It’s important to have a basic understanding of important real estate concepts before you begin the home buying process. Not only could this knowledge give you peace of mind, it can save you time, money and hassle. Get familiar with these key real estate terms you should know before hunting for a home.
Buyer’s Agent vs. Listing Agent
There are two agents that take part in the home buying process: the buyer’s agent represents you, and the listing agent represents the seller. Intermediary agency is when one broker represents both buyers and sellers at once.
Fixed Rate and Adjustable Rate Mortgages
Conventional loans often comprise “fixed rate” and “adjustable rate” mortgages. A fixed rate mortgage features a pre-determined interest rate that lasts throughout the life of the loan, usually 30 years. An adjustable rate mortgage features a variable interest rate, usually five, seven or 10 years.
Pre-Approval Letter
Before applying for a mortgage or starting your house hunt, it’s wise to have a pre-approval letter from the bank in hand. This is basically an estimate of how much the bank is willing to lend you. Not only does this letter help you figure out how much house you can afford, it shows sellers that you are serious about buying and that you can get a loan when needed.
Listings
An online listing displays information about the home, such as asking price, number of bedrooms and age of the structure.
Inspection
After you have put in an offer on a home, you need to schedule an inspection. The home inspector walks through the home and property to review components such as plumbing, electrical, foundation, heating, and appliances. The inspection report lists all the details of the findings. Buyers may ask sellers to take care of the critical findings before they will agree to buy the home.
Appraisal
When applying for a mortgage, your lender will want an appraisal of the home. A licensed appraiser estimates the home’s value based on comparable homes that have recently sold in the neighborhood. This report is also based on an investigation of the property.
Contingencies
If you decide to put an offer on a home, you may spell out certain conditions that must be met in order for you to continue with the deal. There are many types of contingencies, from financial to inspection to appraisal.
Offers
Once you have settled on the right home for you, it’s time to make an offer with the help of your real estate agent. If the seller counters your offer, this is when negotiations come into play.
Closing Costs
There are many fees involved in purchasing a home. Closing costs usually comprise two to five percent of the purchase price of the home, excluding the down payment. Common fees include excise tax, title insurance and loan-processing costs.
Contact Berkshire Hathaway Premier Properties
If you need help deciphering the various real estate terms, give us a call and ask! Our agents will be happy to assist you.