It’s about that time! The weather’s getting warmer, and the sun is coming out, so it’s time for spring cleaning. And you may be thinking, “I’m selling my home. Is this
Becoming Fluent in the Language of Homebuying
Dated: February 23 2023
Views: 373
The best time to buy a house is when you're ready. Before jumping head-first into this new world of real estate, it's best to familiarize yourself with the primary language. Avoid intimidation and take a minute to familiarize yourself with the common phrases used during the home-buying process.
Here are some of the most popular words you'll tend to hear and a rundown of what they mean:
Appraisal
You'll typically hear this term once you're in contract. An appraisal is when an appraiser or evaluator comes through your home and provides an estimated value of what your previous home is worth.
APR
APR is the Annual Percentage Rate you're charged for borrowing money as you do for a mortgage. So it's always best to aim for a low APR so your rates stay manageable.
Closing Costs
Once you've found a house you like, agreed on a deal, and are ready to see closing time, closing costs will also come into play. By technical definition, closing costs are transaction charges that the buyer or seller must pay at the close of escrow or when the property is transferred. Every deal is different, but typically average closing costs can range from two to five percent of the purchase price.
Contingency
A contingency is typically a common ultimatum.
"We'll only agree to a sale as long as x, y, and z happens."
It's an arrangement that either the buyer or seller can place, stating that specific terms of the contract can be changed or voided due to the failure to meet a particular request. Typically contingencies are provisions initially drafted in the sale contract.
Debt-to-Income (DTI)
The percentage of your monthly gross income that's used to repay debt. Lenders look at it to evaluate if they can trust you with a new home. Staying under a 36% DTI is ideal and manageable.
Escrow
Escrow occurs once you put in an offer on the house. Funds or assets held in escrow are temporarily transferred and controlled by a third party to facilitate a transaction, usually on behalf of the buyer or seller.
To be "in escrow" is often used in real estate transactions where property, cash, and title are held until conditions are met, and the contract is closed.
Loan-to-Value (LTV)
This is the amount of money borrowed divided by your home's appraised value or the percentage of your home that you own vs. the portion you owe. It helps lenders decide how much interest to charge you.
Principal
The amount of money you owe without interest rate is the principal. As time passes, your principal will go down the more payments you make.
Title
A title is proof of ownership of real estate property. A deed or other document known as a title report evidences the title. A title report includes property descriptions, titleholder names, tax rates, encumbrances, and real estate taxes due. Depending on that county's practice, a title company, attorney, or other legal officials will draft it. Finally, it's recorded and held in the county land records office.
Hopefully, the breakdown of these terms has made the process easier to understand. For further guidance, call us today! Contact the Levi Rodgers Real Estate Group at (210) 879-8220 or send us a message. You can also follow us on Instagram and Facebook!
The Levi Rodgers Real Estate Group
Levi has led 2 very distinct lives: a successful Military career as well as leading one of the most successful Real Estate companies in the country. In 1996, Levi enlisted into the Army as a combat e....
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