When you enter into a real estate transaction, you’ll hear the involved parties use many industry terms. You’ll want to understand what each of these terms means so you know what to expect and so you can have more informed conversations with your real estate agent. Familiarize yourself with a few of the most common ones you can expect to hear during your upcoming sale or purchase.

Common Real Estate Terms Explained

1. Escrow

Escrow occurs when a neutral third party holds the funds and documents for your sale. It happens before closing and typically lasts for around 30 to 50 days. It begins when the seller accepts the buyer’s offer and is a time for home inspections, related re-negotiations, finalizing mortgage financing, getting title insurance, and more.

2. Appreciation & Depreciation

Appreciation and depreciation describe the change in a property’s value over time. Appreciation indicates a rise in value, while depreciation suggests a decrease in value. They are often affected by a change in the property or a shift in the real estate market.

3. Contingency

A contingency is a provision in a contract that outlines something that must happen, or else the agreement will be considered null and void. For example, a buyer may include one that the home must pass an appraisal at a specific value for the offer to be valid. A seller may require one that states they must first find another house to buy.

4. Fixed-Rate Mortgage

A fixed-rate mortgage loan (FRM) has an interest rate that remains the same throughout the entire life of the loan. These usually are 15 to 30 years periods with lower monthly payments. Someone may choose this if rates are currently low and they want to lock in their mortgage at that flat rate.

5. Adjustable-Rate Mortgage

An adjustable-rate mortgage loan (ARM) has an interest rate that fluctuates over the life of the loan, based on the current market conditions. The loan terms will lay out how often the rate will change, and by how much it can vary. This can be difficult to gauge, as the market is continually shifting and changing the amount you will need to pay each month.

Whether you want to buy or sell property, you’ll find it easier if you work with a realtor who will take the time to explain everything to you. The team at Wright Real Estate Co. prioritizes customer service for their clients in Ronan, MT. They have almost 40 years of experience in the Mission Valley real estate market and will guide you through the complex real estate process with ease. Contact them online or at (406) 676-8610 to learn why they are “The Smart Choice.”