Real Estate Terms ImageBuying a home can be stressful for several reasons, but one is trying to understand the various terms that are used by realtors and in documents.

Trying to understand these on your own can be difficult if you’ve never purchased a house before or talked to a loan officer.

In order to have confidence as you’re reading through the various pages, here are some explanatory definitions of the most common terms.

Adjustable Rate Mortgage

Adjustable Rate Mortgage, ARM, is a common type or mortgage plan where the interest rates change regularly. As the housing market goes up and down, so do the interest payments attached to your mortgage balance.

This could work either for you or against you, but you’ll need to talk to a loan officer to understand what makes this rate change periodically.

Appraised Value

The Appraised Value of a home is what the going rate would be on the current housing market. After an appraiser has taken the time to inspect the property, they will tell you what the house would likely sell for based on competition and the features of the property.

Clear Titles

Clear Titles are necessary before you can legally purchase a home. If there are any tax liens against the property or other claims against the house, then the title cannot be transferred. In order to buy a home outright, the title must be clear without any attachment liens or taxes.

This is also the case with foreclosures when you purchase them from a bank. To acquire the property, you’ll need to pay any back taxes or payments that are owed. Once the house loan is brought current, the bank will start the process of transferring the title into your name.

Earnest Money Deposit

An Earnest Money Deposit is an amount of money deposited into a neutral escrow account. This shows the buyer and finance company that you are serious about following through with the purchase.

Once the sale has been completed, this money will be put towards any outstanding amounts that remain.

Fair Market Value

The Fair Market Value of a home shows the high and low range of selling a particular piece of real estate. The high figure is the most someone would be willing to pay and the low side is the smallest amount a seller would accept.

There are certainly several more terms to understand as you complete the purchase of a house, however, this is a good start. When you clearly understand what you’re reading, it allows you to make more profitable decisions and investments.

Use this and other educational resources found at OpenOffer.com to educate yourself before you buy your next property.

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This is filed under Home Buying.


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