Real Estate Terminology—Simplified!
Sometimes buying or selling a home in the Ann Arbor area can be confusing, because you don’t understand the terminology. This can complicate the procedure when you don’t know what the realtor is talking about. They may be saying you need to have an “earnest money deposit,” and you think it’s the “down payment.” It’s helpful to have a good grasp on real estate terms, so you’ll be able to facilitate the deal you want with ease. To that end, the MARK Z. team has developed this comprehensive real estate terminology list for your perusal.
An appraisal, according to Investopedia, is “an unbiased professional opinion of a home’s value. Appraisals are almost always used in purchase-and-sale transactions and commonly used in refinance transactions.” In other words, an appraisal is a written estimate that consists of your home’s value.
An objective, third-party appraiser conducts the appraisal using market data to determine the value of similar homes in the Ann Arbor area.
There are a variety of fees when you close on a property such as application fees, appraisal cost, attorney fee, escrow, taxes, inspection costs, and so on. These fees make up the closing costs.
Code of Ethics
The National Association of Realtors has a code of conduct that is required for its licensing laws. This standard makes up the code of ethics and keeps the realtors in Ann Arbor on their toes.
The down payment is the amount of money you’ll need to pay upfront when purchasing a property. The average amount is 10% of the total purchase price. However, some people put down more, and some lenders will allow less. Check with your lender or realtor to determine the amount necessary.
Earnest Money Deposit
When you make an offer on an Ann Arbor house, you will also put down an earnest money deposit. This lets the seller know that you are serious about the proposal. Otherwise, sellers may get multiple offers from individuals who do not intend to purchase; they’re just looking around. The amount and terms are set by the seller but are about 1% to 3%.
Equity is how much "net gain" you have with your property. This number is determined by figuring the value of the property and subtracting the amount you owe on the mortgage.
Escrow is money and other holding documents that are placed in a third-party account while the real estate transactions are ongoing.
Fair Market Value
When there’s a competitive market, fair market value is the amount the property is worth as agreed upon by both the buyer and seller.
With a fixed-rate mortgage, your interest will remain the same throughout the entire length of the loan.
When someone doesn’t pay their mortgage, the bank can take possession of the house. When they foreclose on it, they recoup some of the money that was owed through a sale.
The holding period is the amount of time that a property is owned.
The amount of debt you owe on a property is called the liability. This number is used to calculate your net worth.
For a lock-in rate, the lender promises to give the applicant a specific interest rate for a mortgage loan. The amount they promise is “locked-in.”
Determining the market rate of a property involves estimating its value in relation to the present real estate market.
To figure out your net worth, you add up all your assets and subtract all your liabilities. The amount left is your net worth.
When you fill out the loan application for a home, you are taking the first step in the house buying process; this is called origination.
As you move along the loan application process, the lender will want to find out how much you may be able to borrow. They will be able to get an estimate of this amount by looking at such things as your income and credit history.
Real Estate Broker
This person is responsible for helping connect buyers and sellers. During the real estate process, the broker helps the parties negotiate a contract. It’s essential to have a proactive agent who will pursue the outcome for you.
People refinance by obtaining a new loan to pay off a previous loan. Most do this because they want new terms such as a better interest rate or a lower payment.
The title is the document that indicates you now have legal possession of the property in question.
From A to Z
Now that you understand these real estate terms, you will be at ease when speaking with your realtor when selling or buying a home. Are you looking for more information about the best strategies to buy or sell your Ann Arbor property? Look no further than the MARK Z. Real Estate Experts!
When it comes time to sell, there's more on a homeowner's mind than simply trying to navigate real estate terminology. Too many sellers worry their home won’t sell on time—or at all! Our Guaranteed Sold program takes the uncertainty out of selling your home. Get in touch with us today to learn more about the MARK Z. Experience!