There are certain situations in life when it pays to do your research. Negotiating your salary is one; buying a home is another. If you’ve been saving for a down payment and are finally ready to take the plunge into home ownership, you’ll find yourself in a whole new world filled with plenty of jargon. Here are ten real estate terms you should know and understand before you start looking for a home. Educating yourself on the lingo will not only make you more confident throughout the process, it can ensure that you don’t miss important steps that could cost you a fortune in the future. 1.)Buyer’s Agent vs. Listing Agent: There are usually two agents involved when you buy a home; the “buyer’s agent,” who represents you, and the “listing agent,” who represents the home seller. One thing many people don’t realize is that when buying a home, you don’t have to pay your real estate agent; they’ll get a commission from the home seller. 2.) Fixed Rate vs. Adjustable Rate Mortgages: Conventional loans include “fixed rate” and “adjustable rate” mortgages. A fixed rate mortgage has a predetermined interest rate throughout the life of the loan; the most common are for 30 years. An adjustable rate mortgage has a variable interest rate; the most common are for 5, 7, or 10 years. 3.)Pre-approval Letter: Before you apply for a mortgage or even start looking for a home, you should get a pre-approval letter from the bank, which is an estimate of how much they’ll lend you. This letter will help you determine what you can afford, and ensures home sellers that you will be able to get a loan when needed. 4.) Listings: Real estate agents frequently refer to homes for sale as “listings.” A “listing” on a website shows information about the home, like the price and number of bedrooms. You can browse listings on Redfin.com in 22 major metropolitan areas across the U.S. 5.) Inspection: After you’ve made an offer on a home, you’ll need to schedule an inspection, which costs around $500 – $800, depending on the market. The inspector will go through every nook and cranny, and review things like the plumbing, electrical, foundation, walls, heating, and appliances. 6.) Appraisal: When you apply for a mortgage, your lender will require an appraisal of the home you want to buy. A licensed appraiser will estimate the home’s value based on comparable homes that have sold in the area and an investigation of the property.
7.) Contingencies:When you put in an offer on a home, you can specify certain conditions that must be met before the deal will go through – these are called contingencies. You have to make sure you can actually get the loan (a financing contingency), that the inspection doesn’t show anything too crazy (inspection contingency), and that the appraised value is close to what you’re offering to pay (appraisal contingency). Those are just a few common examples; there are several other types of contingencies, which you should discuss with your agent. 8.) Offers and Contracts: Once you find the right home, you’ll make an offer on the property with the help of an agent or attorney. If the seller counters your original offer, it’s usually because they want more money or a faster timeline for closing the deal, at which point you’ll have to negotiate. When submitting an offer, it’s a good idea to include a cover letter that explains why you want to buy the home and adds a personal touch. 9.) Closing Costs: Be prepared to pay a lot of fees when you purchase a home. Typically, closing costs will amount to 2-5% of the purchase price of the home, and that doesn’t include the down payment. Common fees include excise tax, loan-processing costs and title insurance. For a more exact list of what you’ll be charged, ask for a “Good Faith Estimate” from your lender. 10.)Title Insurance: After all the negotiations are done and the seller has accepted your offer, you should receive a home title report within a week. Most mortgage lenders require you to pay title insurance as part of the closing costs; title insurers search the public records to make sure the home seller actually had rights to the title and that there are no liens on the home (like an unpaid contractor or unpaid taxes).
Author:Leah Ecob Phone: 956-206-5577 Dated: March 4th 2014 Views: 3,158 About Leah: Originally from Laredo, TX Leah graduated from The Cox School of Business at Southern Methodist Univ...
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