Vocabulary for First-Time Homebuyers
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Scottsdale, Ariz. - As a first-time homebuyer, the process can be just as overwhelming as it is exciting. There are long lists of terms and phrases that you might not be familiar with but are helpful to know to better understand the buying process from start to finish. In hopes to help lessen the stress that comes with the experience, here is a list of terms and phrases that every first-time homebuyer should know.
Appraisal - An appraisal is an estimate provided by an expert for a property’s value. This is important because you as the buyer, as well as any potential lender, will use the price provided by the appraiser to determine if the property’s price is being reflected fairly by the asking price.
Closing - Closing means that the sale is complete! Hooray! The papers have been signed, funds have been exchanged and you are now the owner.
Closing Costs - Closing costs are fees that are separate from the property’s price that may be necessary to complete the transaction. These costs may cover appraisal fees, loan origination fees, title insurance, taxes, surveys, potential attorney fees, etc.
Contingency - Contingency is a condition or action that must be met for the contract to become valid and binding. A contingency clause allows for one or both parties to back out if specific conditions are not met. Some of the most common contingencies are obtaining finances contingency, appraisal contingency, home inspection contingency and sale of an existing home contingency.
Down Payment - This is the portion of the contracted purchase price that is paid upfront and not financed through a mortgage. It is to be paid at the time of closing and the payment price ranges depending on the type of loan and what the lender requires.
Escrow - Escrow is a third party secure holding site where all funds are kept until the time of closing.
Final Walk-Through - This is an expectation by the buyer before close to ensure that all agreed upon repairs or changes have been made before the ownership is transferred.
Home Inspection - A home inspection is performed by a qualified home inspector who looks at everything from the roof to the foundation. This is typically done so that anything that is not noticeable to the untrained eye or necessarily visible can be revealed.
Pre-approval vs Pre-qualification - Pre-approval and pre-qualification are similar but have different fundamentals. A pre-qualification, also referred to as a pre-qual, is the less formal version where you provide your lender with estimated financial information and they run your credit. A pre-approval requires that you provide them with verified financial information. Your lender will then provide you with an approval letter that you can share with your agent and a seller to prove that you have the financing to purchase a home up to a certain price point.
Having an understanding of these terms will be beneficial in your journey as a first-time buyer and will help you be more confident. Though these are just a few of the terms used in real estate. Trust your My Home Group agent to walk you through every step and explain any of your “unknowns” in the process. Don’t be afraid to ask your My Home Group agent any questions that you may have! They are there to provide guidance and help support you to make informed decisions.