For those who don’t work in the industry, real estate terminology can be a bit overwhelming. There are many different terms used in the home buying and selling process, and it’s sometimes difficult to keep up with the jargon your agent or others involved in the transaction may use. To help you get over that hurdle, this article is going to explain some of the terminology that might come up on your journey toward selling or buying a property.
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APR – Annual Percentage Rate
When taking out a mortgage to purchase a home, the APR or annual percentage rate – is one of the most important numbers to know. This is the rate of interest that you will pay on your loan per year.
Appraisal
Before you close a purchase, there will be an appraisal to determine the fair value of the property. An appraisal takes into account the location and condition of the property, along with the current marketing conditions.
Closing
This is when the deal comes to completion and the transfer of ownership officially occurs. There are a few steps to go through during closing before everything is signed and the money is transferred. When the “closing” is completed the home with change hands from the buyer to the seller.
Contingency
In some cases, a contingency clause will be added to a real estate deal. The most common contingency is one where a deal to buy a house is contingent on the sale of another house that the would-be buyer currently owns.
Down payment
When you take out a mortgage to buy a house, it will be necessary to put down at least some percentage of the purchase price as a down payment. While 20% is often stated as the standard down payment amount, it’s typically possible to secure a loan with a lower down payment.
Equity
Building equity is one of the primary motivations for buying a house. To determine if you have equity in your current home, and to see how much equity might be there, subtract how much you own on the home from the total current market value. As an example, if you owe $200,000 on your loan, and your property is valued at $300,000, you have $100,000 of equity.
Home inspection
When trying to buy a house, a home inspection is one of the most important parts of the process. After you have an offer accepted, a home inspection should be ordered to evaluate the condition of the home and determine if any costly repairs need to be completed.
Mortgage
The word mortgage is used to describe a loan that is issued to a homebuyer to complete the purchase of a property. There are plenty of different mortgage options on the market today, but a 30-year fixed-rate mortgage tends to be the most popular.
Pending
This is the status of a property that is under contract and moving toward closing – but hasn’t closed yet. If the deal falls through for any reason before it closes, the home may be placed back on the market.
Real estate agent
An industry professional licensed and qualified to assist buyers and sellers with real estate transactions. Working with an agent provides access to expertise and years of experience.
Title
This is what is held by the owner of a property, and it serves as proof of legal ownership of that property. The title is only transferred during a real estate deal once the transaction closes and money changes hands.