The process of buying your first home can be intimidating enough, until you realize there’s an entire language of terms you need to learn to fully understand the process and then things become even more daunting. From the different types of mortgages to the process of putting in an offer and then closing on a property, real estate brokers will toss around terms and phrases that may go right over your head. Fear not. We polled some experts and compiled a list of must-know lingo to help you navigate this intense but exciting process. Read on for an education.
A separate document form describing a change or addition to the initial purchase agreement. Addendums can be used for many items, for example changing the closing date.
This is when the buyer, agent or lawyer, and the escrow agent (more on that later) meet with the seller and their representatives to finalize the purchase. This will incur fees known as closing costs which include attorney’s fees, a loan origination fee, and other charges totaling around six percent of the house.
This is when a home’s market value is determined in order to come up with a fair asking price. This will be done by a broker who will find the CMA by comparing the home to other similar properties in the vicinity that have recently sold.
The term for properties that are comparable (in size, amenities, location, and more) to the property being analyzed.
The deed is the legal document that proves the transfer of ownership from the seller to the buyer.
Information about the home (not always flattering) that a seller must provide to a buyer. Examples might include noting the the basement often floods in heavy rain or if there is lead paint anywhere in the house.
This is a percentage of the purchase price that the buyer pays in cash. It usually ranges from as low as three percent up to 20.
This is the responsibility of the buyer to take all necessary care before closing on the purchase. For example, it would include confirming the seller’s broker and attorney are legitimate and confirming there are no issues that have yet to be disclosed that would prevent the buyer from wanting to proceed with the purchase.
This refers to the time period and process where the purchase funds are released and the transfer of the house between parties is completed. The escrow company is a neutral third party and executes the transaction utilizing the purchase agreement and other documents as the directive.
This refers to the obligation your broker or real estate agent has to act solely in your interest. Examples of these duties are disclosure, confidentiality, and loyalty.
A type of mortgage in which the interest rate does not change over the course of the loan.
Anything of value that is permanently attached to or a part of the property. This can include lighting, carpet, or landscaping. These items can be a source of dispute between buyer and seller and can be leverage for negotiations.
The short form of Homeowner’s Association Documents. These apply when purchasing a condo and include HOA meeting minutes, a copy of the building’s yearly budget, and/or rules for shared spaces.