Purchasing a home is a major undertaking—especially since real estate has a language all its own. As a first-time buyer, it’s likely you’ll encounter several terms you’re unfamiliar with throughout the process. However, learning some of the jargon is crucial for communicating with your agent and making educated decisions. Below are a few examples of the terminology you should know.
Real Estate Vocabulary for New Homebuyers
Realtors assist homebuyers and sellers in the completion of a real estate transaction. This term is often used interchangeably with real estate agent, but these professionals are different from one another. While both are licensed, a Realtor is distinguishable by their membership with the National Association of REALTORS®, which means that they have committed to certain ethical standards of practice and passed specific tests.
A mortgage is a loan used to finance a home purchase. Buyers may choose either a fixed-rate mortgage, which keeps the same interest rate throughout the length of the loan, or an adjustable-rate mortgage, where the interest rate may fluctuate up and down. When a mortgage is taken out, buyers will also pay an annual percentage rate (APR). This is an expressed percentage that represents the actual yearly cost of borrowing and includes the interest rate along with other fees you pay to get the loan.
An appraisal is the evaluation of a property’s value based on the expert opinion of a certified appraiser. This process typically involves comparing recent sales of similar homes. The data in an appraisal report helps determine how much a lender is willing to loan for the property. This is different from an assessment, which determines a home’s value for the purpose of assigning property taxes.
This is the final meeting between a homebuyer and seller where ownership of the property is transferred. During closing, the deed is signed over to the buyer, who will then be responsible for paying closing costs and signing the mortgage documents. Closing costs can cover a variety of expenses associated with the home sale, including taxes, loan processing, the title search, the appraisal, and legal assistance.
Having an understanding of these common terms will help make your journey toward homeownership as seamless as possible. When you work with Colorado Realtor and real estate agent Cheri Long of Priority Properties, Inc., you will receive personalized service and valuable guidance through the entire home buying process, utilizing her 25 years of experience. Call (303) 263-2072 to schedule an appointment. Visit her website to view current property listings available across the Denver metro area.