For many people who have yet to buy a home, the terminology can be frightening and intimidating. After all, buying a home is a major investment. Everybody wants to know they are making the right decision, and this can feel more difficult when real estate agents throw around terms buyers are unfamiliar with.
Fortunately, you do not have to be left in the dark for long. Understanding many of these terms is simpler than you think. Get started with this list, and you will find yourself buying your first home in no time at all.
Appraisal -- An appraisal is a report that discusses the estimated value of a property. A third party should complete the appraisal to demonstrate that the value is fair. The buyer is able to use the appraisal to ensure that he or she is getting a fair deal based on what he or she is paying.
Title -- The title of the home is the document that demonstrates home or property ownership. You may also hear the title referred to as the deed to the home.
Escrow -- When you pay money for a home, your money is put in an escrow account, which is held by a third party. The money is not released to the other party until the transaction is over.
Contingency -- A contingency is a condition for the approval of a home loan. In order to ensure that the home's contingencies are met, one party will have the home inspected.
Underwriting -- Every buyer is evaluated by a mortgage company to ensure that he or she is financially able to repay a loan. Underwriting may include property appraisal in addition to credit checks and other forms of reviewing his or her ability to pay for the home. This process is also a part of the review for title insurance. Based on this process, a company may determine to put certain constraints on a loan.
Closing Costs -- Closing costs are the fees that buyers and sellers both pay for the sale of the home. These are all the costs included outside the cost of the home. For the buyer, these closing costs often include fees associated with taking on a new loan. For the seller, these costs typically include commissions for real estate agents.
Now that you understand some basic real estate terminology, you are ready to shop for a home. Get in touch with your real estate agent if you still have questions about purchasing a home, or click here for more info.
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