Whether you are buying or selling a home, there is one thing for sure. There are a lot of terms used during the process! Knowing just a few critical real estate concepts will go a long way in helping you understand the process. In addition, understanding the process means you will understand what to expect and that will undoubtedly help settle your nerves. So let’s help you gain a basic understanding of real estate terms.
Buyer’s Agent vs. Listing Agent
In most home sales, two agents are involved. For example, the buyer’s agent represents you when you buy a home, whereas the listing agent represents the home seller. In some cases, there are scenarios where one agent represents both sides. This is called dual agency and is not permissible in some states.
Fixed-Rate vs. Adjustable Rate Mortgages
When shopping for a loan, two options will be fixed-rate and adjustable-rate. A fixed-rate mortgage has a locked-in interest rate for the life of the loan. These types of mortgages usually are 15 or 30-year loans. A mortgage with an adjustable rate has a rate that changes and usually ranges from 5 to 10 years.
If you plan on owning your home for longer than five years, a fixed rate should be your choice. However, an adjustable-rate mortgage makes sense if you plan to sell the house within a short period of time or if you refinance before the introductory period ends.
Buying a home takes time and some upfront work as well. Before you even think about looking around, find out what your bank is willing to finance for you. This is called a pre-approval letter. Knowing this information upfront will help tremendously in knowing what to look for in your new home, particularly when it comes to the price.
Once you have settled on a home you like and make an offer, the next step is the home inspection. These can range anywhere from $200 to $500 depending upon the size of the home and the market. Home inspectors ensure the house has no significant issues. They will look over plumbing, heating, electrical, the foundation, walls, and major appliances. If they find something wrong, you can either request it to be fixed or leverage it for a lower price.
When you make an offer on a home, you can stipulate certain things before the deal closes. These are contingencies. These would include securing the loan (financing contingency), that the home passes inspection (inspection contingency), and that what the house is appraised at is close to your offer (appraisal contingency).
Be prepared to pay some fees. These are called closing costs and can be around 2-5% of the purchase price of your home. Standard fees are excise tax, loan-processing fees, and title insurance. Also, make sure you research how much you will pay in closing costs as some may be negotiable.
Knowledge is a great thing to have. Knowing what some real estate terms mean can help you tremendously with your next home purchase. So if a new home purchase is in your future, I’m here for you! Call me at 717-253-3259 (cellphone) or visit my website at www.karentavenner.com.