Have you ever talked to a professional like an accountant, lawyer, or doctor and you knew what they were saying, but they were using lingo you didn’t understand? Real estate can be the same way. If you are looking to buy or sell a home, working with a real estate professional is crucial to ensure you have everything you need to make the transaction go smoothly. But you still need to be able to talk to and understand what your real estate agent is saying. Here is some helpful real estate terminology that will help your home buying or selling process be much easier!
Adjustable-rate mortgage- This is a housing loan with an interest rate that is fixed for a specific period of time, then will adjust to a different rate. Your mortgage broker or loan officer will discuss mortgage rates with you.
Real estate appraisal- When buying or selling a home most likely you will get an appraisal of the house to ensure the property is listed at fair market value. The appraiser is an unbiased third party and will look over public records of properties sold that are similar to the one in question, as well as analyze the current housing market conditions.
Closing costs- Buyers and sellers have closing costs, and your real estate agent can discuss how much they are. However,, these fees are paid as part of the purchase agreement for residential property, and sellers have closing costs related to the transfer of property.
Earnest money- This is one of the most important terms every home buyer and seller needs to understand. This money shows the seller that the buyer is very intent on purchasing the house. Typically a real estate broker or escrow company will hold the earnest money while negotiations are happening with the contract. If a buyer does not follow the contract, they can lose their earnest money.
Contingent- Once a buyer and seller are close to an agreement, the buyer might put some contingencies on the contract. Meaning, they will purchase the home if certain things happen. The most common contingencies are home inspections, appraisals, or repairs to the property. For example, the buyer agrees to the seller's terms contingent on a home inspection. If the inspection reveals significant issues like foundation problems, roof issues, or other major problems, the buyer can require those issues to be fixed or lower the price. If the problems are not addressed, or the price isn’t reduced, the buyer can walk away.
FHA loans- This is a government program aimed at helping first-time homebuyers qualify for a better mortgage rate and lower down payment. The FHA insures the loan which gives lenders more confidence in the buyer’s ability to afford the loan.
Fixed-rate mortgage- This type of mortgage is one of the most common types of loans. This means the mortgage rate will stay the same throughout the life of the loan. This rate may start higher than an adjustable-rate mortgage, but many homeowners prefer the stability of a fixed rate.
Seller’s Property Disclosure- This is a document provided by the seller of a property before closing that details their knowledge of the property’s condition. This will include any issues or repairs that need to be completed.
As you maneuver through the home buying or selling process don’t be afraid to ask your real estate agent questions. They are here to help you and want you to buy or sell a home as quickly and smoothly as possible. They are knowledgeable and can help you understand the real estate lingo and help you be well-educated in the home buying and selling process. If you’re looking for help in buying a home or selling your home, Berkshire Hathaway HomeServices PenFed Realty is here for you. Give us a call today and we’ll help get you started on your journey.