Real estate transactions can be confusing and difficult to follow if you do not fully understand the terminology that is commonly used. At HomeLink Realty, our goal is to help you through the home-buying and home-selling process in a way that helps you understand each step of the transaction. That is why we provided a list of common terms below that you might encounter throughout the process.
Financial Terms
Appraisal - An unbiased, professional opinion of the value of a property.
Closing Costs - The fees and expenses that are associated with finalizing a real estate transaction.
Debt-to-Income Ratio (DTI) - A number used by mortgage lenders to determine affordability. If your monthly debt payments are $2,000 and your gross monthly income is $6,000, then your DTI is 33%. ($2,000 is 33% of $6,000)
Earnest Money - An upfront deposit that represents the buyer’s good faith and intent to purchase a home.
Equity - The amount of a home's value above what is owed on it. If you owe $100,000 on your home, but it is worth $225,000, you have $125,000 in equity.
Escrow - The period in which earnest money is held in trust until the conditions of the escrow agreement have been met.
Interest - Apayment fee to a lender at an amount that is above the principal sum.
Mortgage - A type of loan used to purchase or maintain a home, land, or other types of real estate that uses the property as collateral.
Pre-Qualification - A lender's initial determination of a buyer's creditworthiness after a basic review of financial information.
Principal - the amount you actually borrowed to purchase your home.
Legal Terms
Addendum - A change that is made to the terms of an existing contract that specifies the part of the contract to be adjusted and the parameters of the change.
Contingency - A condition of the purchase agreement that needs to occur in order for the transaction to move forward.
Contract of Sale - A legally binding agreement between two or more parties concerning the terms of purchase or transfer of real estate property.
Covenants, Conditions, & Restrictions - The rules and regulations placed on a property that lists any requirements and limitations of what a homeowner is allowed to do with the property. It may also include monthly and/or annual fees or special assessments.
Deed - A legal document that transfers ownership of a property.
Additional Terms
Backup Offer - When a property is under contract, a buyer can submit a backup offer to be negotiated in the event the first transaction falls through.
Closing - When the home sale is considered final. This typically means all parties have signed all required documents, all monies are conveyed, and the property ownership transfer is complete.
Due Diligence - A time frame provided by the buyer to fully inspect and examine a property.
Offer - A document that sets out basic proposed terms and conditions between the Buyer and Seller in a real estate transaction.
REALTOR® - A real estate professional who is a member of the National Association of Realtors and subscribes to its strict Code of Ethics.
While buying or selling a home can be difficult, we aim to make it as simple and easy to understand as possible. Our REALTORS® are experts in the local market. We are always happy to help you with your real estate needs, whatever they may be.
Posted by Carrie King on
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