A Shortlist of Real Estate Terms
If you've never sold or bought a home, or it's been a minute since you completed a life-changing transaction, here's a shortlist or min-glossary of important terminology that'll help you with your next significant move.
You'll find that the term Mortgage and Home Loan are used interchangeably, like a pre-approved mortgage or pre-approved home loan. A home mortgage is a secured loan that is specific to real estate and purchasing a residence. The mortgage is a legal document you sign agreeing to pay back in full the loan amount you owe, and the home is the collateral to ensure payment back to the creditor. This document allows you to live in or make use of the house while making payments on your loan. Then there are home equity loans, the second type of mortgage after your home has incurred equity.
Pre-Qualified for a Home Loan or Mortgage
In only a few hours or a day, you can be pre-qualified for an estimated loan amount. The process provides a quick high-level estimate based on the information you share with the lender regarding your income, assets, and debts. It doesn't qualify you for an actual amount, just an estimated one, and the process doesn't validate essential aspects like your history and credit score. If you don't get pre-approved, you should at least look at being pre-qualified to show the seller you most-likely have the means to purchase the home.
Pre-Approved for a Home Loan or Mortgage
If you are serious about buying, want to show the sellers you are, and want to move quickly on an offer, then getting pre-approved is your next step. This step involves filling out a full mortgage application and includes the lender completing a full financial background credit check. The end result is you will know the loan amount you can afford and the interest rate. The amount approved is no longer an estimate but the specific loan amount you can use to purchase a home.
Get the details onpre-approved vs. pre-qualified here.
A 'contingent' listing means the seller has accepted the offer and will move forward with the sale as long as certain agreed conditions between buyer and seller are met. As a prospective buyer who sees this on a listing, you can still swoop in and make an offer, should the contingencies not be met. You may have a chance to purchase the home as a backup offer.
A 'pending' listing means all contingencies were satisfied, and the sale is moving forward to closing. More than likely, the deal between parties will complete in this stage unless there was a critical error made. As a buyer who has an eye on a home in this status, you may have a small chance to provide a backup offer, but it is pretty slim. Your options are better under contingent and even better when a home is for sale and not in the middle of contract status. Make your offers wisely.
As with all things, most purchases include additional fees. Selling a home is no different. Due to all the paperwork and resources it takes to complete the transaction, there is a long list of fees to pay on top of the home’s sale price. Closing costs are an added expense that many forget to budget for. Be sure to ask questions if you are unsure about a certain fee or fees listed in the closing cost.
Private Mortgage Insurance or PMI
A lender may require you to pay PMI if you put less than 20% down on the home purchase. The lender may offer to add the PMI as part of the loan or provide you the ability to pay upfront. The PMI is insurance for a lender if you have issues with not paying the mortgage. To avoid paying a PMI, consider putting a timeline together when you think you'll be able to afford to purchase a home and save, save, save to put 20% down on a price that fits your budget.
First-time Homebuyer - The Top Three Frequently Asked Questions
Local Getaway Northeast Portland and Kennedy School
Staging Ideas for Selling Your Home in Fall and Winter
A Shortlist of Real Estate Terms
Buying a House in the Winter
HOA? Beware the Rules and Regulations!
3 Important Aspects of the Purchase Agreement