Jan 22, 2024
Homebuyer Glossary: Key Words Homeowners Need to Know [Infographic]
Buying a home can feel especially complicated if you’re new to the process and don’t know the terms to expect. If you want to become a homeowner this year, it’s a good idea to learn these housing key words. Once you do, you’ll feel more confident and better informed.
Affordability
- A measure of whether someone earns enough to qualify for a loan on a typical home based on the most recent price, income and mortgage rate data
- When home prices and mortgage rates are higher, it can impact affordability.
Appraisal
- A report highlighting the estimated value of the property completed by a qualified third party.
- Lenders rely on appraisals to validate a home’s value and ensure they’re not lending more than a home is worth.
Closing Costs
- The fees required to complete the real estate transaction, which is paid at closing
- Ask your lender for a complete list of closing cost items, including points, taxes, title insurance, and more.
Credit Score
- A number ranging from 300-850 that’s based on an analysis of your credit history
- This helps lenders determine the likelihood that you’ll repay your rates
Down Payment
- Down payments are typically 3.5 – 20% of the purchase price of the home. Some 0% down programs are also available.
- Ask your lender for more information about what you may qualify for.
Equity
- The value of your home above the total amount of liens against your home
- Many homeowners are realizing they have more equity than they thought and they’re using it to move.
Inspection Contingency
- A provision in a contract requiring an inspection to be completed
- This essential step gives you information on the home’s condition and potential repairs.
Mortgage
- A loan using your home as collateral. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house.
- The amount of your mortgage is often the purchase price of the home minus your down payment.
Mortgage Rate
- The interest rate you pay to borrow money when buying a home
- As mortgage rates fluctuate, consult a lender so you know how it can impact your monthly mortgage payment.
Pre-Approval Letter
- A letter from a lender that shows what they’re willing to lend you for your home loan.
- This, plus an understanding of your savings, can help you decide on your target price range.
Final Thought
These terms are used throughout the homebuying process. Having a basic understanding of what they mean enables you to ask questions and feel confident when shopping for a home. Speak with your local real estate expert to help you achieve your homebuying goals.
Related Article: Are You Ready to Buy?
Adapted from KCM.
You may be interested in:
As spring approaches, many homeowners gearing up to sell their homes face the daunting task of moving. However, with some innovative strategies and the right supplies, you can make the process smoother and more efficient. Here are five tips tailored specifically for home sellers embarking on a spring move:
As spring approaches and the real estate market begins to bloom, homeowners gearing up to sell their homes are undoubtedly eager to secure the best offer possible. The key to achieving this lies in understanding how real estate agents value properties and determine listing prices. Here's a glimpse into the process:
Before making the decision to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re saving for the down payment for your new home, don’t forget you’ll need to prepare for closing costs too.
As the spring market approaches, prospective home sellers are gearing up to showcase their properties in the best possible light. One of the most crucial aspects of attracting potential buyers is curb appeal – the first impression your home makes from the street. Here's your comprehensive guide to preparing your home for the spring market and maximizing its curb appeal:
Testing a sprinkler system is crucial to ensure proper functionality and efficient irrigation for your lawn and garden. Here's a step-by-step guide on how to test your sprinkler system:
Stepping into the world of renting your first apartment is an exciting milestone, but it can also be daunting, especially when it comes to figuring out your budget. As a prospective renter who's new to living on your own, establishing a realistic budget is essential for ensuring financial stability and peace of mind. Here's a beginner's guide to help you navigate the process:
Following an annual maintenance routine helps homeowners avoid costly repairs, property damage, and keeps home a happy, healthy, and safe place for family and visitors alike.
If you’re in the market for a new home, avoid these 4 homebuying mistakes to optimize your experience and set yourself up for success. How do you know if you’re ready to buy? Ask yourself these questions to find out if you’re ready to be a homeowner.
No matter what stage of life you’re in, buying or selling a home is a big decision. When you’ve made big decisions in the past, what have you done? You’ve probably done some research on your own, and then asked for advice and guidance from someone you consider to be extremely knowledgeable. Big decisions lead to big changes and moving is no exception. There are a lot of factors at play when deciding on new living arrangements. You need insights from experts to help you feel confident and make the right choice.
Stay Inspired
Be the first to get new real estate advice and updates. We won't spam you.
400 Broadhollow Road, Suite 5, Farmingdale, NY 11735