Failing to do an inspection may result in surprise costly repairs down the road for the home buyer. Issues that may turn up during an inspection may factor into the negotiation on a final price. The purpose is to check that the house's plumbing, foundation, appliances, and other features are up to code. Typically, they cost a few hundred dollars. Home inspections are required once a potential buyer makes an offer. This warranty protects from future problems to things such as plumbing and heating, which can be extremely expensive to fix. In a fixed-rate mortgage, the interest rate stays the same throughout the life of the loan. There are two types of conventional loans: the fixed-rate and the adjustable-rate mortgage. EscrowĮscrow is an account that the lender sets up that receives monthly payments from the buyer. If you have a $200,000 home, and you still owe $150,000 on it, you have $50,000 in equity. Put another way, equity is the difference between the fair market value of the home and the unpaid balance of the mortgage. The more equity you have, the more financial flexibility you have, as you can refinance against whatever equity you've built. In homeownership, equity refers to how much of your home you actually own-meaning how much of the principal you've paid off. Dual agencyĭual agency is when one agent represents both sides, rather than having both a buyer's agent and a listing agent. For example, there may be contingencies that the loan must be approved or the appraised value must be near the final sale price. This term refers to conditions that have to be met in order for the purchase of a home to be finalized. Comparative market analysisĬomparative market analysis (CMA) is a report on comparable homes in the area that is used to derive an accurate value for the home in question. Examples of closings costs include loan processing costs, title insurance, and excise tax. In addition to the final price of a home, there are also closing costs, which will typically make up about two to five percent of the purchase price, not including the down payment. At the closing, buyers and sellers sign the final documents, and the buyer makes the down payment and pays closing costs. The closing refers to the meeting that takes place where the sale of the property is finalized. The cash reserves is the money left over for the buyer after the down payment and the closing costs. On the other side is the listing agent, who represents the seller. This is the agent who represents the buyer in the home-buying process. This is how much a home is worth according to a public tax assessor who makes that determination in order to figure out how much city or state tax the owner owes. The appraiser will determine the value of the home based on an examination of the property itself, as well as the sale price of comparable homes in the area. In order to get a loan from a bank to buy a home, you first need to get the home appraised so the bank can be sure they are lending the correct amount of money. This allows you to build more equity in the home early on. This is the process of combining both interest and principal in payments, rather than simply paying off interest at the start. For homeowners who plan to stay in their home for more than a few years, this is a risky loan as rates can suddenly skyrocket depending on market conditions. In an adjustable-rate mortgage, the interest rate can change over the course of the loan at five, seven, or ten year intervals. The following real estate glossary is a handy reference for aspiring real estate agents, nervous home buyers (or sellers), or anyone who's curious about the industry. Every industry has its own jargon, and real estate is no different.įrom adjustable rate mortgages to title insurance to amortization, it can all seem like a confusing word salad for those new to the business.īut don't worry-we've compiled a list of the 29 most common terms you're likely to encounter.
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