ABCs of Real Estate
Everyone knows their ABCs, right? Well here at Advon, our industry leaders want to teach you the ABCs or Real Estate to help guide you home.
A| Appraisal: An estimation of a home’s market value by a licensed appraiser based on comparable recent sales of homes nearby.
B| Backup Offer: A secondary offer on a home that is under contract and becomes active if the primary contract falls through.
C| Contingent Offer: An off is accepted by the seller, but certain conditions must be met before the sale is final.
D| Down payment: The percentage of the home purchase price (usually between 5%-20%) paid upfront in cash.
E| Escrow: A neutral third party that holds funds from the buyer and distributes them when all conditions have been met.
F| Federal Housing Administration (FHA): The government agency that insures loans designed for low to moderate income borrowers.
G| Good Faith Estimate (GFE): Provided by the lender to a borrower, GFE was an estimate of fees due at closing. New Mortgage rules in 2015 replaces this form with one called a Loan Estimate.
H| Home Owner’s Association: A management organization within a community, subdivision or neighborhood that creates and enforces rules for properties within its jurisdiction.
I| Inspection: An examination of property and its systems performed by a qualified professional, usually before the sale of a home.
J| Jumbo Mortgage: A mortgage that exceeds the conforming-loan limit, commonly used for luxury home purchases
K| Key rate: An interest rate set by the federal government that determines the cost to borrow money- in this case, a mortgage to buy a home.
L| Loan to Value (LTV): The risk assessment ration used by lenders to calculate the LTV, divide the mortgage amount by the appraised value
M| Multiple Listing Service (MLS): A database for real estate agents to list and market for-sale homes.
N| Net proceeds: The amount received by the seller at closing after all other costs have been deducted.
O| Open House: An event hosted by a listing agent to showcase a home to potential buyers.
P| Pre-approval letter: A letter indicating that a lender is willing to loan a specific amount of money for a home purchase; pre-approval does not guarantee a loan.
Q| Quitclaim deed: A deed that transfers property rights without any validation of ownership: typically used between spouses and family members.
R| Real Estate Owned (REO) property: A repossessed property owned by a lender after an unsuccessful sale at auction.
S| Seller disclosure: A document completed by the seller disclosing the property’s history and defects.
T| Title: The right to ownership of real property recognized and protected by the law.
U| Under Contract: A buyer has submitted an accepted offer, but the closing is not yet final.
V| VA loan: A mortgage loan for veterans and their spouses, made by private lenders and guaranteed by the US Government.
W| Walkthrough: The final inspection conducted before the sale is final.
X|X marks the spot: Where you sign on the dotted line for your dream home.
Y| Yield-Spread Premium (YSP): The amount a lender pays a mortgage officer for selling a loan with a higher interest rate than the par rate.
Z| Zero lot lines: A residence built very close to- or directly on- the property line.