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Every journey to homeownership is paved with a language of its own. Understanding key terms not only makes you better informed but also empowers you to make decisions with confidence. So, whether you’re a first-time buyer or just needing a quick refresher, here are 10 essential real estate terms to keep in your lexicon:
1. Pre-Approval: This is a lender’s conditional agreement to lend you a specific amount based on your financial credentials. It’s a strong signal to sellers that you’re a serious and capable buyer.
2. Fixed-Rate vs. Adjustable-Rate Mortgages (ARMs): A fixed-rate mortgage has the same interest rate for the life of the loan. An ARM typically starts with a lower interest rate, which changes over time based on market conditions.
3. Closing Costs: These are fees paid at the closing of a real estate transaction. They might include title insurance, attorney fees, appraisals, taxes and more.
4. Earnest Money: Often called a good faith deposit, it’s a portion of the down payment which indicates the buyer’s intent and capability to purchase the property.
5. Escrow: This is a neutral third party or account that holds funds until the deal is consummated and all conditions met.
6. Inspection Contingency: A clause in an offer to buy a home that allows the buyer to have the property inspected within a certain time period.
7. Appraisal: It’s a professional assessment of a home’s value to ensure it’s worth the selling price.
8. Title Insurance: Insurance that protects the owner in the event someone challenges the title to the property.
9. Amortization: The process of paying off a debt over time through regular payments.
10. Equity: The difference between the market value of your home and the amount you owe the lender who holds the mortgage.
Navigating these terms is just one part of your home-buying adventure. For continuous support and expert advice, consider enrolling in one of our Tom Ferry coaching programs. They’re not just an investment in your real estate knowledge but a cornerstone for your overall success in the marketplace.
