First time buyers face a learning curve that can feel overwhelming if the right level of support and education is not available. It's not enough to merely educate one's self on buying strategies, mortgage application, and closing process. Buyers must also navigate through a sea of unfamiliar legalese, home building lingo and real estate specific jargon.
The glossary below is by no means complete and is no substitute for the careful guidance of an experienced real estate agent, but it can serve as a good primer for consumers getting their feet wet in real estate for the first time.
We will cover a variety of terms over the next several posts, so check back often!
Acceleration Clause - Provision in a mortgage that gives the lender the right to demand payment of the entire outstanding balance when the first monthly payment is missed.
Acceptance - A home seller accepts a buyer's offer. After a written agreement to the prices and conditions of the sale.
Ad Valorem - Latin phrase that means "according to value." Ad valorem taxes are taxes are those assessed according to the value of the home.
Adjustable-Rate Mortgage (ARM) - Repayment plan for a mortgage that permits the lender to adjust the interest rate periodically on the basis of changes in a specified index.
Agency - The relationship of trust that exists between buyers or sellers and their agents. The agency is formed via a written contract.
Amortization - Repayment of a mortgage in gradual installments.
Amortization Schedule - Timetable for payment of a mortgage showing the amount of each payment applied to interest and principal as well as the remaining balance.
Annual Percentage Rate (APR) - Total yearly cost of a mortgage stated as a percentage of the loan amount. This includes items such as the base interest rate, primary mortgage insurance and loan origination fee (points).
Appraisal - Professional evaluation of a property's market value.
Appraised Value - A licensed appraiser's opinion of the current market value of a property.
Assessed Value - A tax assessor's determination of the value of a home in order to calculate a tax base.
Back-Up Position
If a seller receives two offers at the same time, he or she has the right to accept either one. If your offer is not accepted, you can request that it remain on file as a second offer, or a back-up position. You can continue to search for another home in this situation.
Buy-Down - Paying a lender to lower the interest rate.
Cash Reserve
Requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two monthly mortgage payments.
Capital improvement - Any improvement that extends the life or increases the value of a piece of property.
Certificate of Reasonable Value
States the estimated value of your property and is prepared by an appraiser.
Clear Title
A title that is free of liens or legal questions as to ownership of property.
Closing
Meeting at which a sale of a property is finalized. This includes the buyer signing the mortgage documents and paying closing costs. Also called "settlement."
Closing Costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Also called settlement costs.
Commitment Letter
Formal offer by a lender stating the terms under which it agrees to lend money to a home buyer.
Counter Offer
Seller's response to a buyer's offer.
Covenants, Conditions and Restrictions (CC&R)
Official restrictions on a property (i.e., fence height, type of livestock permitted) to protect its value and prevent undesireable conditions.
Contingency - A provision of an agreement that keeps the agreement from being fully legally binding until a certain condition is met. One example is a buyer's contractual right to obtain a professional home inspection before purchasing the home.
Convertible ARM
An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions.
Helping you find your home is our goal
Getting you through the process is our expertise
Reechia & Keith
Allen Texas Real Estate
