Tuesday, October 6, 2020 / by Breanna Thornton
Ten Basic Real Estate Terms to Know
Let’s be honest, talking real estate is like talking in a foreign language. There are many terms and phrases that are important to the business! Here are ten of the most popular terms to help you get more familiar with real estate and how it works.
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1. ADJUSTABLE-RATE MORTGAGE (ARM)
A mortgage with an interest rate that has the ability to change throughout the period of time the loan is due.
Why is this helpful? If there is a period of low interest rates, it could be helpful to have an ARM so the interest rate can continue to be adjusted instead of being stuck in one spot.
The process of paying off debt over the course of time. This usually refers to the payment which includes the principal and interest.
Why is this helpful? Instead of a buyer having to pay an enormous amount of money to buy a property, this process allows for the home to be paid off in portions in order to be more affordable.
A process that determines the value of a particular property.
Why is this helpful? When trying to sell a home, an appraisal helps give an idea of how much the home is worth to get the selling process started at a reasonable price.
A real estate agent that continues to get their education to a real estate broker license. They are able to work independently or hire other agents to work for them.
Why is this helpful? A broker has advanced knowledge of the real estate business, and is able to hire others that have similar expertise. They have all the tips and tricks for how to be successful in buying or selling a home.
5. REAL ESTATE AGENT
Someone who gains a professional license in real estate that helps people who are buying or selling a home. They are able to guide through the process and transactions.
Why is this helpful? Real estate agents are helpful for both buyers and sellers! They can find potential homes for buyers, and attempt to close quickly and effectively for sellers.
A final step in the buying process where the final sale of the property occurs. The ownership officially goes from the seller to the buyer.
Why is this helpful? A formal closing allows for minimal confusion of transaction processes. Both parties are able to sign agreements and make final decisions.
An action or demand that must be fulfilled before a real estate contract can become official. Examples usually include improvements that need to be performed in a home before selling.
Why is this helpful? Contingencies in a contract can guarantee that a buyer will get their home in the state requested. Satisfaction levels are met more easily through this method.
The value of an asset after any remaining liabilities. For example, if your home is worth $300,000, but you still owe $250,000 for your mortgage, the equity would be $50,000.
Why is this helpful? Essentially, equity is the remaining money that someone has. This money can be used for different projects or financing different things if used responsibly.
9. FIXED-RATE MORTGAGE
A mortgage with an interest rate that stays the same throughout the course of time the loan is paid off.
Why is this helpful? This type of mortgage could be beneficial for someone who desires a consistent charge every month. The interest rate won’t change how much they are paying throughout the life of the mortgage.
A statement from a lender that shows a buyer is able to purchase a home, and how much the lender is willing to give them. The lender will take factors like credit, debt, and financial obligations into account.
Why is this helpful? Getting pre-approved in the buying process gives buyers the “leg up” when purchasing a home. It shows the seller that they are able to finance a home and are serious about their purchase.
If you have any questions about any of these terms or need any other specific words defined, let us know! We are happy to help in your journey to purchase a new home.
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