The real estate market can be an intimidating place if you are taking it on for the first time. You are in the process of making costly and long-term decisions so it’s important to be prepared. You need to make sure you know exactly what you are looking for and what you should be doing in order to make the best decisions for your real estate future. One of the best ways to get ready before you head into the real estate market is to learn your real estate terminology. Here are the top six terms that you need to know and when they will come up during your real estate transaction.
- Appraisal. An appraisal is a written justification of a price paid for a house, usually made by an appraiser. This price is made based on the price of similar homes in the area. You will need this as a seller when you are trying to determine how much to ask for your house. As a buyer, you will need this amount when asking the bank for a loan.
- Closing Costs. Closing costs are either paid by the buyer or by the seller. Some examples of closing costs include: attorney feels, title service fees, recording fees, mortgage application fees and appraisal fees. Be prepared for extra costs when it comes to finalizing your sale.
- Counteroffer. A counteroffer is when a buyer makes an offer on a house and the seller won’t accept that amount but offers a higher amount.
- Escrow. When the process of selling your home is in escrow, it means that an item of value, money or documents is given to a third party to hold until the transaction is closed.
- EMD. EMD stands for an earnest money deposit. This means a partial payment or deposit is paid showing you are committed to a contractual relationship with the seller. This payment is made when you are making a purchase offer. The balance of payment is due on the closing date. A seller gets to keep this money if a buyer fails to make a payment in full on time.
- PITI. PITI stands for expenses that make up your mortgage payment and it’s helpful to know what those are: principal, interest, taxes and homeowners insurance.
There are several other terms that are helpful when you are in the process of buying or selling your home. Don’t hesitate to ask questions. You want to make sure you are armed with all possible information before making a serious investment.