Sorry that I’ve been MIA for a few months now but I am back and ready to share informal and insightful information about our beautiful city’s real estate market. With summer amongst us now is the perfect time to find your dream home, many times I find that clients get confused by Real Estate terms so I’m here to help you with the ABC’s of the Real Estate language… Today I will do A- D!
Appraised value: An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
Assessment: The placing of a value on property for the purpose of taxation.
Adjustable rate mortgage: A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
Biweekly mortgage: A mortgage in which you make payments every two weeks instead of once a month. The basic result is that instead of making twelve monthly payments during the year, you make thirteen. The extra payment reduces the principal, substantially reducing the time it takes to pay off a 30 year mortgage.
Closing costs: Separated into what are called "non-recurring closing costs" and "pre-paid items." Non-recurring closing costs are any items in which are paid just once as a result of buying the property or obtaining a loan. "Pre-paids" are items in which recur over time, such as property taxes and homeowners insurance.
Collateral: In a home loan, the property is the collateral, the borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.
Commission: Most salespeople earn commissions for the work that they do and there are many sales professionals involved in each transaction, including Realtors, loan officers, title representatives, attorneys, escrow representative, and representatives for pest companies, home warranty companies, home inspection companies, insurance agents, and more. The commissions are paid out of the charges paid by the seller or buyer in the purchase transaction
Comparable sales: Recent sales of similar properties in nearby areas and used to help determine the market value of a property
Conventional mortgage: Refers to home loans other than government loan
Depreciation: A decline in the value of property; the opposite of appreciation. Depreciation is also an accounting term in which shows the declining monetary value of an asset and is used as an expense to reduce taxable income
Down payment: The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
Equity: A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Exclusive listing: A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.
Fair market value: The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
Stay Tuned I will be covering the next ten letters on Wednesday as well as many other interesting topics in the upcoming weeks!