The Homebuying Process: Industry Lingo You Must Learn
Knowing the lingo of home buying can become an asset. It is similar to learning other languages in that once you know it, it doesn’t seem as daunting as it once did. Below are some of the terms that would be helpful to know when buying a home.
As soon as you have your down payment, you will give it to the escrow office to keep until the sale is near completion. Escrow is the act of the escrow company keeping your money in a special escrow account where it will remain untouched until the time is ready to pass the down payment along to the sellers.
This comes towards the end of the homebuying process. When you and the seller have completed nearly all of the other steps for them to sell you their home, there will still be some outstanding debts. They can be paid by either party or the amount is split between you and the sellers. These will total a pre-arranged amount that is generally 2% to 5% of the price you paid for your new home.
Closings costs for homes for sale in Montgomery County might differ from those in another part of the country. Closing costs, in general, are used to pay fees incurred but not yet paid to a courier service, any application fees, commissions to the Realtors or any other bills for the sale left unpaid to this point.
This is the more complex interest rate but there are pros and cons. This type of mortgage will allow you to purchase a more expensive home. Your interest rate may be lower than the fixed rate for a few years and save you hundreds of dollars. The downside is that you will be responsible for higher payments when interest rates climb.
This type of interest rate is preferred by many people because it is easier to budget. Your interest will stay the same for the life of the loan. Interest rates may rise and fall but your interest will stay the same regardless. You can count on a certain amount of money going to this expense every month instead of calculating your budget around a variable figure.
A contingency clause is put into the contract in case an event happens outside the scope of the homebuying process. There are several types of contingency clauses. A mortgage contingency allows the buyer an allotted period of time to locate a lender. An inspection contingency puts a time limit for completion of the home inspection. An appraisal contingency says that the home must be appraised at a fair price that will give the buyer a home valued at what they are paying for.
Learning the lingo of the real estate industry will get easier the more time you spend pursuing homes and properties to buy or sell. Your real estate agent may be able to provide you with a list of classes for homebuyers in your area.