If you’re venturing into the complicated world of real estate for the first time, you’re going to encounter a lot of technical jargon that may be difficult to understand. But don’t worry, we’ve defined some common real estate terms for you right here.
Before you set out to seek the financing required to purchase a property, you’ll need to get an appraisal done.
An appraisal is the process of determining the value of a property and its developments. Appraisers take the property’s condition and the prices of similar homes in the area into account.
Instead of paying off only the interest initially, the combined payment of the interest and the capital is called amortization. This process allows investors to build greater equity in the home in the initial years.
This is an estimate of the home’s value—as determined by a public tax assessor. Determining the assessed value helps you figure out how much tax the owner must pay.
A traditional fixed-rate mortgage requires the owner to pay the loan off in installments. A balloon mortgage, however, requires the owner to pay the entire amount in one lump sum.
This is a short-term loan that owners take out against property for financing the purchase of another asset. The period of the loan can vary from a couple of weeks to three years.
Call options are future contracts that allow buyers to buy and sellers to sell a property at a future time, at a specific price.
Chain of title
The chain of title documents all the owners of a property, starting from the first owner to the present one.
Closing refers to the final stage of the transaction. It is put into effect when the buyer and seller both sign the contract. On the closing date, the property transfer to the buyer is final.
Closing costs are paid near the closing date. They usually are 2–5% of the home’s purchase price.
Easement refers to the process through which another individual is given the right to use a property while the title is in the owner’s name.
If an owner builds or extends their property such that it extends onto a neighbor’s land, that is known as encroachment.
Home equity is the part of the property that you own. Until you pay off your mortgage, the lender has an interest in your property. You own all of your property after paying the mortgage.
The terms mentioned above are just some of the typical words you may come across. Remember, the process of buying or selling is technical and is best conducted by real estate agents.
If you’re looking to invest in residential real estate, Phillip Fehler Realtor, a Broker of Fathom Realty, offers real estate services in Fayetteville, NC. With several real estate listings with them, they can help you make a worthy investment.