When buying or selling a house, it is important to know the lingo used in the real estate world. There are several terms that you should be familiar with when you are buying or selling. Keep in mind, this is not an extensive list, but we think these are some of the most important terms to know.
Acceptance
This is the final piece that constitutes a contract between buyer and seller. It is the agreement on the terms of the offer in place.
Appraisal
An appraisal determines the value of something. An expert will examine the home you wish to buy to determine the worth of the house in order to verify the selling price matches the worth. The examination compares the property’s initial purchase price and asking price to other nearby recently sold properties. In cases where the appraisal comes back lower than the asking price, the lender can refuse to fund the loan.
Adjustable Rate Mortgage (ARM)
This type of mortgage is one in which the interest rate applied on the outstanding balance varies during the duration of the life of the loan. Typically, the initial interest rate is fixed for a period of time before it then begins adjusting.
Buyer’s or Seller’s Market
In a buyer’s market, there are more sellers than buyers, which creates lower home prices, and, in turn, difficulty for sellers. In a seller’s market, there are more buyers than sellers, less homes on the market and higher home prices.
Contingency
This is a provision in a contract stating that specific terms can be changed or voided depending on if/when specific events occur. For example:, there can be a contingency provision stating that the buyer does not have to follow through with the purchase if an inspection comes back subpar.
Conveys with Sale
Sometimes sellers will include appliances, furniture, decorations, electronics, etc. in the price of the home at no extra cost.
Multiple Listing Service (MLS)
MLS is a technology that provides real estate professionals with detailed listings of homes currently on the market.
Prepayment Penalty
Did you know you could actually get penalized for paying off a mortgage before its due date? While this is more rare, some lenders impose this fee to encourage borrowers to keep the debt and continue paying interest for the life of the loan.
Real Estate Broker
Different from the real estate agent, this person is licensed to negotiate the purchase and sale of real estate for a specified fee. Brokers are essentially more powerful than agents, as they act as a supervisor for their agents.
Short Sale
When a house is sold for less than the outstanding mortgage on it, a short sale occurs. For example: Jacob borrows $500,000 to purchase a home seven years ago, when the home was appraised at $500,000. He ended up losing his job and therefore falls behind on mortgage payments. Jacob decides to sell his home, but realizes his home is now only worth $410,000. The problem arises because there is still $485,000 left on the loan. Instead of seeking government assistance, Jacob can ask his lender for permission to sell the home for $410,000, and, in return, have his mortgage considered paid in full.
Our Armstrong Real Estate agents want to help you with the process of buying a home in Nashville. Click HERE to find the latest listings in Oak Hill! Give us a call @ 615.807.0579 for questions!
