Regardless of the industry, there is no doubt a collective jargon that can make it seem like a totally foreign entity. The real estate business is no different. Whether it be mortgage rates, amortization, or title insurance, it can all be quite confusing for those new to the real estate world.
Here are some of the most commonly used and pertinent real estate terms that you should become familiar with.
Amortization
There is a lot of confusion between the term and the amortization period. Simply put, the amortization period is how long it takes a buyer to repay their mortgage. Most amortization periods are 25 to 30 years, though there are special circumstances where they can be longer. The term, meanwhile, is how long a specific interest rate is locked in for. Most terms are about five years though they can be as short as six months and as long as 10 years.
Appraisal
Similar to the confusion over the amortization period and term, there is some confusion about the difference between an appraisal and an inspection. The latter is to find issues within the home before a sale. The former assigns a value to the home. An appraisal is necessary prior to selling your home so that you have a better idea of what its value is.
Closing
There are many aspects of buying a home. Finding said home, making an offer, and having the offer accepted are all the parts we know well. But there is the closing as well. When the sale of the property is finalized, that is the closing. The seller and buyer sign the required documents, the buyer makes their down payment and also pays any associated closing costs.
Contingencies
In some instances, there may be conditions that need meeting before a purchase can be finalized. For instance, there might be a contingency that the loan be approved or the appraisal value be near the final sale price. Contingencies vary from sale to sale and depend on the parties involved in the process.