It is not just the duty of the realtor to know the terms used in real estate, there are some basic terms that we should also know, this will make us flow with the realtor and it will also make you look more enlightened. Knowing these terms will force the realtor to deal with you fairly because he is aware that you are educated in the field.
Real Estate Terms and Definitions
1) Acceleration clause
This is a contract provision that demands the borrower to repay the lender all the outstanding loan if the requirements agreed upon aren’t met, it is also called acceleration covenant.
2) Active Contingent
After a seller accepts an offer from a buyer, the offer is contingent in relation to the buyers’ ability to meet some conditions before the finalization of the sale. Contingencies may require the buyer to sell their home, receive mortgage approval, or reach an agreement with the seller regarding home inspection.
3) Active under contract
A house is said to be active under contract when the seller agrees on an offer with contingencies but still wants the house to be listed as active. Hence a seller may likely accept backup offers if the current offer fails to meet its contingencies.
If the buyer or a seller wishes to amend an existing contract, they may need to add an addendum outlining the specific part of the contract that they may like to adjust or change. The remaining part of the contract remains the same.
5) Adjustable-rate mortgage (ARM)
The interest rate of an adjustable rate mortgage is subjected to changes periodically, you may begin with a rate that is cheaper than a fixed rate mortgage, but in the long run, it may most likely become higher in the future.
6) Adjustment date
Adjustment date is the time your mortgage begins to accrue interest. The adjustment date usually starts from the first day of the month after mortgage funds are given to the borrower.
Amortization is the schedule of your mortgage payments arraigned over a period of time. A buyers amortization in real estate is scheduled to have a monthly payment that may be scheduled over a period of 15-30 years.
8) Annual percentage rate (APR)
Annual percentage rate is the amount of interest charged yearly on your received loan.
An appraisal is the actual estimate of the worth of your home. Lenders always request for an appraisal when seeking for a loan to buy a house, to ensure that the loan amount requested is accurate. If the lender discovers that the appraised value is lower than what the buyer offered, the lender may request the buyer to pay the difference in cost.
Appreciation is the increase in the value of a home over a period of time. You can calculate the appreciation of a home by adding the annual appreciation rate and raising it to a power equal to the number of years you wish to estimate and finally multiply by the current value of the property.
11) Assessed value
An assessment is the measure of the amount of taxes the property owner will pay, the assessor calculates the assessment of home value by looking at similar homes in the area and reviewing a home inspection carried out in the home.
The assignment is the handing over of a property rights and obligation by the seller to the buyer before the official closing date.