Real Estate Terms You Should Know Before Buying A Home

For those out there that are first-time homebuyers, or simply want to brush up on your real-estate lingo, below is a list of important terms you will want to know when purchasing a home.

Adjustable rate mortgage: This is a mortgage whose rate (interest) is linked to a "market indicator". There are several market indicators that are used, such as LIBOR, which is the rate that international markets are trading at. Entering into an adjustable rate mortgage means that you will not have a fixed monthly payment for the duration of your mortgage term. Instead, your payment will change, depending on market indicators of the time, at some point during your mortgage term. Adjustable rate mortgages often start with a lower rate which then increases after several years, so be sure to calculate this disparity into your budget.

Closing Costs: Closing costs are the money that need to be paid at the end of the closing. For buyers, these costs include: lender's fees, property taxes, real estate commission, and insurance premiums. There are several online calculators you can use to that will help estimate your closing costs.

Escrow: escrow is a money held by a neutral third party, most often an attorney, until the sale of the home is completed. This assures all parties that the funds held in escrow will be released after the transaction is successfully completed.

Affidavit of title: An affidavit of title is a certified document that proves ownership of a property. This document is needed to show that the seller is the true owner of the home, there are no liens or other obligations levied on the property, and that the property is not sold to anyone else.

Assessed value: This is the value of a property certified by the county and determined by an assessor.

Competitive Market Analysis: A listing of homes on the market that are similar to yours, based on location, style, and size, and the price that they were sold for. These are often referred to as "comps" and can help you determine what price you should put your property on the market for.