Homebuyers looking at Westfall are not new to buying a house. But even the most experienced buyer may need a refresher on the language surrounding the purchase of a new home.
When buying a first home, people are often overwhelmed and rely heavily on a real estate agent to translate. This time, you better understand the process, know what you want, (and may actually read the documents)! While you certainly know the words “mortgage,” and “down payment,” here are 11 other terms to remind yourself about this time around:
As part of your mortgage, a lender can demand full payment. This happens in response to late payments.
Agreement of Sale
This is a contract signed by the buyer and seller that indicates the terms and conditions of the sale, such as price, dues, and fees.
Certificate of Title
A title company issues this certificate to show the title of the property is insurable.
Deed of Trust
You are probably familiar with the deed, which shows you own the house. A deed of trust is given to a trustee to hold against the debt borrowed. That way if the borrower defaults on the loan, he or she can sell the house and use those funds to repay the debt.
Earnest money is not present in all home sales. It’s a deposit buyers give to the seller as a sign of good faith. Earnest money is applied as part of the down payment. But just like a rental deposit you may lose this money if the sale is not completed.
In some properties, you may need to use another person’s property to access your home. In that case, you could be granted easement rights, or the right to access or use someone’s property without actually owning it.
Escrow has multiple meanings in real estate, which is why many people get confused about the term. When buying a home, escrow is the money you send to a third party who holds it until all conditions of the sale are met.
If a lien has been placed on a home you want to buy, it means someone has claim to that property until a debt is repaid. Liens may be held by a general contractor who worked on the house or the government, if owed back taxes.
Pre-qualified vs. Pre-approval
Prequalified means that a lender has taken a look at your basic finances and determined the rough amount of mortgage for which you might qualify. It does not guarantee a loan and does not include a look at your credit report. Prequalification is a process that’s useful to determine whether you are financially ready. Preapproval is the next step and is more official, requiring a mortgage application, usually with an application fee. The lender will then do a more in-depth check on your finances and credit and then let you know how much they will lend.
Real Estate Agent vs. Real Estate Broker
Real estate agents are licensed by the state and work for a firm. A broker is a step above that; an agent who holds a broker license and can therefore sell homes on his/her own. Meanwhile, Realtor refers to an agent who belongs to the National Association of Realtors.
A property’s title is a report of activity, including any liens against it or other ownership. You want a home with a clean title, meaning it has no liens or other claims to it.