Real Estate Lingo
Ever hear a Realtor or Mortgage Lender ramble off a bunch of words that you have no idea the meaning of? That is what this post is for! Take a look at a list of Real Estate lingo to help you better understand the process, and what the heck we are talking about!
Appraisal: A licensed appraiser's opinion of a home's market value based on comparable recent sales of homes in the neighborhood.
Asset: Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds and so on)
Chain of Title: The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Clear Title: A Title the tis free of liens or legal questions as to ownership of the property.
Clear to Close: One of the final stages before your loan is funded
Closing Costs: Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount places in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country: lenders or Realtors often provide estimates of closing costs to prospective homebuyers.
Contingent: After an offer has been accepted, finalization of the closing can be contingent on the certain terms, i.e., inspection, appraisal, sale of another home, etc.
Deed: The legal document conveying title to a property.
Disclosures: Obligation of a seller to disclose potential problems to a prospective buyer that could affect the value of the property being sold.
DTI (Debt to Income): A metric the lenders analyze when considering whether to issue a loan to a specific borrower. This calculates the total amount of debt that a borrower has against their income in order to assess the borrower's ability to repay a loan.
Earnest Money: A deposit made to a seller indicating the buyer's good faith in an agreement. Money goes towards down payment.
Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.
Escrow: An item of value, money or documents deposited with a third party that is to be delivered upon the fulfillment of a condition.
Inspection: Examination of the home for its condition. Handled by a licensed professional of your choosing
Inspection: Examination by a licensed inspector of the homes condition inside and out, paid for by the potential buyer.
Insurance: A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.
Offer: An Agreement between a buyer and seller to purchase real estate. Also referred to as the sales contract.
P.I.T.I (Principal, Interest, Taxes & Insurance): The four components of a monthly mortgage payment. Principal refers to the part of the monthly payment that reduces the remaining balance of the mortgage. Interest is the fee charged for borrowing the money. Taxes and insurance refer to the amounts that are paid into an escrow account each month for property taxes and mortgage and hazard insurance.
Title: The bundle of rights for a property, which will be handed to you by the Title company to accept.
Title Insurance: Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower's creditworthiness and the quality of the property itself.