Master the language of real estate with our easy-to-understand guide.
As experts in the real estate industry, we’re here to demystify some of the jargon that often confuses buyers and sellers. Today, we’re focusing on common terms you might encounter and what they actually mean.
1. Refinancing (Refi). Refinancing, often referred to as ‘Refi,’ is a process where you adjust the terms of your current mortgage, usually to withdraw equity or lower your interest rate. It involves replacing your existing mortgage with a new one under different terms.
2. Annual percentage rate (APR). The term APR stands for Annual Percentage Rate. It’s an essential disclosure and includes all costs related to the interest rate of a loan. Think of it as the total cost of borrowing money, encompassing various fees and charges.
3. Comparative market analysis (CMA). CMA, or Comparative Market Analysis, is a tool we use to determine the value of your home. It’s essentially a report that compares your home to similar properties in the area to estimate its worth.
4. Rate buydown. This term refers to paying upfront to reduce your mortgage interest rate over the loan’s lifetime. This can involve funds from either the buyer or seller and is a strategy used to make mortgages more affordable in the long run.
5. Escrow. It is a term that signifies a neutral phase in a real estate transaction. It means the buyer and seller have agreed on terms, and the process of fulfilling contractual obligations is underway, leading to the final sale.
6. Earnest money. It is a term that refers to a deposit made by the buyer to demonstrate their commitment to the transaction. It’s essentially a show of good faith and a sign that the buyer is serious about their offer.
7. Closing costs. This encompasses various expenses associated with buying or selling a home. For sellers, these costs typically include real estate fees, title insurance, and property taxes. For buyers, they cover fees related to obtaining a mortgage. These costs are negotiable and can often be covered by the seller, especially in a slower market.
We hope this breakdown helps clarify some of the terms you might encounter. If you have more questions or need assistance in navigating the real estate market, don’t hesitate to contact us. Remember, understanding these terms is crucial to making informed decisions in your real estate journey.