Educating yourself is the best way you can make a sound real estate investment. Real estate deals are full of many complex terms you may not be familiar with, and through education you will better prepare yourself when making the decision to purchase a home, through the closing procedures. Here are some basic real estate terms that you should familiarize yourself if you’re thinking about buying a home.
A broker is a third party professional who is brought on board to handle the transaction between buyer and seller. A real estate agent may work for a broker, but this is not always the case. Closing refers to the process in which the buyer, seller and their attorneys meet to sign all the necessary documents that will transfer ownership of the house. Equity is the difference between the value of your home and the amount of money still owed on your home. This is not to be confused with escrow, which is when a third party holds a homebuyer’s money until the transfer of property is completed. Pre-qualification is a buyer’s first step in the home buying process, and reflects a mortgage lender’s good faith on the homebuyer. Prequalification makes it easier to purchase a home, because while it is not guaranteed, it is a sign of good faith that you will be approved for the loan. Once you’ve prequalified for a home loan you may request something called rate lock, that will guarantee the interest rate for a certain amount of time.
Understanding these basic terms, as well as other terms pertaining to the home buying process is a necessary part of being a responsible homebuyer. Familiarize yourself with as many facets of the home buying process as possible in order to understand everything that will happen during the process. Doing so will better your chances of having a seamless process as your buy your home.