Learning the lingo and the ins and outs of real estate isn’t easy – if it were, there’d be no need for Realtors! When you work with the Hansen Home Team, you’re working with a team of professionals who will guide you through the entire process and don’t expect you to have any prior knowledge of real estate. But, we did think it might be helpful for you to have a little vocab cheat sheet so that things make a little more sense along the way.
Annual Percentage Rate Also known as “APR” – the annual percentage rate is a method that shows the total cost of borrowing money, combining the interest rate and any additional fees.
Appraisal
An appraisal is the estimated value of a home. A market professional creates the appraisal, and it helps to determine if a home’s value is properly reflected in the asking price.
Contingency A contingency prevents an agreement from being fully legally binding until a certain condition is met. For example, if a homeowner makes an offer on a new home, it may be contingent on the sale of their current home. Other contingencies include home inspection, financing and home appraisal.
Conventional Loan
While there are a variety of loans available for homebuyers, a conventional loan is most common for first-time homebuyers. It typically requires just a 3% down payment, so is not advisable for buyers with low credit scores.
Closing Costs
Closing costs include fees for the services required to finalize your mortgage, and the amount varies from location to location. Don’t forget to take these fees into account when budgeting for your home!
Home Inspection
Home inspections typically happen when you’ve put an offer on a home. They involve a close physical examination of a property to determine the functionality of heating and cooling systems, appliances, plumbing, electrical units, structural stability, and more. MLS MLS stands for Multiple Listing Service, which is the service that collects, compiles and distributes information about all homes listed for sale by its members in the region.
Net Income
When applying for a mortgage loan, you’ll need to know your net income – your after-tax pay or the money you’ll have in-hand after all tax withholdings have been deducted from your income. This is how lenders will determine your financial standing when issuing your loan.
Pre-Approval
Pre-approval involves working with your lender and providing verified documentation of your income and financial history. It is strongly advised that buyers get pre-approved before seriously looking at homes, as it will make your offers stronger and help your chances of closing on a home.
Under Contract
The seller and the buyer have an agreed-upon contract, but since closing hasn’t happened yet, it’s not a done deal.
There is a lot of jargon involved in the real estate world, and the confusion can add to the already-stressful process of home buying. We hope that this list is helpful in kicking off your search for your dream home!