Common real estate terms like “appraisal,” “down payment,” or “MLS” are things you will often hear as you navigate your home purchase and home sale. We believe knowledge is power, and in real estate, it is the key to navigating the market successfully. To boost your knowledge, here are some of the most common and important real estate terms to know, along with their definitions:
Appraisal:
- An assessment of a property’s value, conducted by a licensed appraiser; lenders use this to determine the loan amount
Buydown:
- A mortgage-financing technique where the lender agrees to lower the buyer’s interest rate for a few years in exchange for
some payment
Closing Costs:
- Fees associated with the finalization of a real estate transaction, including legal fees, title insurance, and other miscellaneous costs
Down Payment:
- The initial payment made by the buyer, usually a percentage of the home’s purchase price
Escrow:
- A process in which a neutral third party holds funds and documents during the real estate transaction until both parties fulfill their obligations
Home Inspection:
- An examination of a property’s condition, helping buyers identify potential issues before closing the deal
Multiple Listing Service:
- A database where real estate agents list properties for sale, providing a comprehensive resource for buyers and sellers; also known as MLS
Pre-Approval:
- A lender’s confirmation of a buyer’s ability to qualify for a mortgage, based on their credit and financial information; often given in the form of a letter
Learn about why pre-approval is a good thing to have when searching for a home here
Title Insurance:
- Protects against potential ownership disputes or defects in the property title
Learn about the importance of title insurance by clicking here
Underwriting:
- The process by which a lender evaluates a borrower’s creditworthiness and the risk associated with providing them a mortgage