Common Real Estate Terms - Explained
Real estate is a complex industry with a unique set of vocabulary and industry terms all its own. If you have not been involved in the real estate scene recently (or even if you have been), you may have trouble interpreting the various terms you come across during the process of buying or selling a home. Arrowhead Title, Inc. is here to help! Keep reading to find the definitions to some common real estate terms you are likely to encounter as you sell or buy a home at the Lake of the Ozarks.
Common Real Estate Terms & Their Definitions
Adjustable Rate Mortgage (ARM)
This type of mortgage has a set interest rate for a fixed number of years, after which the interest rate will adjust to reflect the current market rates.
Amortization Schedule
This is a table or document that shows the planned monthly payments for the duration of your mortgage loan. It identifies how much will go towards principal and how much will go towards interest each month so you can understand how your loan will be paid off.
Appraisal
This is the official process wherein a professional home appraiser identifies a property's current market value. This is done by evaluating several different factors, including the condition of the property and the actual sale price of comparable properties.
Bill Of Sale
This is a written document that officiates the transfer of title of a piece of property from one person to another.
Chain Of Title
This is the history of a title to a given property reflecting whom has had ownership of it and how/when that title has been transferred over the past several years.
Closing
This refers to the process wherein the sale of a piece of property is finalized. Final signatures from the sellers and the buyers are obtained, and all of the money involved in the transaction is transferred to its respective parties.
Comparable or "Comps"
These are terms used to refer to similar (or "comparable") properties to a home in question. The sale price of these comparable properties are evaluated to determine the current value of a given home.
Contingency
This is a clause that prevents an agreement from becoming legally binding if a certain condition is not met. If a home offer is contingent upon financing, for example, it means that the buyers must be approved for a mortgage loan before they can be held legally responsible for their offer.
Debt-To-Income Ratio
This ratio shows the balance of prospective homeowners' total debts compared to their total income. If this ratio will become too high once a mortgage loan added into the equation, the buyers may not be able to get approved for a mortgage loan.
Deed
This is the official document that conveys the title to a property.
Earnest Money
This is the deposit that the buyers provide when they submit an offer on a home to show the sellers that they are serious about the purchase. Typically, earnest money ranges between 1-3% of the proposed sale price.
Escrow
This the process wherein documents, money, or other important items are held by a third party until the appropriate time. In real estate transactions, for example, earnest money and other funds are held in an escrow account by a local title company until they are passed to the rightful recipients.
Fixed-Rate Mortgage
These types of mortgage have a fixed interest rate for the duration of the loan. No matter how the future market unfolds, buyers can trust that their interest rate will stay the same (unless they choose to refinance).
Good Faith Estimate
This is an official document a mortgage broker provides, estimating the fees the buyers' will be required to pay at closing.
Home Equity Loan
This is a loan homeowners can take out to access the equity in their home (the amount of the home they actually own).
Lien
A lien is an encumbrance placed upon a property that must be met before the property can be sold.
MLS
This stands for Multiple Listing Service. It is a service available to all licensed REALTORS® that helps organize all current home listings within a certain area.
Pre-Approval
Buyers become pre-approved for a mortgage loan once their lender has reviewed all of their financial documents and submitted a written proposal estimating the loan amount the buyers can obtain.
Pre-Qualification
Buyers become pre-qualified for a mortgage loan once the lender has evaluated their verbal description of their financial situation and offered a proposal estimating the loan amount buyers can obtain. (This step comes before preapproval and is not quite as formal.)
Title Insurance
This is a unique form of insurance designed to protect homeowners' and their heirs' right to use and occupy their land.
Arrowhead Title Is Here For All Of Your Title-Related Needs
If you are hoping to buy real estate at the Lake of the Ozarks, our title insurance team will be here to assist you in any way we can. From researching the title to facilitating the closing, our Lake of the Ozarks title experts look forward to serving you!
The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!
Common Real Estate Terms & Their Definitions
Adjustable Rate Mortgage (ARM)
This type of mortgage has a set interest rate for a fixed number of years, after which the interest rate will adjust to reflect the current market rates.
Amortization Schedule
This is a table or document that shows the planned monthly payments for the duration of your mortgage loan. It identifies how much will go towards principal and how much will go towards interest each month so you can understand how your loan will be paid off.
Appraisal
This is the official process wherein a professional home appraiser identifies a property's current market value. This is done by evaluating several different factors, including the condition of the property and the actual sale price of comparable properties.
Bill Of Sale
This is a written document that officiates the transfer of title of a piece of property from one person to another.
This is the history of a title to a given property reflecting whom has had ownership of it and how/when that title has been transferred over the past several years.Closing
This refers to the process wherein the sale of a piece of property is finalized. Final signatures from the sellers and the buyers are obtained, and all of the money involved in the transaction is transferred to its respective parties.
Comparable or "Comps"
These are terms used to refer to similar (or "comparable") properties to a home in question. The sale price of these comparable properties are evaluated to determine the current value of a given home.
Contingency
This is a clause that prevents an agreement from becoming legally binding if a certain condition is not met. If a home offer is contingent upon financing, for example, it means that the buyers must be approved for a mortgage loan before they can be held legally responsible for their offer.
Debt-To-Income Ratio
This ratio shows the balance of prospective homeowners' total debts compared to their total income. If this ratio will become too high once a mortgage loan added into the equation, the buyers may not be able to get approved for a mortgage loan.
Deed
This is the official document that conveys the title to a property.
Earnest Money
This is the deposit that the buyers provide when they submit an offer on a home to show the sellers that they are serious about the purchase. Typically, earnest money ranges between 1-3% of the proposed sale price.
Escrow
This the process wherein documents, money, or other important items are held by a third party until the appropriate time. In real estate transactions, for example, earnest money and other funds are held in an escrow account by a local title company until they are passed to the rightful recipients.
Fixed-Rate Mortgage
These types of mortgage have a fixed interest rate for the duration of the loan. No matter how the future market unfolds, buyers can trust that their interest rate will stay the same (unless they choose to refinance).
Good Faith Estimate
This is an official document a mortgage broker provides, estimating the fees the buyers' will be required to pay at closing.
Home Equity Loan
This is a loan homeowners can take out to access the equity in their home (the amount of the home they actually own).
Lien
A lien is an encumbrance placed upon a property that must be met before the property can be sold.
MLS
This stands for Multiple Listing Service. It is a service available to all licensed REALTORS® that helps organize all current home listings within a certain area.
Pre-Approval
Buyers become pre-approved for a mortgage loan once their lender has reviewed all of their financial documents and submitted a written proposal estimating the loan amount the buyers can obtain.
Pre-Qualification
Buyers become pre-qualified for a mortgage loan once the lender has evaluated their verbal description of their financial situation and offered a proposal estimating the loan amount buyers can obtain. (This step comes before preapproval and is not quite as formal.)
Title Insurance
This is a unique form of insurance designed to protect homeowners' and their heirs' right to use and occupy their land.
Arrowhead Title Is Here For All Of Your Title-Related Needs
If you are hoping to buy real estate at the Lake of the Ozarks, our title insurance team will be here to assist you in any way we can. From researching the title to facilitating the closing, our Lake of the Ozarks title experts look forward to serving you!
The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!
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