Having a basic understanding of important real estate concepts before you begin the home buying process will give you peace of mind now and could save you a fortune in the future. Here are five real estate terms you should know before looking for a home.
1. Buyer’s Agent vs. Listing Agent
Listing agents already have an established relationship with the Sellers. Their duty is to sell the house in the quickest amount of time and for the highest price possible. It is better for Buyers to find a realtor who will work for their best interests and do their best to get the best price for the home.
2. Fixed Rate vs. Adjustable Rate Mortgages
Conventional loans cover “fixed rate” and “adjustable rate” mortgages. A fixed rate mortgage has a set interest rate throughout the length of the loan; the most common typically last for up to 30 years. An adjustable rate mortgage has a variable interest rate; the most common being for 5, 7, or 10 years.
3. Pre-Approval Letter
Before you apply for a mortgage or before you even start looking for a home, you should receive a pre-approval letter from the bank. The letter is an estimate of how much the bank is willing to lend you. This is a huge help in determining what you can afford and ensures home sellers that you will be able to get a loan when needed.
4. Closing Costs
When you finally purchase your home, prepare yourself for several closing fees. Typically, closing costs will amount to 2-5% of the purchase price of the home, and that doesn’t include the down payment. Typical fees include excise tax, loan processing costs and title insurance. For more specific information on closing costs, contact your real estate agent.
5. Title Insurance
After all the negotiating is done and the seller has accepted your offer, you should receive a home title report in approximately a week. Mortgage lenders usually require you to pay title insurance as part of the closing costs; title insurers search the public records to make sure the seller has access to the title and that there are no liens on the home.
For more real estate terms and tips, you can sign up to receive our FREE home buyers guide here. If you still have questions or are ready to start touring homes, contact us here or call 407-493-0719, we would be happy to help.