When buying your first home, you are concerned about finding the perfect home, keeping it within your price range, and navigating home ownership the best you can. What you didn’t plan for, however, was the constant google search to figure out what your realtor just said. From escrow account to property tax, trying to understand every step of the buying process can be tough. To help you out, we have created a list of terms that can trip up some first time home buyers.
Mortgage Pre-Approval: This is when your lender will look at your overall financial picture, evaluate it and give you an idea of the amount of mortgage you will qualify for. This is the first step in the mortgage process and helps clarify which homes you can afford during the home search process.Talk to your lender and ask questions if you do not understand something that they say.
Fair market value: The highest price that a buyer would be willing to pay and the lowest a seller, willing but not compelled to sell, would accept.
Escrow Account: An account, separate from your mortgage account that is traditionally set up by a mortgage lender to pay for property related expenses. For example, homeowner’s insurance and property tax.
Earnest Money: A payment made to confirm a contract and can be used to help fund your down payment. An earnest money deposit lets the seller know that you are a serious, committed buyer.
Homeowners Insurance: Insurance that covers damages to your property and/or injury or property damage you or your family cause to others. While you are not legally obligated to have homeowners insurance, many lenders require that you do before borrowing money from them.
Property Tax: A levy on your property that you are required to pay by the state or local government.
Final Walkthrough: This is one last chance for you to look through the home you will be buying. You need to make sure the terms of your contract will be met and that the property’’s condition is the same as the last time you visited.
Contingency: A condition of some sort that must be met before the contract is legally binding. For example, many home buyers include a contingency that the contract is not binding until they obtain proof of satisfactory home insurance.
Closing Costs: Fees paid by the seller and/or buyer at the end of a real estate transaction.
As you begin your home search for the first time, take a moment to make sure you really understand what your realtor and mortgage lender are saying. It can be tough to navigate real estate jargon, but if you have any questions just ask your realtor to explain it further or in more detail.
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