In any real estate transaction, there’s plenty of industry jargon that can be confusing to buyers, sellers, and investors alike. To make things easier, we’ve put together a list of some of the most common real estate terms and a brief explanation of each so you can feel a little more confident in your next real estate transaction!
1. Fixed vs. Adjustable Rate
These terms refer to types of mortgages. A fixed-rate mortgage is one where the interest rate stays the same throughout the life of the loan, regardless of the current market. Adjustable-rate mortgages, on the other hand, have rates that can fluctuate as the market changes.
This is the total value of a real estate property as determined by a qualified professional. This step in the process is usually completed after an offer has been accepted on a home and before home financing funds are disbursed.
A home inspection is typically done around the same time as an appraisal, and involves a thorough assessment of a home’s major components, including:
- Major appliances
This is a great way for potential buyers to gain additional peace of mind and knowledge before finalizing a home purchase.
Pre-approval is the tentative approval that a mortgage lender provides to prospective buyers. A pre-approval letter from a lender allows buyers to place offers on homes based on basic information about their income, credit scores, and debt-to-income ratios. Still, a complete approval must be given by the lender before closing.
A contingency refers to any condition placed on a real estate transaction that must be carried out before something else can take place. One common example of a contingency is one where a buyer agrees to purchase a home under the condition that they sell their current home within a certain number of days.
Closing refers to the meeting between buyer and seller when all necessary paperwork is signed and rights to a real estate property are legally turned over.
A third-party account where deposits, down payments, funds, and other documents are placed until the closing on a real estate deal is called escrow. At closing, funds are disbursed as needed to cover property taxes, mortgage payments, closing costs, and the like.
8. Private Mortgage Insurance
For buyers who put less than a 20% down payment on a home, private mortgage insurance is an additional charge added to a monthly mortgage payment on all FHA loans.
9. Homeowner’s Association
A homeowners’ association is the governing body that handles common areas of any given neighborhood in exchange for a fee from homeowners. This could include anything from landscaping to maintaining a neighborhood pool or playground.
Properties near a home that give real estate agents and other professionals an estimate as to how much a home is worth and how much it will sell for in the current market are considered comparables.
The world of real estate can be confusing, but it doesn’t have to be! The Parker Group is here to help. Whether you’re interested in buying/selling a home or have your eye on investment opportunities in the Greenville area, our experienced and professional team can guide you every step of the way. Contact us today to get started!