Are you about to begin looking for a home? Maybe you are completely unfamiliar with the "lingo" used by real estate professionals and in real estate websites? Don't worry; we are here to give you a bit of a cheat sheet and to help you know exactly what to say, and what is being said, as you navigate your way through the world of real estate.
To keep it easy, let's look at the terms in alphabetical order:
Appraisal - This must be done by a qualified professional, and it is meant to give a very accurate estimate of the market value of any type of real estate property;
Closing costs - Firstly, the "closing" is the moment when all of the final documents relating to the house are signed and the official "deal" is done (the title is transferred). You may be alone with an attorney or the seller/buyer may be there as well. The closing costs are all of the fees associated with the paperwork done at the time. This often means monies relating to the mortgage, to any escrow funds, to the attorneys, and everything else that has to be paid because of the finalizing of the deal.
Contingency - This is a term used to describe something that will prevent a real estate deal from being formalized. It is a condition, such as a home passing some sort of inspection before it could receive financing, etc.
Deed - This is another name for the document that shows who owns the house (it can have a lien against it - such is the mortgage that puts a claim on the home until the loan is paid in full).
Depreciation - Just like a car depreciates, so too does a home, and the loss of value that comes from any wear, damages, etc. is usually described as depreciation.
Down Payment - This is the amount of cash you will put towards the purchase of the home.
Equity - This is the difference between the balance owed on the house and the actual value of it. You want to have equity in the home as soon as possible.
Lien - Any claim against a property that comes from some sort of debt.
Market Value - This is not the actual value but is instead the most that would be paid by a buyer in the current market.
Mortgage - This is a document that shows how much money was borrowed to buy the home from the owner. It will have "interest" at a set rate and will hold the home as collateral for the loan. In other words, you can have a $100k mortgage at 6% for a house that cost $200k. Mortgages can be refinanced in order to enjoy better terms such as a lower interest rate.
Title - This is the actual document that shows the owner of a real estate property.
There are many other terms that may appear as you begin looking at homes, but you should consider these the crucial ones in order to understand what is being said by real estate professionals.
Realtor.com. "Real Estate Lingo and Acronyms." 2013. Realtor.com. 2013 <http://www.realtor.com/home-finance/buyers-basics/a-short-guide-to-real-estate-lingo-and-acronyms.aspx?source=web>.