Buying a home is exciting, but it can also be confusing. In fact, it’s easy to be overwhelmed, especially if you aren’t familiar with the real estate terms used. That’s because real estate is full of jargon, which can add layers of confusion to an already complex process. To help you with that, here are five real estate terms you should know when buying a home:
Amortization entails paying off your mortgage in equal installments over the term of the loan. Essentially, it’s a schedule showing every monthly payment you’ll make and how it’ll contribute to building your home equity. It also shows you how much your home really costs at the end of the loan term.
Appraisal and Appraisal Contingency
An appraisal, typically done by a qualified third-party professional, is an analysis that estimates the value of a home. That’s done by comparing current market values of similar homes in the neighborhood to the quality of the house you want to buy. The appraisal is meant to protect you and your lender by ensuring that the home’s value matches the agreed-upon selling price.
An appraisal contingency is a clause that allows you to walk out of the deal if the property’s appraised value is less than the selling price.
A home marketed in as is condition typically indicates that the seller will not perform any repairs for issues that you, your agent, or an inspector may find in the house. It can also mean that a property is priced “as is,” which is often lower than the market pricing in the neighborhood.
If you’re interested in buying a home that’s under contract with another buyer, you have the opportunity to submit a backup offer in case the first deal falls apart. A backup offer will still be negotiated, and any money, such as earnest deposit money, will be submitted to confirm that your offer is the next one in line.
Closing and Closing Costs
Closing is the last step of homebuying. In this step, you’ll sign all the necessary documents to finalize the sale, get the deed to your home, and take responsibility for the mortgage. Closing costs are fees paid during closing and can amount to 2-5% of the home’s purchasing price. Typically, a buyer’s closing costs can include appraisal and inspection fees, title search and insurance fees, mortgage discount fees, escrow fees, and loan origination fees, among others.
Want to Learn More? Call Us!
One of the best things you can do as a homebuyer is to learn the basic real estate terms. And what better way to learn than from a real estate expert? Call our real estate pros today – we’re more than ready to help you understand the real estate terms as well as the overall homebuying process.