REAL ESTATE TERMS YOU SHOULD KNOW IN NORTH SAN DIEGO COUNTY
We've been selling homes for 15 years and have worked with hundreds of clients and every now and then we use terminology that we just assume everyone knows but that's not always the case. So for those of you buying or selling a home in North San Diego County, here's some terms you should know before you get started.
Annual Percentage Rate (APR) - the borrower's (buyer getting the loan) costs of the loan term expressed as a rate. This is not your interest rate.
Close of Escrow - Generally this is the date that the buyer becomes the legal owner and title insurance becomes effective. Also known as the closing or close date.
Comparable Sales (aka COMPS) - these are sales that have similar characteristics as the subject property. This is used for analysis in the appraisal and also we run comps before we write offers and before we go on a listing appointment so we have the data to give an estimate of value or suggested offer price.
Earnest Money Deposit- This is essentially the down payment made by a buyer of property as evidence of "good faith" (meaning you intend to go through with the deal). It's a partial payment which only gets used when the offer is accepted and escrow is opened. Nowadays, earnest money is almost always wired as soon as escrow sends wiring instructions.
Easement- This is a right or privilege that one party has for a specific purpose on a piece of property you may own or be interested in buying. Easements are on the title and can be transferred usually to the new buyer depending on the situation. A typical easement example is where someone has access through your property to get to their home like a common driveway.
Hazard Insurance- This is real estate insurance which protects the home against fire, some natural causes, vandalism, etc depending on the policy. Buyer will often add liability insurance and extended coverage for personal property. This is ordered by the buyer or buyer's lender during the escrow process.
Lien- This is a form of encumbrance that usually makes a specific parcel of real estate the security for the payment of a debt or discharge of an obligation. Some liens that show up typically are judgments, taxes, mortgage and deeds of trust. When you get a loan for a home, the lender will put a lien on the property for the amount owed. This shows up to the title company when the home is being sold and title will investigate the payoff of the loan and any other liens. It's important to make sure all liens are removed before the escrow closes.
Loan Estimate (LE)- This form is designed to provide disclosures that will be helpful to borrowers in understanding the key features, costs and risks of the mortgage loan which they are getting. These disclosures must be given to the borrower 3 business days after application.
Mortgage- The instrument by which property is pledged as security for repayment of a loan.
PITI- This stands for principal, interest, taxes and insurance. When you ask for an estimate of monthly payment, this is normally how it's quoted to you.
Recording- This is the official filing documents affecting the property you're purchasing. The recording is done either electronically or by driving down to the county recorders office and filing the deed there. When a property has recorded it officially belongs to the new buyer.
This is just a sampling of the most popular terms we use in the real estate industry. When you have a good agent in your corner they will keep you informed the entire way but I know that the majority of buyers today come ready to buy and extremely informed. Special thanks to First American Title for coming up with some of the descriptions. I hope this helps.
Chris Whittaker
Solutions Real Estate
Carlsbad, CA
License # 01895376
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