Whether you are buying your fifth house or becoming a first-time homebuyer, the process can be difficult and confusing, to say the very least. With piles of paperwork, terms, inspections, fees, and costs that seem never-ending, the very best thing you can do for yourself is work with a trusted and respected real estate agent. But if you find yourself in the beginning thought process of buying a home, you will find yourself faced with an abundance terminology that you may not be familiar with.
Here is a list of terms that you should know if you’re looking for a home for sale in Scottsdale.
Amortization– unlike a typical mortgage where you would pay the interest first and then the principal at the end of the loan term, amortization is a system that combines the interest and principal together.
Assessed Value– the dollar value assigned to a home by a public tax assessor. Keep in mind that this value may be different than the value from a private assessor or what the market will yield.
Cash Reserves– the money that the buyer has left over after the down payment and all closing costs.
Closing– the meeting in which the sale becomes final when the buyer and seller exchange funds and sign documents.
Closing Costs– expenses and fees paid by the buyer, which may include commissions, mortgage fees, recording fees, title insurance and others.
CMA– also known as a comparative market analysis, which is a report of similar homes in the area that were recently sold or are currently on the market to help determine an accurate value for the home of interest.
Contingency– a clause in an agreement that keeps things from being legally binding unless a condition(s) is met.
Earnest Money Deposit– when an offer is placed on a home, an earnest money deposit sometimes accompanies it to show the seller that there is serious interest.
Equity– the difference between the home’s fair market value and the unpaid balance of the mortgage.
Escrow– an account set up by the lender that receives monthly payments from buyers to pay for things like insurance or taxes.
Home Warranty– sellers and buyers can buy a warranty to protect their home from future issues.
MLS– multiple listing service is an organization that collects and distributes home sale information to its members.
Mortgage Broker– an individual or company that brings together lenders and borrowers. Mortgage brokers do not fund the loan, unlike a bank.
Point– a point is equal to 1% of the value of the mortgage loan. Buyers have the option of buying discount points by paying for more money upfront in exchange for a lower interest rate.
Private Mortgage Insurance– an insurance premium that is paid for by the buyer to the lender in order to protect the lender if you are unable to pay your mortgage. Once 20% equity in the home is reached, the insurance is discontinued.
Title Insurance– an insurance policy that protects the owner or lender interest in the property from unexpected claims of ownership.
These are just a few of the most common terms that you will come across in your home buying experience. As mentioned before, the best thing you can do for yourself when the time comes is to find yourself a trusted real estate agent. Jeff Barchi is one of the most respected names in the Phoenix market. With over 17 years of experience and a proven track record of success and client satisfaction, Jeff Barchi will help you find your dream home.