Home buying terms you should be familiar with

Do you need a glossary on various real estate terms? It can be quite confusing trying to keep up with with all the lingo and terminology used in real estate. Read on for home buying terms you should be familiar with.

Appraisal

Firstly, let us start by looking at the term appraisal. Simply put, an appraisal is a well-documented and impartial opinion of the value of a home. In addition, an appraiser, who is certified and qualified, undertakes an appraisal. Moreover, an appraisal is primarily based on information about comparable homes in the same area.

Approved for short sale

Secondly, the phrase ‘approved for short sale’ refers to the time when a home is ready for resale after the homeowner’s bank has approved a lower listing price on the home.

Attorney state

Under an attorney state, a real estate lawyer oversees the closing.

Back-end ratio

The back-end ratio is a debt-to-income ratio used by lenders to ascertain a borrower’s eligibility for a home loan. A back-end ratio also functions by comparing a borrower’s monthly debt payments to gross income.

Buyers market

Under a buyers market, the number of homes for sale is greater than the number of buyers. Due to the fact that homes stay on the market for longer, property prices begin to drop.

Cancellation of escrow

A cancellation of escrow simply refers to a situation where a buyer pulls out of a home purchase.

Capacity

Capacity refers to the actually amount of money a homebuyer can qualify to borrow.

Cash-value policy

Homeowners get cash-value insurance to help you pay the replacement cost of a home should damage occur.

Closing

The process under which a property transfers ownership from seller to buyer is referred to as ‘closing’.

Closing costs

The closing coats are any fees that are due at the end of the sales transaction. Examples of closing costs include; home inspection fees, title search fees and appraisal fees.

Closing disclosure

A closing disclosure is a document that outlines the terms of the home loan, including the amount as well as the loan interest. In addition, a closing disclosure spells out the closing costs, mortgage insurance and monthly escrow.

Closing escrow

This is the final, conclusive and official transfer of property from seller to buyer. Moreover, this is the delivery of all the relevant paperwork to each party involved.

Comparative market analysis

A comparative market analysis is a detailed and comprehensive investigation that is used to determine the estimated value of a home based on recent sales of similar homes. Moreover, real estate agents take into consideration the area, size, condition, age and features of a home when determining a comparative market analysis.

Compliance agreement

In real estate, a compliance agreement is a document in which the buyer agrees to let the lender rectify any errors in the loan document.

Comparable sales

A real estate agent uses comparable sales of similar homes that are sold within a given timeframe to evaluate a home’s value.

Contingencies

You can view contingencies as very important condition that are included in the home purchase agreement. In addition, should any issues arise then contingencies can help protect a buyer.

Down payment

A down payment is a portion of a home’s purchase price that a buyer must pay. Moreover, The loan type will determine the minimum down payment required.

Debt-to-income ratio

The debt-to-income ratio compares a home buyer’s expenses to gross income.

Earnest money

You can view earnest money as a security deposit paid by a buyer to assure the seller of their intent to purchase.

Equity

Most people find the concept of equity complex to grasp. However, equity is a percentage of home’s value that is owned by the homeowner.

Foreclosure

A foreclosure is the process under which a mortgage lender repossesses a property from a buyer who fails to meet their mortgage obligations.

Home inspection

A comprehensive examination of the systems in a home.

Homeowners insurance

Homeowners insurance is an insurance policy designed to protect the structure of the home, as well as its contents.

Listing price

A listing price is the price of a home as determined by a seller.

Loan-to-value ratio

By dividing the amount of the loan by the price of the house we can get the loan-to-value ratio.

Mortgage broker

You can view your mortgage broker as licenced and qualified professional who helps you secure financing through a lending institution.

Private mortgage insurance

Borrower’s are charged private mortgage insurance when they make a down payment of less than 20% of the property’s value.

Pre-approval

Simply put, pre-approval is an assessment of a borrower’s financial standing to ascertain a loan amount they would qualify for.

Sellers market

Lastly, when there are more buyers than there are houses for sale then it is a sellers market. This subsequently results in increased demand leading to an upsurge in property prices.

Compare listings

Compare