If you’re planning on buying a home in the near future and are confused about many of the terms associated with mortgages, you’re not alone. Real estate is its own industry with its own set of processes, terms, and acronyms. If you’re new to the home buying process, there can be somewhat of a learning curve to understand what each of these terms means.
Since buying a home is such a huge investment and life decision, there’s a lot of pressure on home buyers to make sure they get everything right. This makes for a stressful situation for buyers who don’t feel like they understand the terminology of things like mortgages, appraisals, credit reports, and other factors that contribute to the home buying process.
To alleviate some of those concerns and to make the home buying process run more smoothly, we’ve compiled a list of the most common, and most commonly confused, real estate words, terms, and acronyms. That way, when you’re talking things over with your real estate agent or your mortgage lender, you’ll be confident that you understand exactly what’s being considered.
Read on for our real estate terminology glossary.
Adjustable rate mortgage (ARM) - This is one type of home loan. Mortgage rates with this type of loan fluctuate throughout the repayment term of the loan. The fluctuation is based on a market indicator.
Fixed rate mortgage (FRM) - Another type of home loan, a fixed rate mortgage has a rate which does not fluctuate, remaining constant for the life of the term, most commonly 15 or 30 years.
Appraisal - An appraisal is the determination of the value of a property. Appraisals are used when purchasing and selling a home, as well as when refinancing a home loan. Appraisers are required to be licensed or certified in each state and are usually paid for by the lender.
Appreciation - An increase in a property’s value, most commonly due to market inflation, or the general increase in home prices over time.
Depreciation - A decrease in a property’s value, due to either market deflation (uncommon) or the wear and tear on a home that comes with age.
Closing costs - The costs and fees that a buyer is responsible for when purchasing a home or taking out a mortgage. These include underwriting fees, inspections, appraisals, transfer taxes, and more. Closing costs typically range from 2% to 5% of the total loan amount.
Contingency - Home purchases have contracts to protect the interest of the buyer, seller, and lender. Contingencies are provisions designed to protect the buyer or lender should something occur in the time leading up to closing on (or purchasing) the home. One common contingency is the buyer’s right to have a final inspection of the home before closing to ensure no new issues with the home have occurred.
Private mortgage insurance (PMI) - Buyers who cannot afford a down payment of %20 typically are required to take out a private mortgage insurance policy. This policy protects the lender should the borrower default (fail to repay or meet the conditions of their loan).
A condo offers a great opportunity to enjoy a comfortable living space without the hassle of home exterior maintenance. As such, many property buyers are exploring condos in cities and towns nationwide.
However, buying a condo sometimes can be tricky, particularly for property buyers who are unfamiliar with the real estate market. Lucky for you, we're here to help take the guesswork out of purchasing a condo.
Let's take a look at three questions that condo buyers need to consider before they purchase a property.
1. Am I ready for condo life?
Owning a condo and owning a home are two very different things, and perhaps it is easy to understand why.
Like a homeowner, a condo owner has a property to call his or her own. But a condo community usually has a homeowners' association (HOA) in place that manages exterior maintenance and other tasks. This association also establishes rules and regulations that all condo owners must follow; otherwise, property owners may face fines.
Before you purchase a condo, it is paramount to prepare for condo life as much as possible. To do so, you may want to consult with friends or family members who have resided in condo communities over the years. These loved ones can share their condo living experiences with you to help you better understand what life will be like as a condo owner.
2. How much can I afford to pay for a condo?
Although you know that you'd like to purchase a condo, you still need to find out how much you can afford to pay for a property. Fortunately, banks and credit unions are available to help you determine how much you can spend on a condo.
Consult with several banks and credit unions to explore all of your home financing options. Then, you can select a mortgage that matches your expectations.
In addition, you may want to get pre-approved for a mortgage before you start your condo search. If you enter the real estate market with a budget in hand, you can narrow your condo search and speed up the property buying process.
3. Do I need to employ a real estate agent?
Ultimately, a real estate agent is a must-have for any condo buyer, at any time. This housing market professional can teach you the ins and outs of real estate and ensure that you can make an informed condo purchase.
A real estate agent strives to provide you with an outstanding condo buying experience. To accomplish this goal, he or she will work with you, learn about your condo buying goals and help you plan accordingly.
Furthermore, a real estate agent is unafraid to be honest. He or she will offer condo buying recommendations and suggestions as you check out a variety of properties. This housing market professional is happy to respond to your condo buying queries as well.
Streamline the process of buying a condo – consider the aforementioned questions, and you can move closer to acquiring an outstanding condo at an outstanding price.
121 Oak ST, Westerly RI, 02891
From clogged toilets to a lack of ample shower time, there’s always an issue of too many people and too little bathrooms in a home. Most people will agree that one bathroom isn’t enough in a home. Yet, while you’re on the hunt for a home, should you decide to just settle for a single bathroom or keep hunting for a house with more bathrooms? There is always the additional option of putting in another bathroom as well, although this can be costly.
In today’s fast-paced world, we have new bathroom needs that make us look at properties differently. Different cultures are also accustomed to varying standards of bathrooms and home building, and find it a normalcy to have only one bathroom. Also, once upon a time, it was feasible for everyone to have people take their turn in the bathroom-even in America. As the family unit shifted and everyone in the house became accustomed to living on the same exact schedules, it became more necessary to have an extra bathroom.
Age Of A Home
While you can survive with one bathroom, the biggest message one bathroom in a home sends is that it’s an older property. That may be the underlying factor that steers people away from one bathroom homes. Many realtors even warn of the difficulties in selling a one bathroom home. Ultimately, the decision is up to you. There’s some things that you should consider when you’re searching for a home and are concerned about the number of bathrooms.
How Many Bathrooms Will You Actually Use?
If you’re a bachelor, living on your own, you may not need more than one full bathroom in a home. For comfort reasons, you could consider places with an additional half-bath, but it may not be necessary. If you’re planning on co-living with your in-laws or friends, you’ll definitely need to consider your need for multiple private baths high.
If you can afford the upfront cost, it could be well worth it to put a second bathroom into a one bathroom home. It will add a lot of value to the home once it is sold again and your family will have more privacy and space. Not to mention that your home will be more attractive to buyers once the time to sell does come.
Homes with extra bathrooms are truly seen as a luxury. Have you ever seen celebrity homes advertised that have more bathrooms than there are bedrooms? There’s probably little reason for that other than the luxury factor. Ultimately, your home search will be a bit harder when you seek out multiple bathrooms. However, if this will increase you and your family’s comfort, the time spent searching is definitely worth it! When you’re on the house hunt, the number and type of bathrooms are just one of many things that you’ll need to consider.