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How to “Speak” Real Estate

How to “Speak” Real Estate

Those in the process of buying land, purchasing a new home, or even renting an apartment or condo are exposed to various real estate terms, which are probably better off explained in “layman’s terms.” The process of purchasing real estate is complicated, and real estate jargon does not make it any simpler. Fortunately, we are here to do that for you. Below, we have defined some of the most common terms thrown around in the real estate industry. 

Appraisal: An appraisal is an informed, unbiased opinion of the value of a home, prepared by a licensed and certified appraiser. This opinion is based on a combination of data regarding comparable homes in the area, as well as the appraiser’s personal walkthrough.

Back-end ratio: This is one of two debt-to-income ratios that a lender analyzes to determine whether a buyer is eligible for a home loan. This ratio compares the borrower’s monthly debt payments to his or her monthly income.

Buyer’s market: The term “buyer’s market” indicates it is an ideal time to purchase a new home. In this situation, homes for sale outnumber prospective buyers, causing prices to drop.

Cancellation of escrow: This is when a buyer backs out of a home purchase.

Closing: This is the meeting that takes place when the ownership of a home is transferred from seller to buyer.

Closing costs: When purchasing a home, closing costs are the fees due at the end of the sales transaction. They may include the home inspection, a title search, a pest inspection and more. 

Compliance agreement: A document signed by the buyer at closing, wherein he or she agrees to work with the lender if any mistakes in the loan documents need adjustments.

Down payment: When purchasing a home, a buyer must pay a certain percentage of the home’s purchase price upfront. There is usually a minimum requirement that is dictated by the loan type.

Equity: A percentage of the home’s value owned by the homeowner.

Foreclosure: A property repossessed by a bank when the owner fails to make mortgage payments.

Homeowner’s insurance: This is a policy that protects the structure of the home, living expenses, its contents, and injury to others should any sort of damage occur.

Listing price: The price of a home that is listed for sale.

Mortgage interest rate: How much it costs to borrow money. The base rate is set by the Federal Reserve and then adjusted per borrower, based on the down payment, credit score, property type, and the points the buyer pays to lower the rate.

Tax Lien: A tax lien is the government’s legal claim against a property when the homeowner neglects or fails to pay a tax debt.

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The Lauterbach Law Firm is proud to serve clients throughout Rockland County who are faced with legal matters related to estate planning, real estate, foreclosure defense, landlord-tenant law, business law, and criminal defense. If you require the services of an experienced team of attorneys, contact The Lauterbach Law Firm today to schedule a consultation.

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