You can be innundated with real estate jargon when buying a home – Keith Bryan shares the 5 most common terms you will hear during a home purchase and explains exactly what they mean!
Are you buying a home? Do you know the lingo? Well, buying a home can be intimidating if you’re not familiar with the terms associated with it. So, to start you down your path with confidence, I’ve compiled a list of the top five most common terms used.
- Closing Costs. These are costs associated with a real estate transaction in addition to the price of the home and are paid at the close of escrow. They include but not limited to loan fees, taxes, title insurance, financing costs, appraisal fees et cetera. Typically, home buyers will pay between two and 5% of the purchase price of their home in closing costs.
- Escrow. It’s the holding of money or documents by a neutral third party before closing. Different from an escrow account, which is an account set up for a borrower by a lender to pay homeowner’s insurance or property taxes when they come due in the course of a given year.
- The Home Inspection. This is where the home gets visually inspected by a qualified home inspector to determine the condition of the property. This inspection should include but not limited to the roof, the attic, plumbing, electrical system, appliances, the AC, and much, much more. At the end of such inspection, you will receive a written report with a description of any problem areas and may also include a recommendation for further evaluation.
- Private Mortgage Insurance (PMI). If you make a down payment lower than 20% on your conventional loan, the lender’s going to require PMI, private mortgage insurance at a rate of .5%. This serves as added insurance that protects the lender if you’re unable to make the mortgage payment and only can be removed by refinancing your loan once your balance is 20% equity in your home.
- The Preapproval Letter. This is a letter from your mortgage lender that indicates that you qualify for a mortgage for a specific amount. It also shows the home seller that you’re a serious buyer. See my previous video on the benefits of getting pre-approved.
For more information, call Keith Bryan at 760-456-9471.Search Homes For Sale in San Diego