This article provides a comprehensive overview of some of the most important real estate terms, so that purchasers can navigate the process with confidence and clarity.
One of the first terms to understand is the term “mortgage”. A mortgage is a loan used to purchase a home or other real estate. It is one of the largest financial commitments someone can make over their lifetime, so it’s important to understand what mortgages entail before signing any paperwork. Generally, a person will have to provide proof of income, acceptable credit history, and have enough money for a down payment in order to receive financing. Additionally, mortgages come with closing costs and often require private mortgage insurance (PMI) which increases the monthly payment amount.
The term “closing costs” is an umbrella term that refers to any fees or costs associated with buying a property. These can include appraisals, inspections, attorney fees, and more. In many cases, closing costs can add up to thousands of dollars and will need to be paid at the time of settlement.
Property taxes are another important real estate term that buyers should become familiar with. Property taxes are taxes assessed on a property based on its value. The amount of property taxes owed varies from state to state and can range from several hundred to several thousand dollars per year. Property taxes also vary depending on where the property is located, as well as its value.
Another term to understand is escrow. Escrow is when two parties—usually a buyer and seller—put money or documents in the care of a third party, until the conditions of the sale are met. Normally, both parties must agree on the details of the sale before the escrow is released to either participant.
Lastly, a property title is a legal document that proves ownership of a piece of real estate. The title identifies the owner of the property along with any liens or encumbrances. When transferring ownership of a property, the buyer and seller must execute a deed that transfers the property title from one party to the other.
This article provides a comprehensive overview of some of the most important real estate terms. Having a handle on these terms is vital to understanding the process of buying, selling, and owning real estate. By familiarizing oneself with these terms, potential buyers can move forward with confidence and clarity.
This article was contributed on Nov 20, 2023
