Buying your very first home is already a daunting task as it is. Having to deal with and understand real estate jargon just makes it worse. Unfortunately, it’s inevitable and the best thing you can do is to just do your due diligence and study up on these terms before you accept an offer. Here’s a mini cheat sheet we prepared to make it a little easier for you.
Real Estate Appraisal
If you’re thinking of getting a home loan via a mortgage lender, you might come across the term “real estate appraisal.” This phrase simply refers to the mortgage lender’s process of checking the fair market value of the property in question for which they’re granting a mortgage. This process is done by an unbiased third-party real estate appraiser.
Buyer’s Agent
This is the real estate agent that works for a home buyer. A buyer’s agent’s job is to assist you as a homebuyer and look out for your best interest for the whole duration of the transaction (and beyond if you find yourself a really good one). There’s also a seller’s agent who works for the seller and, in some states, there are dual agents.
Fixed Rate Mortgage
A type of housing loan where the mortgage interest rate does not change. The mortgage payment you’ve agreed on with your mortgage lender will remain the same until it if completely paid off.
Adjustable Rate Mortgage
A type of housing loan where the interest rate can change. This type of loan usually have lower interest rates, though it can change quickly and drastically, depending on how the market is doing.
FHA Mortgage
This is another type of housing loan but what makes it different is that this type of loan is a government loan granted by the Federal Housing Administration.
Earnest Money
A specific amount of money collected by an agent from the buyer to show the seller just how serious the buyer is about buying the property. This usually ranges anywhere from 1% to 5% of the total purchase price.
Backup Offer
Putting down an offer on a house doesn’t necessarily guarantee your spot as the new potential homeowner. This is why some sellers accept backup offers or offers that may be accepted if and when the original offer falls through.
Home Sale Contingency
This is a clause that you, as a buyer, can include in your offer. What this basically means is that you’ll only buy a home if your home sells first. It’s convenient for buyers, but can be quite a hassle for sellers.
Got any more terms you’re not familiar with? If you don’t already have an agent you can clarify things with, feel free to leave your questions in the comments or get in touch with me!