Buying a Home: Take Time to Learn the Industry Terms
Navigating the home-buying process can be intimidating if you aren’t familiar with the standard industry terms. However, becoming comfortable with the terminology only takes a little focus. (no fast-talkers or acronyms. please!)
We have several articles about buying a home in today’s market;
Here’s one that may help put it into perspective.
The best way to make sure your home-buying experience is a positive one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher.’
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Some Highlights of the Home Buying Process:
There are many moving parts to a real estate deal, but your chances of “eyes wide open” are much better when you understand a few basics used by real estate professionals.
Here’s a list of some of the most common terms you’ll hear when buying a home to help you get started.
Mortgage Terms
- Pre-Approval vs. Pre-Qualification: Both terms refer to your ability to secure a mortgage; however, they aren’t the same. Pre-qualification gives you an estimate of what you can afford, while pre-approval is a more in-depth review by a lender that shows you’re a serious buyer.
- Credit Score: A number ranging from 300-850 based on an analysis of your credit history. This helps lenders determine the likelihood that you’ll repay future debts.
- Down Payment: This is the initial amount you pay upfront when purchasing a home. It typically ranges between 3% and 20%, depending on the type of loan. Some 0% down programs are also available. A larger down payment can reduce your monthly mortgage payments. Ask your REALTOR® or lender for more information.
- Mortgage Rate: The interest rate you pay to borrow money to buy your home. The lower the rate, the better.
- Closing Costs: Closing costs are fees you pay when finalizing your home purchase. These include points, taxes, insurance, financing costs, and items you must prepay or escrow. Ask your lender for a complete list of closing costs. It’s critical for your budget!
Closing Terms
- Escrow: Escrow holds funds in a neutral third-party account during the transaction. In Texas, title companies normally fill this role. This helps ensure that both buyer and seller meet their contract obligations before finalizing the deal.
- Appraisal: A professional analysis used to estimate the value of the home. This is necessary to validate the home’s worth to you and your lender to secure financing. It helps determine whether the home’s price is fair and supports the loan amount.
- Survey: A drawing showing the property lines and structures, including the house, garage, fences or walls, driveways, and sheds. Learn more about surveys.
First Things First in the home buying process:
Choosing a REALTOR® to represent you is a critical first step to buying a home. The right agent can save you time, money, disappointment, and frustration.
- Choose a REALTOR®
- Prequalify for Mortgage
- Your Next Home Plan
- Property Search
- Contract
- Due Diligence
- Close
You should choose a REALTOR® you can communicate with and one with whom you have confidence in their professional experience and ability. Plus, you always know who’s got your back!
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BTW, You might want to know about Your REALTOR®:
A REALTOR® is a licensed real estate professional who provides services in buying and selling homes. They are there to help you through the confusing paperwork, find your dream home, negotiate any details, and help you understand what’s going on in the housing market. As a member of the NAR (National Association of REALTORS®) they follow a specific Codes of Ethics.