Buying a home can be intimidating if you’re not familiar with the terms used throughout the process. To point you in the right direction, here’s a list of some of the most common language you’ll hear along the way.
Appraisal: A professional analysis used to estimate the value of your home.
A necessary step in validating a home’s worth to you and your lender as you secure financing.
Closing Costs: The fees required to complete the real estate transaction. Paid at closing, they include points, taxes, title insurance, financing costs, and items that must be prepaid or escrowed.
Ask your lender for a complete list of closing cost items.
Contingency: A condition that must be met, such as selling your current home, before your contract to purchase a new home becomes binding.
Credit Score: A number ranging from 300-850 that’s based on an analysis of your credit history.
Helps lenders determine the likelihood you’ll repay future debts.
Down Payment: Down payment are typically 3-20% of the purchase price of the home. Some 0% down programs are also available.
Ask your lender for more information.
Earnest Money: Money the buyer gives the seller as a security deposit for the home. It tells the seller you’re a committed buyer, and it helps fund your down payment
Escrow: The holding of funds by a neutral third party prior to the closing of your home.
Pre-Approval Letter: A letter from a lender indicating you qualify for a mortgage of a specific amount.