Planning to buy a house? The following list of terms will help you gain familiarity with what will be going on throughout the process.
Closing costs: Expenses incurred in the purchase and sale of property that are paid at the time of closing. They include title insurance, attorney fees, appraisal fees, recording fees and taxes.
Code of ethics: A standard of conduct required by license laws and by the National Association of Realtors.
Down payment: The amount of money a buyer pays upfront to purchase the property. This is typically around 10% of the total cost.
Escrow: A secure, third-party account for holding documents and money related to a loan. The money is released when all the terms of an agreement are met, reducing the risk of fraud.
Fair market value: The price for a property agreed upon between a buyer and seller in a competitive market.
Fixed-rate mortgage: A loan in which the interest rate does not change throughout the term of the loan.
Foreclosure: The lender takes possession of a mortgaged property as a result of the mortgage holder's failure to keep up payments. The lender sells the property to recoup the money owed.
Lock-in rate agreement: A guarantee from the lender that the applicant will receive a specified interest rate on the mortgage loan.
Market value: An estimation of the price for a property in relation to the current real estate market.
Net worth: The difference between your assets (what you own) and your liabilities (what you owe), it's used to determine if you quality for a loan.
Origination: The first step in the mortgage loan process, consisting of the completion of the application.
Pre-approval: A lender's estimate of how much you could be eligible to borrow, based on your credit history and income.
Real estate broker: An individual employed as an agent to bring buyers and sellers together and to assist in negotiating real estate contracts between them.
Security deposit (also known as earnest money): A sum of money turned over by the buyer when submitting an offer, to demonstrate the true intent to purchase. The money is kept in trust and is applied to the remaining cost when the transaction is settled.
Title: The documentation that an owner is in lawful possession of the property.