Fundamental Real Estate Terms
While searching for the best North Dallas Texas Home as a first-time home buyer, you may come across several terms that are specifically used in the real estate sector.
1. Fixed-rate mortgage: interest rate paid on the home loan remains fixed.
2. Adjustable-rate mortgage (ARM): The interest rate remains fixed for around 5 to 10 years, but then it gets adjusted according to the prime rate + points charged by the banks.
3. Federal housing administration loan: This type of loan is considered to be the best choice for buyers with sub-prime credit scores.
4. Appraisal: It is defined as an estimate of the market value of a property on a given date. There are multiple approaches to appraisal, but residential real estate typically uses the sales comparison approach
5. Balloon Payment: This is referred to as the last payment on the loan (mostly called as the scheduled payment) that is larger in amount than the previous payments.
6. Contract of Sale: It is a contract between a property buyer and property seller, which conveys the title after payments have been made and certain other conditions have been fulfilled.
7. Foreclosure: A legal proceeding, which that allows the creditor to pay off any unpaid mortgage payment by selling your house.
8. Pre-qualification: It involves calculating the amount of money that a home buyer can spend on purchasing his home. The calculation is done by comparing the buyer’s debts with the buyer’s income, which is how the realtor becomes able to find the right home for the buyer.
9. Pre-approval: Pre-approval to grant a home loan for purchasing a home is provided by the mortgage lender in the form of a written agreement. It assures the seller that the offer made by the buyer is valid and that he can actually afford to buy the chosen property. These days, being pre-approved is more important than being pre-qualified, so as to speed up the buying process.
10. Upfront costs: These are the additional costs, like flood insurance, credit report fee, appraisal fee, hazard insurance, etc. that are required to be paid by the buyer before closing the deal on a home.
11. Title insurance: It protects the insured against any loss due to adverse claims, defects, encumbrances, liens, or other matters which are not disclosed to the new owner.
12. Earnest money: The amount of money that you put while making an offer as a sign that you are genuinely interested in purchasing the home.
Learn more about other related terms that support the entire home buying and ownership experience:
Expanded Financials Glossary of Terms
