Real Estate Terminology for Dummies
If you’ve recently jumped into the process of either buying your first home, you may have realized that the real estate world has its own language. To become a REALTOR, you must learn these….plus a ton more real estate terms to be able to speak intelligently in the field. With the rise of the web, the internet has changed the role of the REALTOR — and now, its best to understand real estate terminology yourself. Here are some basic real estate terms to help you navigate more easily.
–Closing: this is the meeting at the end of the process where the sellers sign over the title of the home to the new buyers.
–Down Payment: usually 5-20% of the total cost of the home, this is the amount of money that the buyer pays upfront to purchase the property.
–Escrow: this is the account set up by a lender that you pay toward when you purchase your home; once escrow is paid out, the lender will hand over the property to you.
–Pre-Approval: when you are pre-approved, a bank reviews your finances and credit and gives you a set interest rate for a certain period of time; pre-approval is sometimes required and always recommended to begin the process of buying a home.
–Lien: this is when a legal claim is put on a property to receive payment for debt and the holder of the lien can then sell the property to recover the money owed.
–Comparable: also called ‘comps,’ these are the similar homes (size and age) in the area you are looking to buy that have recently been sold or are currently on the market, used to determine the value of your home.
–Inspection: where a certified inspector will scrutinize every part of the home, including electricity, plumbing, roofing, appliances, etc.
–Appraisal: required for a mortgage, this is the estimate of the home’s value based upon the condition of the property and the comparables in the area.
–Listing: this is a term that many real estate agents use to refer to all the homes that are for sale. This can also refer to the for-sale homes that are listed on a website.
–Equity: this is the difference between the home’s value and what you owe on your mortgage; for example, if your home is $200,000 and you only owe $75,000, then your equity is $125,000.
–Principal: this is the exact amount of money that you borrowed to purchase your home; if the home was $200,000 and you put 10% down, your principal is $180,000 and you will have to pay this back, plus interest
–Interest: this is what the lender chargers you to borrow the money to purchase your home; you are approved for a specific interest rate, and will pay this off as you pay off the principal of your home.
Click HERE for a more exhaustive list of real estate terms
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