Linguistic Prowess in Home Buying

There is a certain terminology used in real estate circles that first time home buyers will definitely find mysterious and hard to understand. These constitute words and phrases that are not used in our everyday communication and or which have different meanings from those they are attached to during ordinary discourse.

Before you set out to buy a home, try to learn some of this lingo, and you will be better able to converse like an insider during the process. More importantly, you will understand what is meant when such terms are used in documents and conversations.

The phrase Adjustable Rate Mortgage or ARM refers to a loan type that starts the introductory stages with lower interest rates and then adjusts upwards with time and according to market interest rate adjustments. The term Appraisal refers to the estimate market value of a house based on the type of house, location, size, features and the local market conditions.

The term Closing (Also called Settlement) refers to the official ownership transfer of a real estate entity property in this case from a seller to a buyer. A formal closing should ideally be attended by a seller, buyer, settlement agent and the agents representing the buyer and the seller. This is the meeting during which a buyer signs the mortgage and the seller receives payment.

The term Comparables which is today referred also as Comps means a comparison of several homes that are on market within a particular area. This is especially useful while validating the asking price of a new home.

Down Payment in real estate circles refers to the amount paid to a lender by a property buyer at the formal closing of a deal. The amount is paid in advance as the portion of the total purchase price and not as a repayment part of the mortgage loan.

If you come across the term Escrow or Escrow Account during your home buying process, it refers to the funds that have been set aside under the trust of a neutral 3rd party to be used for tax and insurance remittances.