15 Real Estate Terms That You Must Be Familiar With
If you are dealing with the real estate industry for the first time, you will find various new words and phrases that can confuse you. This confusion can lead to further complications and misunderstandings. Hence, you must understand the terms in real estate.
In order to help you out, we have compiled top 15 real estate terms that you must be familiar with. Let’s get started.
1. Adjustable-Rate Mortgage
Mortgages have become a common instrument for almost all house buyers. It lets people purchase their dream house without waiting for years to save money for it. When you come across the mortgage concept, you will find the real estate glossary term “adjustable-rate mortgage.” This refers to the type of loan where your interest rates keep on changing during the entire tenure. Thus, you may get lower or higher interest rates from the initial ones based on the market. The interval at which this alteration takes place is predetermined.
2. Fixed-Rate Mortgage
Another real estate terminology related to loans is “fixed-rate mortgage.” It is exactly the opposite of the previous term. Here, you receive a constant rate of interest irrespective of what is going on in the market. So, even if the market falls down, you will still have to pay a higher interest amount towards the loan throughout its tenure.
3. Buyers Agent
Real estate agents, or as commonly known real estate brokers, are the people who connect a potential buyer with the property seller. Therefore, it wouldn’t be wrong to state that they work as a bridge between the two. But usually, there are two agents involved in a deal. One from the buyer’s side and the other one from the seller’s side. The glossary of real estate terms includes a title called “buyers agent.” As you may have guessed, this term refers to the agent from the buyer’s side. For the seller agent, the title “listing agent” is used.
4. Cash Reserves
To close a property deal, a buyer needs to provide the down payment and closing costs. Cash reserves refer to a specific amount of money that gets leftover after making the mentioned two payments. However, you must know that all lenders don’t need these.
The amount you borrow under a mortgage is referred to as the principal amount. But the lender doesn’t provide you with funds without any profit for themselves. That is why they add a specific interest to the loan that you need to pay over time. It is a certain percentage of the total borrowed amount that gets paid in your monthly EMIs.
6. Private Mortgage Insurance
Many people aren’t familiar with Private Mortgage Insurance or PMI home buying terminology. This can be considered an additional fee that a buyer needs to pay if they provide a down payment lower than 20% of the total property cost.
A buyer may take another loan to fill in their previous mortgage. This is called refinancing, and it is usually done to obtain lower interest rates on the new loan.
8. Title Insurance
Title insurance is one of the home buying terms that provides the buyer with an assurance that no other liens are present on the property. This gets covered under the closing costs.
9. Due Diligence
A buyer needs to inspect the property appropriately and ensure that they get whatever they are paying for. Due diligence is the real estate terminology that refers to the specific period provided to the buyer to examine the property.
10. Closing Costs
These are the additional charges paid by the buyer in order to cover various aspects, such as title insurance, taxes, and other related fees.
11. Assessed Value
A public assessor examines the property for tax purposes. A property management terminology “assessed value” gets used here for the overall property value provided by them.
12. Mortgage Broker
Just like the real estate broker, these agents serve as a bridge between the lenders and property buyers.
The glossary of real estate terms defines “offer” as the initial purchase price point that the seller receives from the buyer. A seller has the liberty to accept, make a counter, or reject the offer.
14. Pre-Approval Letter
Sometimes buyers get themselves thoroughly checked by their lenders to obtain an estimate of their loan approval. This estimate is received in the form of a letter, called “pre-approval letter” in the real estate glossary.
Listing is nothing but a property that falls under the category of “for sale.”
We hope these 15 terms in real estate would have cleared your doubts. For more information, contact us!