Common Real Estate Terms
Here are some common real estate terms that buyers should be familiar with:
Appraisal: An appraisal is a professional assessment of a property's value conducted by a licensed appraiser. It determines the fair market value of the property and is typically required by lenders before approving a mortgage loan. Heritage Land Bank has its own in-house appraisal team to help expedite conducting and reviewing appraisals.
Closing: Closing, also known as settlement, is the final stage of a real estate transaction when the property ownership is transferred from the seller to the buyer. It involves signing the necessary documents, paying closing costs, and disbursing funds.
Equity: Equity refers to the portion of the property's value that is owned by the homeowner, calculated by subtracting the outstanding mortgage balance from the property's market value. It represents the homeowner's financial interest in the property.
Escrow: Escrow is a process in which a neutral third party holds and manages funds and documents on behalf of the buyer and seller during a real estate transaction. It ensures that all conditions and requirements are met before the transfer of ownership and funds takes place.
Mortgage: A mortgage is a loan provided by a lender to finance the purchase of real estate. The property itself serves as collateral for the loan, and the buyer makes regular payments over a specified term until the loan is fully repaid.
Pre-approval: Pre-approval is the process of obtaining a lender's conditional commitment for a mortgage loan. It involves a thorough evaluation of the buyer's creditworthiness, income, and financial documents. A pre-approval letter strengthens the buyer's position when making an offer on a property.
Title: Title refers to legal ownership of a property. A title search is conducted to verify the ownership history and ensure that there are no liens, claims, or other encumbrances that could affect the property's transfer.
Contingency: A contingency is a condition or requirement that must be met for a real estate contract to be binding. Common contingencies include home inspection, financing, and appraisal contingencies. If a contingency is not satisfied, the contract may be terminated without penalty.
Understanding these terms can help buyers navigate the real estate process more confidently and effectively. However, it's essential to consult with lenders like Heritage Land Bank, real estate professionals, such as agents, brokers, or attorneys, who can provide detailed explanations and guidance throughout the buying process.