In the market for a new home? Buying a home can be one of life’s biggest decisions. To guide you on the journey to your new home, we are releasing a 3-part series which outlines the nuts and bolts of homeownership for new homeowners and home buyers. In 3 separate articles, we will review some key information you won’t want to miss if you’re knocking on the door to homeownership or finally turning the key.
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Part 1: The New Homebuyer’s Glossary
From buying a home, start to finish, there are many steps you may take from researching homes to signing the final papers. We have outlined some key financial, real estate, and other industry terms that you may encounter through the process of buying a home.
Appraisal: An approximated value of what your home is worth.
Closing: The final step in the transaction of buying a home. At closing, you and the community will sign various documents, and you will provide the funds necessary to purchase the home.
Contingencies: Requirements between the buyer and community selling the home that must be met before the final deal for the home can close.
Credit limit: The maximum amount of money or credit that can be given to you, the buyer, in an open-ended credit account.
Credit report: A record of your personal credit history entailing public information provided by creditors, financial institutions, public records, and businesses.
Credit score: This is a numerical measure used by credit reporting agencies to determine the value of your credit based on the performance of your credit history.
Debt-to-income ratio: Compares your monthly debt payments to your monthly income, used primarily to determine your credit score.
Delinquency: The failure to make payments on time for your home loan.
Disclosures: A document created by the seller of a home stating all of their knowledge about the condition of the home during the time they owned it for buyers to review.
Down payment: The amount of money you pay at closing for the purchase of your new home.
Effective date: The date that signifies the official signature in the sales contract of a home. This date defines the terms of the contract’s various deadlines.
Fixed-rate mortgage: A type of mortgage in which the interest you pay the interest you pay on your home loan will remain constant, meaning you can expect that your monthly mortgage payment won’t drastically change.
Installment loan: A loan that is repaid over time with a set number of scheduled payments.
Listing: A property for sale.
Loan-to-value (LTV): Compares the amount of money borrowed for the home to the appraised value of the home.
Preapproved: A homebuyer completes an application for a home loan, pays a fee, and provides required documentation to the loan lender. Preapproval does not guarantee a loan.
Prequalified: Not to be confused with “preapproved”, prequalified means you are given a general idea of the home loan amount you could qualify for from a lender.
Title: The right to, or ownership of a specific real estate property.
After reviewing these terms, we hope that you feel more confident about making informed decisions on your path to buying a new home. The process can be tedious, but it pays off to be as knowledgeable as possible when faced with the choices that come with homeownership.
Start your homeownership journey today and view all of our available homes via our Find a Home site!
In the next 2 parts of our Nuts and Bolts of Homeownership Series we will prepare you for home maintenance you’ll be excited about and dig into all the essentials you’ll need for your new home. Stay tuned!
Sources:
https://manitousprings.com/first-time-home-buyer-10-crucial-terms-need-know/https://www.investopedia.com/https://realestate.usnews.com/real-estate/slideshows/10-terms-first-time-homebuyers-must-knowhttps://www.incharge.org/housing/homebuyer-education/homeownership-guide/glossary-of-terms/https://www.washingtonpost.com/realestate/real-estate-glossary-key-terms-explained/2018/01/19/ce2fe038-f7df-11e7-beb6-c8d48830c54d_story.html?noredirect=on&utm_term=.dc5fa894ea81