Real Estate Terms for First Time Home Buyers



The world of real estate can be quite confusing for a first time buyer, and it never hurts to have a head start in the terminology you will encounter. From simple to complicated we decode the jargon for you. Comment with any questions! {interested in the home above?}

SIMPLE TERMS

Appraisal

An appraisal is made by a neutral third party and determines the approximate value of the house. The appraisal will not always be the same as the asking price of the house, but it is required by the lender – who also chooses the appraiser.

Offer

The purchaser makes a bid to purchase a home – called an offer.

Comps

Comps are properties comparable to the one being considered, used to evaluate it properly.

Purchase and Sale Agreement

The buyer receives this document to sign after an offer has been accepted (including the final sale price and any other terms of the offer).

Under Contract

After the Purchase and Sale Agreement has been signed, a property is now Under Contract. Once Under Contract, financing and inspections are the only things left to do before closing.

Pending

A home is usually labeled “Pending” or “Sale Pending” once an offer has been made and all contingencies have been cleared – meaning the agreement has been signed and the financing and inspections are complete. Other outside buyers can still make a backup offer in case the primary buyer makes an emergency exit!

Closing

This is the completion of the sale of the house. The buyer and their real estate agent or attorney meets with the seller and their agent or attorney to finalize the purchase with the escrow agent, and sometimes an agent of the lender as well.

Down Payment

This is the amount that the home buyer “pays up front” and depending on the lender, is anywhere from 3% to 20% of the purchase price.

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{interested in the Dallas home above? brand new construction!}

Escrow

A neutral third party that uses the purchase agreement as instructions to ensure that the transfer of funds from buyer to seller and transfer of the house from seller to buyer goes smoothly.

Mortgage

This is the legal document that pledges the house to the lender – as conditional security for making the loan to the home buyer.

Fixed-Rate Mortgage

This is a type of mortgage in which the interest rate of the loan does not change over time – the rate is “fixed” to what was agreed upon at the time of the mortgage’s signing.

Deed

The Deed is the legal document that provides proof of the transfer of ownership of a property.

Terms5

COMPLEX TERMS

Amortization Schedule

This is the schedule of payments (with interest) towards paying off a debt.

Lien

A lien is filed against a property as security for the payment of a debt or charges incurred from work done to the property. Liens are filed by courts or workers (a Mechanic’s Lien) and generally, liens must be settled and removed before a lender will make a loan for a mortgage. A lien is a type of Encumbrance.

Encumbrance

An encumbrance is a type of liability or claim on a property.

Unencumbered Property

A property free of liens.

Debt to Equity Ratio

The method used by banks to determine how much cash the borrower should invest to obtain a mortgage. It is usually about 10-25% of the purchase price, and the amount is dependent on the borrower’s income.

Open Listing

This is a property for sale by in which the owner does not have a solitary, exclusive broker. The owner might have many, or none – and attempting the sale on their own.

Joist

A little known term for wooden supports used in the construction of floors and ceilings.

Covenant

This is a guarantee made in writing.

Are you ready to start your search for a home? It’s important to know these terms going into the home buying process, and Victoria will be by your side to the very end! Call Victoria 214-213-2593 or email her at victoriabarr[at]ebby[dot]com. To view all her listings, go to www.dallashomesbyvictoria.com and be sure to visit her Facebook, Twitter and YouTube pages!

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About Victoria Barr de Quinones

Ask Victoria Barr, and she will tell you that "to know Dallas is to love Dallas.” And she would like to be the one to show it to you.Primarily specializing in the luxury markets of the Park Cities, Preston Hollow, Devoonshire, Bluffview, Lakewood, Uptown, and downtown Dallas, Southlake and Westlake. Victoria Barr de Quinones is an award-winning leader in the real estate industry. “People ask me what areas I represent, but truly what I represent are my clients,” she says. “I work in any area that helps them meet their real estate goals, whether its schools, price point, style, location, or investment strategy.”
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