It’s All Greek to Me, Real Estate Terms as a Second Language

The Mysterious Real Estate Language

Selling or buying a home can be a mysterious journey for those not familiar with real estate terms. While many home buyers and sellers have a general understanding of how the process works, the language of real estate can actually cause more fear than the process itself. However, by learning a few of the common real estate terms you can feel more at ease when approaching selling or buying your next home.

Repeat After Me…Common Real Estate Terms

Closing
At the "closing" meeting for home sellers and buyers, all of the contract documents are signed and money for the transaction changes hands. Usually present at this meeting are the sellers, buyers, realtors for both parties, a home lender representative (may not always be the case) and the closing attorney. This is normally the final transaction in a home sale, however does not always mean home access is immediately granted unless contracted to do so.

Closing Costs
Closing costs are expenses that take place during the final transaction of a home sale. These costs are broken down into two types, non-recurring closing costs and pre-paid items. Non-recurring closing costs are any one-time expenses which result from buying a home or obtaining a home loan.

Non-recurring closing costs incurred include:

• Loan Origination Fees
• Discount Points
• Appraisal Fees
• Title Searches
• Title Insurance
• Property Surveys
• Home Sale Taxes
• Deed-Recording Fees
• Credit Report Charges

Pre-paid items are expenses that will reoccur over time for the new homeowners.  These expenses normally include property taxes and homeowner’s insurance for a specified amount at the beginning of new home ownership. 

A Home Lender must provide a Good Faith Estimate for the projected amount of non-recurring closing costs and prepaid items to the borrower within three days of receiving a home loan application.

Contingency
A contingency is the term in which the home sellers must meet certain standards before the home sale contract is legally binding. For example, this is often conditional on a house passing a home inspection.

Escrow
Is the financial "third party" in the home ownership process. Normally the buyer's earnest money deposit is put into escrow until delivered to the seller when the transaction is closed.

Mortgage
The legal document (holding) of property ownership-title for repayment of debt. Instead of mortgages, some states use First Trust Deeds.

Home Mortgages can take many forms depending on a home buyer's financial standing, government programs' qualification and military service record.

Typical mortgage types include:

• Adjustable-Rate Mortgage (ARM)
• Conventional Mortgage
• Fannie Mae (FNMA)
• FHA Mortgage
• Fixed-Rate Mortgage
• Owner Financing
• VA Mortgage

Grantee

The seller of the property.

Grantor

The buyer of the property.

Loan-To-Value (LTV)
The percentage of the amount between the home loan amount and the appraised value or sales price of the home (whichever is lower).

Origination Fee
This a fee that is charged by the lending institution (mortgage company) to cover the establishment (setup) of an account. It pays for the work involved in researching and setting up the mortgage for a borrower.

PITI (Principal, Interest, Taxes and Insurance)
An impounded or escrow account is set up the lender to cover the combined expenses for your mortgage. Your monthly house note or mortgage payment is divided up to pay these fees.   

Pre-Approval

When a borrower or potential home buyer is pre-approved it means that they have qualified for a loan up to a specific amount towards the purchase of a home. Having per-approval can greatly increase a buyer's advantage in the negotiation process as sellers know that the home buyer is ready to purchase and there is less time involved awaiting loan approval.

Purchase Agreement
This is the contract between the home sellers and buyers detailing out the negotiated points of the agreed home purchase. Often when this is signed the home buyers' earnest money (deposit) is submitted to escrow for holding until the transaction is complete.

Title Insurance
Title Insurance is an insurance policy that protects the lenders and buyers against any loss if there is a property ownership dispute.

While selling or buying a home can appear to be a scary process, especially for first-time sellers or buyers, do not let the terminology rob you from your adventure. With a good realtor by your side you will have the perfect guide for your journey.

If the language of real estate is Greek to you, please visit my site at http://www.pamsantoro. com/. You can also contact me at 678-656-6627. As an experienced member of both the National and Georgia Board of Realtors, I can answer any questions you have about local market conditions, financing or selling your home for the best market value.

Remember, no one sells a home like a Mom!