Common Real Estate Terminology
If you are about to become a first-time home buyer, this is an exciting time for you. However, you should be prepared to immerse yourself in the language of real estate. Here are a few terms that realtors, lenders and other related professionals might be using and what they mean.
You always hear people say they are "in escrow," but what does this actually mean? Escrow is actually an account and not technically a period of time. The buyer writes a check to an escrow company and this company holds the check until your loan is funded and the home belongs to you. From the time you write the check to the time your loan funds takes about 30 days or more, and during this time you have inspections, appraisal and tons of paperwork to sign.
While you are working with your lender, this person will ask you what type of mortgage you want. You can choose between "fixed" loans and "adjustable" loans. The fixed loans, often a 30-year-fixed mortgage, means that you will be paying off the loan for 30 years, and you will always pay the exact same amount of interest. An adjustable-rate mortgage, which also is called an ARM, can fluctuate and your interest can change. This means your monthly payment also can change.
The buyer and seller also will have to pay for closing costs, but what does this entail? The costs include paying for an appraisal and also paying for title insurance, both of which are covered by the buyer. There are plenty of other little fees and documents and notary services to pay for along the way, but the biggest cost of all is the commission that gets paid to the realtors. However, as the buyer, you can breathe a sigh of relief because that typically is paid by the seller.
You might be wondering about the difference between appraisals and inspections. In order to get a loan, the bank or lender will make you pay to have the home appraised. The selling price of the home cannot be more than the value set forth in the appraisal. A bank won't lend money if you are paying more than you should for a home. Inspections are not always required, but definitely crucial, and you will want to pay for a quality home inspection and possibly other inspections such as termite inspections, geological inspections, roof inspections and anything that you might need based upon the age, location and general condition of the property.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
You always hear people say they are "in escrow," but what does this actually mean? Escrow is actually an account and not technically a period of time. The buyer writes a check to an escrow company and this company holds the check until your loan is funded and the home belongs to you. From the time you write the check to the time your loan funds takes about 30 days or more, and during this time you have inspections, appraisal and tons of paperwork to sign.
While you are working with your lender, this person will ask you what type of mortgage you want. You can choose between "fixed" loans and "adjustable" loans. The fixed loans, often a 30-year-fixed mortgage, means that you will be paying off the loan for 30 years, and you will always pay the exact same amount of interest. An adjustable-rate mortgage, which also is called an ARM, can fluctuate and your interest can change. This means your monthly payment also can change.
The buyer and seller also will have to pay for closing costs, but what does this entail? The costs include paying for an appraisal and also paying for title insurance, both of which are covered by the buyer. There are plenty of other little fees and documents and notary services to pay for along the way, but the biggest cost of all is the commission that gets paid to the realtors. However, as the buyer, you can breathe a sigh of relief because that typically is paid by the seller.
You might be wondering about the difference between appraisals and inspections. In order to get a loan, the bank or lender will make you pay to have the home appraised. The selling price of the home cannot be more than the value set forth in the appraisal. A bank won't lend money if you are paying more than you should for a home. Inspections are not always required, but definitely crucial, and you will want to pay for a quality home inspection and possibly other inspections such as termite inspections, geological inspections, roof inspections and anything that you might need based upon the age, location and general condition of the property.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
About the Author:
Pammy McGrath enjoys reading about real estate blogs. If you are searching for licensed Texas Hill Country real estate agents, or to discover homes for sale in Fredericksburg TX, please check out the Nixon Real Estate website now.
posted by Vittoria @ August 29, 2014
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