Are you planning on buying a home? Are you fluent in real estate lingo? It is a bit intimidating when you're looking to make a big purchase like buying a home but don't know what terms mean. To help you out and boost your knowledge, here are the 5 real estate terms you need to know so you're confident when buying.
· Preapproval Letter. Getting preapproved is always one of my first recommendations for homebuyers. Getting preapproved starts with sitting down with your mortgage lender and having them analyze your current financial situation. After crunching numbers, they'll qualify you for the price range of homes you can afford. You'll receive a preapproval letter that proves the price range you can afford while showing sellers you're a serious buyer.
· Closing Costs. In addition to the price of the home, there are costs associated with the real estate transaction to be paid, often between 2-5% of the purchase price of the home. Some of these costs include appraisal fees, financing costs, title insurance, taxes, loan fees, and more.
· Home Inspection. Having a qualified home inspector determine the condition of the property with a visual inspection is a great decision for buyers. There are many parts of the home that should be looked at, including the AC, appliances, the attic, the electrical system, and the roof, just to name a few. Home inspectors should send you a detailed report showing photos with notes of the condition on the day and note problem areas and recommendations.
· Appraisal. Real estate appraisers have thorough training and are licensed to estimate the market value of the real estate. They use 3 main methods including a) comparing recent sales in an area, b) note the type and quality of materials, condition, as well as the age and depreciation, and c) an income approach (for commercial or rental properties)
· Mortgage Commitment Letter. A letter from the lender spelling out the max loan amount, max payment, and down payment. The lender takes a much more detailed look at your situation and this is much stronger than preapproval and is essentially a guarantee of the loan.
For more information, call or text Nina Jordan at (732)331-5389