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Shelly Hu
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Be In the Know: Real Estate Lingo You Should Know For Your Transaction

Appraisal – estimated value of the property, this is done by a professional appraiser and it is based on the value of recently sold homes in the area

Back up offer – a secondary offer for a property that is used in the event that the primary offer falls through

Certificate of title – document that ensures the property is legally owned by the person who claims it

Closing costs – the fees and expenses associated with closing on a home (typically 6% of the cost of the home)

Comparative Market Analysis (CMA) – a study of how comparable local home have sold to help determine a reasonable price for the property

Contingencies – conditions that must be met in order for the offer on a home to proceed

Due diligence – actions that a responsible buyer must address in order to protect the real estate investment

Debt to income ratio – in order to qualify for a loan, your monthly debt cannot exceed 43% of your monthly income

Down Payment – percentage of the total purchase price that is paid upfront (usually between 5% and 20%)

Earnest money deposit – payment made to the seller with the offer to show serious intention

Escrow – a neutral third party account that holds the funds throughout the process, they are responsible for distributing all monies when the transaction has closed

Federal Housing Administration (FHA) – government agency that insures loans for borrowers

FICO score – numerical value assigned to the lenders based on their credit history

Fiduciary duties – the responsibilities of the broker that the real estate agent works for

Good faith deposit – payment made to the lender with the offer to show serious intention

Good faith estimate – the estimate of fees due at closing, this is provided by the lender to the borrower

Home Owner’s Association (HOA) – the organizations that determines community rules and standards

Inspection – examination of a property by a certified professional, usually done before the sale of a property

Loan to value ratio – how the lender determines if the loan is worth the risk associated with it

Mortgage – home loan

Multiple Listing Service (MLS) – online database for real estate professionals to list, market, and search for-sale homes

Net Proceeds – amount received by the seller after all closing costs have been deducted

Open House – event in which the real estate agent hosts a showcase of home to potential buyers

Pre-qualification – the process to determine if a borrower is qualified for a loan – amount is approximate

Seller Disclosures – document completed by the seller that indicates the properties history and defects

Title – the right to ownership of property that is recognized and protected by law

Under Contract – when a buyer submits an accepted offer but the transaction is not closed yet

Walk-Through – final inspection of the property that is done before closing is finalized

 

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