If you are a first-time buyer or seller (or even if you’re a pro), the real estate terms thrown around during the process of buying or selling a property can be daunting. In fact, at times, “real estate lingo” may seem like a foreign language.
Check out these frequently used real estate terms to get you speaking “real estate lingo”
- Open Escrow – Escrow rules may vary from state to state and among lending institutions. Once the purchasing agreement is accepted in a real estate transaction, the escrow fund is opened. This account acts as a neutral third-party source of payment for the expenses associated with the closing.
- MLS – MLS stands for Multiple Listing Service and acts as the main database for real estate listings. Searching the MLS can yield all the details needed of a home listed for rent or sale including square footage, value, year built and specifics of the property including age, the number of bathrooms and bedrooms.
- Title Search – A title search is an act of determining (proving) that the person or party that states ownership of a property actually does own that property. This usually takes place toward the end of the real estate process and is a requirement before closing can occur.
- Listing Agreement – A listing agreement is a contract made between a seller and their listing broker. It outlines the listing details including the desired sale price, the anticipated selling time as well as details related to a commission.
- Adjustable Rate Mortgage – An Adjustable Rate Mortgage (also referred as an ARM) is a mortgage interest rate that is tied to a designated market indicator such as the U.S. Treasury Bill. When market rates are low, this kind of term can benefit the borrower. When rates begin to climb, it can significantly increase the monthly payment.
- Private Mortgage Insurance – This is optional and is purchased by the borrower to protect them from default in the event that they cannot make their mortgage payment.
- As-is – This means the seller is offering a property for sale without doing any necessary repairs. Anything that is noted in the inspection will, most likely, not reduce the price and will be the responsibility of the buyer.
- Assumable Mortgage: An assumable mortgage allows the buyer to take over the seller’s payments. The buyer becomes the owner of the loan and agrees to follow any other terms of the existing loan.
- Capital Gain – A capital gain is the profit realized from an increase in a property’s value. The capital gain is taxable and assessed at the time of sale.
- Equity – In accounting terms, equity equals assets minus liabilities. In terms of real estate, equity is the current value of the property less what is owed on the property.
Speaking real estate is easy once you do a little research. If you are planning to buy or sell a home, be sure to connect with Beycome.com for all the tools and support you need to be successful in any real estate transaction.