien is lifted.
The period of time after your offer is accepted and before you close on the home.
The process of assessing income, assets, and credit before your lender offers final approval on your mortgage.