There are a lot of industry buzzwords that scare first time home-buyers. Here’s a quick reference guide so that you can keep up with the intimidating lingo. You should never be scared off by some silly real estate terms.
Appraisal – the estimated value of the property
Certificate of Title – document that ensures the property is legally owned by the person who claims it
Closing Costs – all the fees and expenses associated with closing on a home, usually around 6% of the cost of the home
Comparative market Analysis (CMA) – a study of how comparable local homes have sold to help determine a reasonable price for property
Contingencies – conditions that must be met in order for the offer on a home to proceed
Due Diligence – actions that a responsible buyer must address in to protect the real estate investment
Debt to Income Ratio – in order to qualify for a loan, your monthly debt cannot exceed 43% of your monthly income
Earnest Money Deposit – payment made to the seller with the offer to show serious intention
Escrow – an account where all closing costs are collected while the lender approves the deal
FICO Score – numerical value assigned to lenders based on their credit history
Fiduciary Duties – the responsibilities of the broker that the real estate agent works for
Good Faith Deposit – payment made to the lender with the offer to show serious intention
HOA – homeowners association; the organization that determines community rules and standards
Loan to Value Ratio – how the lender determines if the loan is worth the risk associated with it
Mortgage – simply put: the home loan
Prequalification – the process to determine if a borrower is qualified for a loan; amount is approximate
Payment Terms – principal, interest, taxes, PMI, etc. all the buyer really needs to know is the monthly and cummulative totals
