The process of buying your first home often feels very stressful. In addition to searching for your dream house in the right location and with all the amenities you need, understanding all those real estate terms may tempt you to give up on the process. I was once a first-time home buyer, and I understand the pressure you face. While I can’t find your dream home for you, I can relieve some of the pressure by explaining six important terms that can help you make sense of the industry.
Licensed Realtors specialize in the real estate industry. Hire one to find appropriate properties, negotiate with the seller and offer professional advice every step of the way.
The seller may wish to gain big bucks from you when you buy his or her property, but a professional appraiser determines how much the house is really worth. He or she assigns the property a fair market value based on the size, type and age of house and the values of homes nearby. You may use the appraised value to decide if you can afford the house.
Every home in the real estate market has secrets, and you don’t want to move in and then discover that the roof or foundation is damaged. Certified home inspectors provide an unbiased look at every detail of your home. Always obtain a professional inspection to ensure the house you’re buying is stable.
If you’ve saved enough cash, you can use it to pay off your house without a loan; otherwise, you’ll need to borrow money and get acquainted with one of the most important real estate terms. House loans, or mortgages, typically originate with a bank or credit union. You can choose between an adjustable rate mortgage with a flexible interest rate that changes over time, or a fixed rate mortgage with an interest rate that doesn’t change over the course of the loan. Discuss your options with your Realtor or lending officer as you choose the best type of mortgage for your financial situation.
The house you want to buy isn’t yours until you or the bank that holds your mortgage receives the deed. It’s a piece of paper that gives you ownership of the real estate. By understanding the type of deed on the house you want to buy, you limit confusion about who owns it.
- A warranty deed promises you that the property has no liens or other owners.
- A grant deed transfers the property ownership to you from a previous owner or heir who has a claim to the property.
- A quitclaim deed hands over property ownership and is commonly used during a divorce.
Closing and Settlement Fees
Before you can move into your dream house, you need to sign papers and complete what’s called the settlement process. This is the time when you pay closing and settlement fees. They are common fees in the real estate market and include costs associated with your mortgage, escrow setup, title and deed transfers and the home inspection. Sometimes, you can negotiate with the seller to lower closing and settlement fees, but discuss this with your realtor.
Confusing real estate terms may keep you from finding your dream house, but I encourage you not to give up. The right property is out there somewhere and may be across the street or around the world. No matter where home ownership takes you, start preparing for the thrill of the process as you learn about the industry and pack for the move that will take you into your very first home.
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