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| Real Estate TermsBelow are some Real Estate Terms. They are general in nature so be sure to ask us for more specific explanations. That's why we are here! Pre-Approval: Don't get this confused with Pre-Qualify below. Pre-Approval means you have undergone loan application, underwriting and conditional approval. This means that as long as your financial and job status stay the same, you are approved for the loan up to the amount stated being that the house is within that price range and appraises to the lenders guidelines. This is the Real Estate equivalent to walking into the car dealer with 100% cash for a car. This is the single best thing you can do to strengthen your negotiating position. This assures the seller you are serious and your offer will be considered (often over higher offers) first. Start this process before you shop! Pre-Qualify: The term pre-qualify means that someone, not necessarily a mortgage lender, asked you how much you make, how much debt you have and whether you have good credit. Base on this conversation alone, without verification of any kind, they tell you how much you can borrow and how much you can spend on a house. This can be a good general guideline and does usually hold true but is really meaningless in the scheme of things. Property Disclosure Statement: When considering a home you should ask to see a disclosure statement, a written statement explaining any material facts that may adversely affect the home. Most states (including Ohio) require sellers to provide a disclosure statement. It is important to note that while sellers are required to disclose all material facts about the property, two things must be considered: 1. If a seller does not know about something, they can not disclose it. 2. A seller may conveniently "forget" an important fact. (nudge nudge... wink wink). If in doubt confirm all information yourself. Purchase Offer: Once you have found a home you would like to buy, you will give the seller a purchase offer. The purchase offer is a document that you and your sales agent will prepare and present to the seller detailing the conditions of the sale; such as the amount of the down payment, the date of occupation and any appliances the buyer would like included in the sale of the home. This document should include what is called a loan-contingency clause, a clause that may allow you to cancel the transaction and get your deposit back in the event that you are unable to get a loan. Earnest Money: Your deposit may also be referred to as earnest money or good-faith money because it represents your serious intentions toward buying this particular home. This money will be put in escrow until the transaction is successfully completed. Escrow refers to the process of putting this money in a separate account. Mortgage Note: Once you have signed a contract with the seller, you will need to take the contract to a mortgage lender in order to obtain a mortgage note. This is your promise to pay the purchase price, in addition to the interest rate agreed upon, over a specific period of time - usually 15 or 30 years. Fixed Rate / Adjustable Rate Loans: You may choose a fixed rate loan or an adjustable rate loan. Fixed rate means you lock in an interest rate that remains constant throughout the life of the loan. An adjustable rate provides a discounted rate for a time, but will then change. Adjustable rates have caps for each adjustment period and cannot exceed these caps. Home Inspection: During the period before closing, the home should be inspected by a professional. A professional home inspector will look over the house thoroughly and let you know about things that should be fixed before a contract is signed, or at least bring potential problems to your attention. Points: Points are another term you will encounter. Points are the fee your lender will charge you for initiating a loan, and are often paid up front. A point equals 1% of the principal - the original amount borrowed. Not all lenders charge their customers points. Survey: The property should be surveyed to determine exactly the dimensions of the plot, and to where it extends. The survey will show you exactly what you are purchasing as well as potential problems like the neighbors fence on your property or the beautiful oak tree that belongs to the next door property! Title / Deed /Title Insurance: You should also be familiar with the terms title, deed and title insurance. The title is evidence that you, the buyer, own the property, while the deed legally transfers the title to you. Title insurance offers protection to the buyer if the title turns out to be faulty. Closing: The closing is the meeting at which the buyer and seller and their agents and attorneys will go over all documents and sign them. All final documents are exchanged at the closing. Closing costs are fees that are paid at the time of this meeting, such as inspection fees, attorney fees and local government fees. Buyers pay some of these fees, sellers pay others. |
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