It’s not uncommon for home buyers to have questions about basic real estate concepts and terminology. It’s part of a realtor’s job to guide their clients through this process as they make what’s likely the biggest purchase of their lives. Reach out to one of our agents if you have more questions, we are always ready to help!
Active Under Contract- A house is listed as “active under contract” when the seller has accepted an offer with contingencies, but still wants the house to be actively listed. In this situation, the seller may be accepting backup offers in case their current offer fails to meet its contingencies.
Appraisal-is an unbiased estimate of how much a home is worth. It is typical for a lender to require an appraisal by a third party (the appraiser) to make sure the loan amount requested is accurate.
Clear Title Also known as a "just title," "good title," or a "free and clear title". A clear title doesn’t have any kind of lien or levy from creditors. It means there's no question of legal ownership of the property.
Closing Costs expenses outside the purchase price of the property, necessary to transfer legal ownership of property. As a general rule, they are 2-5% of the purchase price. They may include such items as; attorney fees, title search, title insurance, taxes, lender costs, recording fees…
Contingency are certain events that must occur or the contract can be considered void. I.E. successful building inspections, other testing, a passed appraisal…
Earnest money deposit is a deposit (usually 1-2% of the home’s total purchase price) made by a home buyer at the time they enter into a contract with a seller. Earnest money indicates the buyer's interest in the property and is typically deducted from your total down payment and closing costs.
Easement-A legal right to use another person’s land or property while leaving the title in the owner's name.
Escrow-is part of the home buying transaction. It happens when a third party holds something of value during the transaction.
Home Inspection-an evaluation by an impartial third party to determine the condition of a property during a real estate transaction. An inspector will report on such things as a home’s heating system, the stability of the foundation, and the condition of the roof. The purpose of the inspection is to identify major issues that might affect the value of the home and the stability of your and your lender’s investment and return.
Loan to Value is the ratio of the mortgage loan balance divided by the home’s value. It shows how much you’re borrowing from a lender as a percentage of your home’s appraised value. The higher your LTV, the riskier you’ll appear during the loan underwriting process because a low down payment denotes less equity or ownership in your property