Starting the home buying journey? Here are a few terms to know before you get started!
- Pre-Approval
- After verification of job history, credit habits, assets and debts, a lender will provide a written agreement with the amount that you can afford in a home. This pre-approval is usually contingent on further documentation and approval but allows you to submit contracts on homes that you can afford.
- Earnest money
- Earnest money is a deposit that is made by you as the Buyer right after going under contract; usually between $4,000 and $10,000 (depending on price of the home). This is used to show good faith and intentions on purchasing the home. On many circumstances if you need to terminate the contract, the Buyer can receive this money back.
- Buyers Agent
- The Buyer’s agent works for the Buyer, simply put. They will represent you to the best of their abilities through the real estate transaction and handle the negotiations with the other party.
- Listing Agent
- The listing agent represents the Seller in the Seller’s best interest.
- FSBO
- For sale by owner – in this case the owner of the home is selling it without the assistance of an agent. Although they are saving some money without having to pay commissions, it is always important to do our due diligence to make sure everything complies with regulations.
- Private Mortgage Insurance (PMI)
- PMI usually comes in to play when the Buyer puts less than 20% down. (Yes, you can put down less than 20%.) This is something that is discussed with your lender but it’s a monthly payment that is added on to your monthly mortgage. This protects the lender against any financial loss.
- Single Family Home
- A single family is your typical home, not attached to any other dwelling. Although not always, typically the largest type of home.
- Condo
- More times than not, a condo will share many of the walls with its neighbors as well as floors and ceilings. Condo owners also only own the interior of the building and usually pay an HOA fee to help maintain and manage the exteriors as well as the mutual areas. Some may come with garages or assigned parking spaces.
- Townhouse
- Although condos share walls too, a townhome will only share one maybe two interior walls. While obviously owning everything inside, the owners will also own the exterior of their unit as well as the patio/yard space if applicable. Many do come with a garage which is a plus and usually a little more space than a condo. Many do come with HOA regulations as well so always be sure to pay attention to those.
