Real Estate Terms to Know!

Are you interested in buying or selling your home but are confused by the REALTOR lingo? Look no further because here is a list of important real estate terms that you should know!

Buyers' Market: Market conditions that exist when homes for sale outnumber buyers. Homes can sit on the market for a longer time and prices tend to drop.

Days on Market (DOM): The number of days a property listing is considered active.

Multiple Listing Service (MLS): A data base where real estate agents can list their properties for sale with in-depth details about the home!

Sellers' Market: Market conditions that exist when buyers outnumber homes for sale. Bidding wars are common, and prices often rise during this time.

Federal Housing Administration (FHA): A government agency created by the National Housing Act of 1934 that insures loans made by private lenders. FHA is a part of the US Housing and Urban Development and typically requires a smaller down payment.

Foreclosure: A property that has been repossessed by a bank when the owner fails to make their mortgage payments.

Points: Prepaid interest owed at closing, with 1 point representing 1% of the loan. Paying points, which are tax deductible, will lower the monthly mortgage payment.

Pre-Approval: a thorough assessment of a borrower's income, assets and other data to determine a loan amount they would qualify for. A real estate agent will typically request a pre-approval letter before showing a home. 

Closing Costs: Fees associated with the purchase of a home that are due at the end of the sales transaction. Fees may include the appraisal, the home inspection, a title search, a pest inspection and more. Buyers should budget for an amount that is 2% to 5% of the home’s purchase price.

Contingencies: Conditions written into a home purchase contract that protect the buyer should issues arise with financing, the home inspection, etc.

Earnest Money: A security deposit made by the buyer to assure the seller of his or her intent to purchase.

Escalation Clause: A clause or addendum to a real estate contract that states a buyer is willing to raise his or her offer price to a predetermined amount if the seller receives a higher competing offer for the property.

Lein: A lien is any legal claim upon a property for a debt or a non-monetary interest in the property. A lien is a security interest that can give a creditor the right to take possession of a property secured by a loan, such as a mortgage, when the borrower defaults on the loan obligations. Most lenders will require title insurance to protect their interests should there be outstanding liens on the property securing their security interest.

Refinancing: The act of paying off one loan by obtaining another. Refinancing is generally done to secure better loan terms, such as a lower interest rate.

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*All definitions found and credited to Zillow.com