For the home-buying newbie, there is much to learn, and while the experience of finding that first home should be fun, it's also a little intimidating. Every business has its own jargon and real estate is no exception. If you are hearing a lot of real estate words that you don't quite understand fully, you are definitely not alone.
Escrow, of course, is a word with which you soon will be familiar. People will often state that a property is "in escrow," making it seem like this a specific period of time. Actually, escrow is a special account that is set up by a third party to handle the transfer of money between the buyer and seller. For about 30 days (or perhaps longer) this account will be opened and once your loan is funded, the account will be closed and you will be the new owner.
Your mortgage is probably going to be a big focus of your life in the coming years, and there are quite a few different types of mortgages. In general, you will hear the terms "fixed" or "fixed-rate" or "adjustable" when you talk with a lender. Your mortgage payment has two parts. One part pays down the amount that you owe the lender or bank. The other part is a payment of interest. A fixed-rate mortgage has a rate of interest that never changes. An adjustable-rate mortgage or ARM can change every year, which means your monthly mortgage payment also can go up or down every year.
Closing costs are yet another interesting term you will hear. These are the expenses relating to the closing of an escrow account. There are quite a few items that must be paid for during the escrow process and this includes appraisals, title insurance, recording fees, notary fees and commissions to the realtors. Typically, the sellers pay the real estate commission, which is the biggest chunk of closing costs, but buyers are responsible for paying for many of these expenses.
Appraisals and inspections are going to become important words in your vocabulary. An inspection is pretty easy to understand, and the buyers will pay for one or more inspections to ensure that the property is in good condition. Buyers also pay for a home appraisal, and this is done in order to secure your loan. The appraisal must show that the home is worth what you are paying for it. So, if you are purchasing a home for $400,000, but the appraisal comes back at $385,000, the bank might not lend you the money for the home, because it simply looks like a bad deal to them. If you have the same purchase price, but the appraisal comes back at $400,000, you will be fine, and if the appraisal is even higher, then you probably are getting the home for an excellent price.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
Escrow, of course, is a word with which you soon will be familiar. People will often state that a property is "in escrow," making it seem like this a specific period of time. Actually, escrow is a special account that is set up by a third party to handle the transfer of money between the buyer and seller. For about 30 days (or perhaps longer) this account will be opened and once your loan is funded, the account will be closed and you will be the new owner.
Your mortgage is probably going to be a big focus of your life in the coming years, and there are quite a few different types of mortgages. In general, you will hear the terms "fixed" or "fixed-rate" or "adjustable" when you talk with a lender. Your mortgage payment has two parts. One part pays down the amount that you owe the lender or bank. The other part is a payment of interest. A fixed-rate mortgage has a rate of interest that never changes. An adjustable-rate mortgage or ARM can change every year, which means your monthly mortgage payment also can go up or down every year.
Closing costs are yet another interesting term you will hear. These are the expenses relating to the closing of an escrow account. There are quite a few items that must be paid for during the escrow process and this includes appraisals, title insurance, recording fees, notary fees and commissions to the realtors. Typically, the sellers pay the real estate commission, which is the biggest chunk of closing costs, but buyers are responsible for paying for many of these expenses.
Appraisals and inspections are going to become important words in your vocabulary. An inspection is pretty easy to understand, and the buyers will pay for one or more inspections to ensure that the property is in good condition. Buyers also pay for a home appraisal, and this is done in order to secure your loan. The appraisal must show that the home is worth what you are paying for it. So, if you are purchasing a home for $400,000, but the appraisal comes back at $385,000, the bank might not lend you the money for the home, because it simply looks like a bad deal to them. If you have the same purchase price, but the appraisal comes back at $400,000, you will be fine, and if the appraisal is even higher, then you probably are getting the home for an excellent price.
Of course there are plenty of other confusing terms you will hear, and that's why it's great to have an experienced real estate agent on your side. The realtors at Nixon Real Estate, for instance, not only can help you find a great piece of Fredericksburg real estate or Texas Hill Country real estate, they can also clear up many of the mysteries that accompany the process of buying your first home.
About the Author:
Pammy McGrath enjoys reading real estate blogs. If you are searching for licensed Texas Hill Country real estate agents, or to discover homes for sale in Fredericksburg TX, please go to the NixonRealEstate.com site today.
