Common Real Estate Terms for New Homebuyers
Purchasing a new home can be an exhilarating experience, but it can also be overwhelming, especially when faced with real estate terms that may not be familiar to everyone.
Common Real Estate Terms
As we celebrate National Homeownership Month in June, here is a list of common terms that are helpful for prospective homeowners to know.
A mortgage is a loan from a financial institution that enables you to purchase the property while paying it off over time. This typically includes principal, interest, taxes and insurance.
The down payment is the initial amount you pay upfront toward the purchase price of the property. It is typically expressed as a percentage of the total price and can affect the interest rates and mortgage options available to you.
Before embarking on your house-hunting adventure, it's wise to seek pre-approval from a lender. This process involves evaluating your financial status and your credit situation to estimate the loan amount you qualify for – helping narrow down your home search.
Closing costs are the various fees and expenses incurred during the homebuying process, including loan origination fees, attorney fees, appraisal fees, title search fees and more. It's important to budget for these costs in addition to the purchase price.
An appraisal is an unbiased assessment of the value of a property conducted by a licensed appraiser. Lenders typically require an appraisal to ensure the property's worth aligns with the loan amount.
Escrow refers to a third-party account where funds and documents are held during the homebuying process until all contractual obligations have been met. It acts as a neutral entity, ensuring a secure and smooth transaction.
Title insurance protects both the buyer and lender against any disputes or claims on the property's ownership rights. It provides peace of mind and financial protection if any title-related issues arise.
Do Your Research
Remember, it's crucial to shop around and compare multiple loan offers from different lenders to find the best terms and conditions that suit your needs. Consult with financial professionals or mortgage brokers to get expert advice tailored to your specific situation.