Real Estate Definition Guide!

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iStock_000011892013SmallOur Admirals Cove experts have found that many people out there don’t exactly understand a lot of the commonly used real estate terms . So here is a list of definitions for some commonly used terms often misunderstood with people new to the real estate world.

  • Pre-Qualification: Pre-qualification is given to buyers from a lender as a rough estimate of what they might be able to afford. It really says nothing to sellers about your ability to gain financing it just says the bank thinks you can.
  • Pre-Approval: Pre-approval is given to buyers only after a lender has done some significant research into their financial history and agrees to loan them a certain amount. This carries a great deal more weight then pre-qualification.
  • Down Payment: A down payment is the share of a home’s purchase price that a homebuyer pays upfront. The typical down payment for purchasing a home is currently roughly twenty percent or more.
  • Price Appreciation: Price appreciation refers to the amount a home is likely to increase in value each year. However, price appreciation in unpredictable and can tend to be very volatile.
  • Buyer Closing Costs: The closing costs associated with buying a home include things like mortgage points, title insurance, loan origination fees, escrow deposit, credit report running fees, appraisal fees, etc.
  • Seller Closing Costs: The closing costs associated with selling a home include things like paying the real estate agents’ commissions, transfer taxes, title insurance fees, etc.
  • Home Inspection: A home inspection is a complete examination of the current condition of a property. Done by an experienced and certified professional inspector. Your inspector will prepare and deliver you a comprehensive report on their findings.
  • Home Appraisal: A home appraisal is the processes of evaluating the value of a property. Unlike a home inspection this is designed to determine fair market value not the condition of a home.
  • Commission: A commission is the money realtors make for the work they do either selling your home or helping you purchase one. This is typically a percentage of the homes selling price split between both agents.
  • Mortgage Term: The term of your mortgage is the length of your mortgage, meaning the amount of years until your mortgage will be paid off. Typically you will find mortgages with 15 year and 30 year terms.
  • Interest Rate: An interest rate is the rate a mortgage borrower will pay interest to a lender for the right to use their money. It is a percentage of the loans principal generally paid a certain amount of times per year.
  • Property Tax: A property tax is the levy on a property that a homeowner pays to the area’s governing authority. This can be levied either by the national government, state, county, or municipality.
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